Will Electrification Impact Mexico’s Manufacturing Operations?Sat, 09/01/2018 - 11:00
Mexico has vast experience in automotive manufacturing after substantial investments from OEMs and suppliers, as well as a strong development strategy for quality manufacturing. However, that experience has mostly been founded on knowledge regarding internal-combustion units. As the industry moves toward an electrical and autonomous future, the country will now have to adapt to the construction of vehicles that were previously nonexistent. Supply chains will change, certain suppliers will have to transform their business model entirely and quality standards will rise even further. Is the country ready for such a drastic change?
As a country, we are fully committed to the Paris Agreement and our strategy to reduce polluting emissions. This involves not only manufacturing operations but also carbon emissions from the national vehicle park. The future is electric for the automotive sector and within our “precision-shot” strategy, we have opened a specific division for suppliers wanting to participate in the electrification trend. Soon, Mexico will start manufacturing electric light-vehicle models and that will force us to move ahead in supplier development strategies for these types of components. Electrification will bring new business opportunities as demand for these vehicles grows and we must take advantage of our position as manufacturers to make the best of this new trend. As a government, we must be agile enough to support this transformation and integrate more suppliers to the production chain.
Rather than impact, the industry will see evolution. Electrification is inevitable and we are already making the leap toward these technologies with the introduction of the X-Trail Hybrid and the second generation of the Nissan LEAF. Change will come gradually, not only in Mexico but through the global industry. Our main export market is the US. That being said, Nissan is the brand that produces the most for the domestic market with 40 percent of our production for local sale. At the same time, we have the opportunity to export our production to many more countries in South America, Europe and even the Middle East. Today, we manufacture eight different engines at Aguascalientes and in the future, we may also include electric or hybrid variations. Although this still has not happened and we have not made clear plans to modify our production, we think the moment will come when it will be unavoidable.
Many of the plants already operating in the country will have to be refurbished or transformed to support the new platforms that OEMs will bring in the next 10-15 years. Technology is advancing rapidly and companies will have to adapt to new trends in robotics and artificial intelligence. At the same time, there are new developments within the vehicle industry itself that will also transform companies’ operations. Mexico has almost no participation in the manufacturing of electric vehicles and in the next 20 to 25 years, there will be fewer internal combustion engines being built. Scenarios such as this one will impact not only OEMs but also suppliers that will have to adapt to new requirements for powertrain components and lighter materials. Autonomous vehicles will also become part of the mainstream and Mexico needs to be ready to service production of these units.