Mexico Lacks EV Battery Output Three Years After Lithium Law

Nearly three years after Mexico enacted the nationalization of lithium, the country has not produced lithium batteries for EVs, and the automotive supply chain has not integrated domestic lithium into production plans, say industry insiders. The decree, signed on Feb. 18, 2023, had the stated goal of reserving lithium for state use and launching a national EV battery industry.

The policy aimed to ensure that lithium-derived value remained in Mexico, primarily through battery manufacturing for the automotive sector. However, no commercial lithium extraction has taken place, and no battery production projects have materialized, says Eric Ramírez, Latin America Director, Urban Science, to Expansión. 

“The government’s message was that manufacturers would eventually buy batteries made in Mexico, but there has not been a single unit of lithium extracted from domestic deposits,” says Ramírez. “It is viewed as a very long-term bet. The deposits exist, but many years are still needed before they can be developed into something usable.”

Interest in Mexico’s lithium potential peaked in 2019, when Mining Technology identified Bacadéhuachi, Sonora, as hosting one of the world’s largest lithium deposits. That momentum slowed as it became clear that Mexico’s lithium is largely found in clay, which requires different and more complex extraction and processing methods than brine-based lithium used in most global production.

While Mexico reserved lithium for the state, other countries expanded battery manufacturing. China now assembles between six and seven out of every 10 lithium batteries worldwide, according to EV Volumes data. Ramírez says that China’s position reflects more than two decades of coordinated public and private investment. “Even China, with a 25-year head start, still struggles to achieve low-cost competitiveness,” he adds. “Mexico would only have the raw material, and even that requires a full technological ecosystem.”

Plans for an electrification hub in northern Mexico, centered on Sonora and supported by Nuevo Leon, were also tied to Tesla’s proposed Gigafactory. The project, announced in 2022, has not been formally canceled but is no longer considered active by the industry.

Zacua, a Mexican automaker founded in 2017 to develop the country’s first EV, highlights batteries as a persistent bottleneck for Mexico’s EV industry. Nazareth Black, CEO, Zacua, tells Mexico Business News that even before the trade war, EV manufacturers struggled with limited financial and infrastructure incentives and continued dependence on imported components, particularly batteries and electric motors. The absence of domestic battery production has restricted technology access and kept EVs concentrated in a small market segment, underscoring the challenge of scaling EV manufacturing in Mexico.

In the third quarter of 2025, Mexico sold 24,498 low-emission vehicles, up 49.6% year over year, according to EMA data. Plug-in hybrids led growth with 13,592 units, while EVs reached 10,906. During the first nine months of 2025, the market reached 68,321 units, driven mainly by plug-in hybrids, which accounted for 37,673 units, compared with 30,387 EVs. The cumulative total stands at 176,700 units, with a similar share between EVs and PHEVs, confirming slow but sustained growth in the country’s electromobility market.

Global conditions have further weakened prospects. The European Commission recently proposed easing its 2035 ban on internal combustion engine vehicles, reflecting slower EV adoption. Gerardo Gómez, Country Manager, J.D. Power Mexico, says that Mexico’s opportunity depends on renewed global momentum. “There is a cooling in EVs, but if regulations or incentives change, Mexico could re-enter the discussion,” he says.