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News Article

Mexican Industry Must Keep Up with Electrification Trends

By Antonio Gozain | Tue, 11/09/2021 - 14:15

You can watch the video of this presentation here.

Mexico has 120 years of history in the automotive industry and has managed to become a cornerstone when it comes to ICE vehicle global production. However, to remain a key player at the international level, the country must transition to electromobility, says Nazareth Black, CEO, Zacua.

“Electromobility is inevitable and necessary. In Mexico, 15,000 people die every year due to respiratory diseases directly related to car emissions. Electrification has become a major global trend and Mexico should transition as soon as possible to avoid losing ground in the global industry,” said Black at the International Mexican Automotive Industry Congress (CIIAM), an event organized by INA, in collaboration with Mexico Business.

EVs have become the core of the ambitious sustainable development goals (SDGs) of OEMs across the world. Over the last two years, many light-vehicle manufacturers have announced and updated their goals regarding electrification and the role that EVs will play in their long-term strategies. As Elías Massri, CEO of Giant Motors Latinoamérica told MBN, “electrification is not coming; it is already here. Globally, there are more than 3 million vehicles powered by alternative energy sources and 75 percent of them are electric.”

The electrification trend is pushed by customers rather than by companies themselves, said Black. “The new user is more demanding, digital, has environmental awareness, feels responsible and is willing to pay for EVs.” Current customers are different and have constant communication with OEMs, she said. “They are no longer satisfied with consuming; they want to be part of the creation of products. Users have become the trigger and a guide at the same time.”

OEMs are gradually changing their business model from solely being automakers to becoming integral mobility solutions providers. Companies in all industries are focusing on complying with the UN’s 17 SDGs. In the auto sector, these goals are closely related to electrification, which is set to become the pillar for the rest of the SDGs to be accomplished. Current times demand intelligent, sustainable mobility, with less cars but more intelligent vehicles on the street. The first step to accomplish this is the massive production of EVs, said Black.

Zacua, a Mexican OEM focused on EV development, set itself the goal of producing the first 100-percent Mexican-supplied vehicle in history, said Black. The company started production in the country in 2018, the same year it released its first two models, the M2 and M3. Both models are manufactured at Zacua’s facilities in Puebla.

Electrification creates a considerable amount of opportunities and challenges, but for EVs to success in Mexico, evolution, innovation, reorganization and a mindset shift will be required, said Black. “(Decision-makers) need to have a digital mindset to understand what software they are acquiring and why. Our industry has to evolve quickly through innovation. There are many parts that will no longer be required in the future, businesses will have to adapt,” she said.

Sales of electrified vehicles in Mexico continue to gain strength despite the pandemic. As a percentage of total vehicle sales, electrified vehicles represented only 0.26 percent in 1Q16. Only five years later, in 1Q21, they represented 3.81 percent of total sales with expectations for over 5 percent in 2Q21. NPHVs account for most of the sales, followed by PHEVs and then BEVs.

An entire ecosystem, from the supply chain to chargers on the streets, is needed to make EV production a mainstream reality in the country. “There is a unique opportunity in Mexico and the challenge is to collaborate to create an ecosystem, capable of efficiently supply the EV industry and keep the country moving forward,” said Black.

Antonio Gozain Antonio Gozain Journalist and Industry Analyst