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News Article

Mexico's Green Vehicle Manufacturing Potential

By Andrea Villar | Wed, 09/22/2021 - 13:38

Driven by the need to reduce its carbon footprint, the automotive industry is undergoing one of its most significant transformations in many years. As supply chains undergo major disruptions, vehicle technologies evolve and consumers change their preferences, the adaptability and resilience of companies in the automotive sector has become essential for all players in the ecosystem.

According to data from the National Institute of Statistics and Geography (INEGI), during 1H21, sales of non-connectable hybrid vehicles and electric cars increased, said Elisa Crespo Ferrer, Executive President of Cluster Automotriz Regional Estado de México. Nationally, the State of Mexico had the highest number of electric vehicle sales during the first half of the year with 110 transactions. Mexico City comes in second place with 102 sales, followed by Nuevo Leon with 29 and Jalisco with 25.

Giant Motors, which seven years ago began a nationwide electrification project in the truck sector, developed the country's first all-electric truck twinned with an internal combustion engine. “Today we have almost 2,000 zero-emission vehicles on the road,” said Elias Massri, CEO of Giant Motors. For the company, however, this has not been an easy process as it started out testing lead-acid batteries and worked its way up to the lithium batteries it uses today.

In this transition, auto parts suppliers play a key role in supporting OEMs develop new technologies. “Resources are not unlimited for anyone and it is necessary to face these new challenges together and on a fast track,” said Marcelo Ortiz, Global Business Development Director of Nemak. Along with the knowledge that these two industry players can share, Ortiz said that blending their networking pool is also a big step towards listening more closely to the consumer and the entire supply chain to provide better solutions. “What has made you successful in the past will not necessarily make you prosper in the future,” he said.

The myths surrounding electric vehicles, however, are still present in the market. The mileage that such a car can achieve is one of them, Massri said. “With commercial vehicles, this is less of an issue because the driver is clear about the route, how many kilometers they will drive and where they can charge it,” he explains. Today an electric car can achieve 500 kilometers of range. Another of these misconceptions is that the lack of infrastructure makes it almost impossible to own one of these cars and, while “Mexico still lags far behind in mobility infrastructure in comparison to other countries,” the transition between increased demand for EVs and infrastructure supply will come hand in hand. Currently, most OEMs marketing such cars already include the installation of in-home charging centers, Massri added.

Circutor, a transnational company focused on energy efficiency, currently provides about 80 percent of the current market for EV charging centers in Mexico. Today, the company is also focusing on battery innovation for cars, said Monica Samudio, Country Managing Director for Mexico and Central America of Circutor.

The price of electric vehicles is also preventing many consumers from buying one. However, Massri explains, it is necessary to consider that the long-term cost of an EV is much lower compared to that of an internal combustion engine, “starting with the fact that you never have to spend more on fuel.”

A key step in this transition are hybrid vehicles, which have been the go-to option for consumers just entering this emerging market, said Oswaldo Cacheux, Planning Director of Hino Motors Sales Mexico. Currently, the Japanese-based company has established itself in Mexico as the only brand with this technology for light commercial vehicles ranging from 4.5 tonnes to 7.2 tonnes gross vehicle weight, Cacheux said. To date, the brand has sold more than 1,500 units in the Mexican market, with particular success among manufacturers and wholesalers of sweets and snacks, dairy products and logistics companies.

Under these circumstances, resilience allows companies to overcome the hurdles that electrification has brought to the market, according to Mexican electric vehicle manufacturer Zacua. Limited education regarding clean energy has not allowed the massification of EVs to accelerate. “Many people do not know how an electric vehicle works,” said Nazareth Black, CEO of Zacua Mexico. “We always approach the consumer through education to break down any misconceptions they may have.”

Andrea Villar Andrea Villar Journalist and Industry Analyst