Guanajuato Paves the Road to Electromobility
The electromobility transition is bringing countless challenges and opportunities to the automotive sector. While already consolidated as a strong automotive supplier, Mexico will find in this transition ways to continue growing thanks to the advent of new trends like electromobility. As these trends continue penetrating the country, its major automotive hubs like Guanajuato play a key role in ensuring the smooth adoption of the emerging trends.
“We are a state with business-friendly public policies. Projects that arrive in Guanajuato do not suffer any delays,” says Alejandro Hernández, Deputy Minister of Investment Attraction, Ministry of Sustainable Economic Development of Guanajuato.
Traditionally known for its manufacturing expertise, Mexico brings a unique set of benefits for car makers, including its low-cost, highly-qualified labor and proximity to the US and Canada. Thanks to these benefits, the country is now one of the most important automotive hubs in the world. In recent years, nearshoring has become increasingly popular as more companies turn to Mexico to relocate operations closer to their customers. By moving their facilities closer to the US, these companies can simplify their logistic systems and reduce supply chain disruptions.
Mexico has 14 free trade agreements that give it a competitive advantage to establish its products across different markets worldwide. However, the country still has significant potential to increase its exports, which it could do by boosting its relationship with Argentina and Brazil, says Hernández. “There is still significant potential to build agreements with Latin America regarding supply chain relocations,” he adds.
“Nearshoring has two main effects, the most illustrative is when a new company arrives in the country, builds a new plant and creates new labor opportunities. The companies that are already operating in Mexico can also start to redirect their production capabilities to the country. In both of these scenarios, the country’s automotive sector grows,” says Rene Mendoza, National Coordinator, Mexican Industry Supply Chain (CAIPM).
Nearshoring, together with the recent ruling in favor of Mexico and Canada’s Rules of Origin posture by a USMCA dispute panel, have helped Mexico confirm investments totaling US$15 billion just during the latter half of 2022 and the first few months of 2023. Experts concur that a substantial portion of these investments followed the favorable response from the USMCA dispute panel, as reported by MBN.
Guanajuato is the top non-border exporting state, which highlights the quality of its labor force and manufacturing abilities. “Guanajuato has access to 60% of the country's population. Moreover, 70% of the country's foreign trade is carried out in this area, from which companies have access to 80% of the national market,” said Hernández. However, there is still much room for growth, he adds. In the last 15 years, the region has attracted over 500 global companies, he adds, giving a clear example of the potential of the region.
Both companies coming to Mexico and those already in the country are heavily investing in electromobility. According to Alberto Bustamante, President, INA, Mexico’s automotive industry is anticipating to produce 142,000 EVs by the 4Q23, a nearly 50% surge from last year’s production levels. If this figure is reached, Mexico will reach almost 1 million domestically assembled EVs.
Many players will play a key role in achieving these goals, including Guanajuato, which plays a critical role in Mexico’s automotive sector. The state has four vehicle assembly plants, the highest number of such plants in the country, according to Guanajuato’s Inland Port. These plants include: General Motors' Silao Complex, where models like the Chevrolet Cheyenne, Chevrolet Silverado and GMC Sierra are assembled; Honda's Celaya plant, which has manufactured cars such as the Honda Fit and the HR-V; Mazda's Salamanca plant, where models such as the Mazda 3 sedan, Mazda 2 (hatchback and sedan), and the CX-30 SUV are produced; and Toyota Motor Manufacturing Guanajuato, the state’s most recent assembly plant, which produces the Tacoma pickup. The Bajío region also has a unique and privileged location that gives the region direct access to 80% of the Mexican territory.
The region is actively helping automotive companies to have a smooth transition toward greener and more sustainable operations, as most of the state’s automakers and auto parts companies are already starting this transition. Even the companies focusing on internal combustion engine (ICE) vehicles are expected to gradually transition to electric-powered vehicles by 2026, according to Hernández.
Guanajuato, which is responsible for a quarter of Mexico’s total light vehicle production, has 46 industrial parks, with the automotive industry playing the most important role in the creation and development of these facilities. The triple helix model has played a key role in supporting the growth of the region’s automotive industry, says Hernández, so it is critical that all three pillars understand the needs of the other players.
Guanajuato also has an attractive talent pool, with over 6,000 engineers graduating every year from numerous public and private universities with degrees compatible with the automotive industry. This highlights the state's commitment to investing in the talent necessary to develop the region’s automotive sector.