Mexico at a Crossroads: Protagonist or Supporting Character?
As the world continues to move toward a more sustainable future, the demand for electric vehicles (EVs) has grown significantly. Mexico, with its vast reserves of lithium and a strong manufacturing base, has the potential to become a protagonist in the global electromobility transition. However, as with any major industrial transformation, significant challenges must be overcome, including addressing the Industry 4.0 paradigm shift, completely reevaluating the manufacturing process to build EVs and educating consumers. Fortunately, the Mexican government has shown willingness to support the shift towards electromobility, which bodes well for the country's prospects, agree industry leaders at Mexico Automotive Summit 2023.
"Mexico's automotive sector stands at a crossroads, as it possesses all the necessary qualities to emerge as a leading regional or even global hub. However, to achieve this goal in the short to medium term, Mexico needs to stimulate domestic demand for EVs so companies can confidently make significant investments to scale up production with economies of scale,” says Isidoro Massai, CEO, Giant Motors, JAC.
Mexico has a unique opportunity to emerge as a prominent player in the global electromobility transition, given its various strengths. First, the country boasts a robust domestic market that presents a significant opportunity for EV sales. Furthermore, Mexico has a historic reputation for great manufacturing competitiveness, which, coupled with low manufacturing costs and high-quality labor, positions it favorably as a potential EV manufacturing hub. Mexico's proximity and status as the most important commercial partner to the US also provides it with a strategic advantage. However, despite these strengths, most of Mexico's infrastructure is designed for internal combustion engine (ICE) vehicles. It is, therefore, crucial for Mexico to adapt to the rising demand for EVs and maintain its privileged status as a manufacturing powerhouse.
The transition to electromobility is not just about building a different type of vehicle, but rather a complete reconfiguration of the manufacturing process. The EV has qualities that “make it more similar to a high-tech gadget than a traditional car, and this means that companies will need to integrate new technologies like AI, IoT and IT,” says Jorge Vázquez, R&D Head Mexico, ZF Group. The challenge lies in the fact that the traditional auto industry may not be familiar with these technologies, and companies will need to invest in their talent to ensure that they are prepared to use and maintain them. The paradigm shift toward Industry 4.0 is happening globally, and some companies have already begun the transformation process. In the last seven to eight years, there has been a significant shift in companies' R&D budgets as they look to leverage and integrate new technologies to build EVs rather than combustion cars, says Massai. Therefore, it is crucial for Mexico to invest in the necessary infrastructure, workforce development and technological advancements to meet the rising demand for EVs and remain competitive in the global market.
To detonate Mexico's EV demand, there are three key areas that need attention: consumer education, legislative incentives and the construction of supporting infrastructure. First, there needs to be a consumer education process that explains the benefits of EV use and how to use and maintain them. This would help dispel myths and misinformation about EVs and encourage more people to consider purchasing them. Second, there needs to be a legislative push that goes beyond just economic incentives. Currently, Mexico is one of the few countries that does not offer any economic incentives to buyers of EVs, and this is a missed opportunity for the government to facilitate the transition. To address this, “Mexico could learn from countries like Norway, which has already implemented successful policies and legislation to promote EV use. By copying the language of these policies and legislation, Mexico can leapfrog the learning process and speed up the adoption of EVs,” says Stefan Poltz, President of the Industry 4.0 Innovation Committee, Automotive Cluster of Coahuila.
Finally, the construction of supporting infrastructure is crucial for the success of EVs. This includes building a network of charging stations, upgrading the electrical grid to handle increased demand and providing incentives for private companies to invest in this infrastructure. To address these challenges, the government, private sector and academia are collaborating to develop a manual that records what has worked and failed in this process. By taking these steps, Mexico can become a leader in the global electromobility transition and reap the economic, environmental and social benefits of this technology. EV adoption will take time, but I hope that we will take advantage of the experience of other countries. There must be more investment in R&D and cooperation with the government.
The Mexican government's commitment to accelerating its efforts to reduce emissions and achieve electromobility goals has been evident in recent years. Minister of Foreign Relations Marcelo Ebrard has emphasized Mexico's responsibility to reduce emissions as one of the world's largest economies. This commitment has been further supported by the global shift toward EVs, with major automakers like General Motors, Ford and BMW announcing ambitious plans to phase out gas-powered vehicles and invest heavily in electromobility. Mexico has a unique opportunity to become a key player in the global EV market, and recent developments in the country indicate a clear shift towards achieving this goal. As reported by MBN, Mexico aims for 35% of its energy production to be green by 2024, which aligns with North America's decarbonization plans. "With the government's willingness to support the shift toward electromobility and the country's potential to become a major player in the EV market, Mexico is well-positioned to lead the way in the transition to a more sustainable future,” says Juan Cerdeira, General Manager, SEV.