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POSCO to Build EV Motor Plant in Mexico

By Alfonso Núñez | Wed, 01/12/2022 - 11:05

South Korea-based POSCO International Corp. has announced the construction of a US$43.6 million plant in Mexico to manufacture EV motor cores and enter the expanding North American EV market.

 

“We decided to make this investment to target North America, the largest market for electric vehicles, and strategically prepare for the US government’s green mobility policy,” said representatives from POSCO International in a company statement. The plant will be built in Ramos Arizpe, Coahuila, an important hub of auto manufacturers housing plants from Fiat Group, General Motors and Chrysler, amongst others.

 

The decision comes after US President Joe Biden put forth many sustainable policies, including a large focus on reducing carbon emissions by driving forward a transition to EVs and hybrid models. President Biden’s proposed “Build Back Better” Bill includes tax breaks for the purchase of EVs manufactured by US unions, which caused controversy as it would severely affect Mexico and Canada’s automotive exports. But as evidenced by POSCO International’s plans to build a plant in Mexico that would not benefit from Biden’s proposed tax breaks, many doubt the bill will be approved by the US Congress in its current state. Once the current dispute regarding rules of origin is resolved, all participating parties will continue to reap the benefits of the agreement.

 

“We will use our Mexican production subsidiary as an outpost for the production of electric vehicle components. By combining our years of overseas investment experience, POSCO’s technological competitiveness and material capabilities, we will play a key role in realizing the group’s carbon neutrality goal,” POSCO officials said.

 

The construction of the plant will begin in June of this year and is expected to finish during the second half of 2023. Initially, the plant will have a production volume of 300,000 units per year, which is set to increase to 1.5 million by 2030 when the investment by the company is expected to grow to up to US$136 million to create a production outpost.

 

POSCO International chose Ramos Arizpe due to US restrictions on electrical steel products. Mexico, POSCO International believes, will provide competitiveness to penetrate the North American region as all three countries have committed to expand the use of EVs or hybrid models.

Photo by:   Unsplash, Ralph Hutter
Alfonso Núñez Alfonso Núñez Journalist & Industry Analyst