EVs Expected to Drive Electricity Demand

During the online event Cumbre de Negocios 2020 held earlier this week, Hans Kohlsdorf, Founder of Energy to Market (E2M) said electricity demand will increase in Mexico in the coming years as more electric cars reach the roads. CFE is not prepared for this new demand, says Kohlsdork, and as a result, the government will have to boost public and private investments.

In an interview with MBN, Vicente Aparicio, Commercial Director in Mexico of Iberdrola, said demand for energy in the automotive industry will double over the next 15 years. He said "We live in an ever-more electrified world, a reality we need to be aware of and which the automotive industry cannot escape”.

According to INEGI, there were 748,501 new vehicle sales between January and October 2020. During the first 8 months of 2020, 14,073 EV and hybrid vehicles were sold, meanwhile, in the same year period of 2019, there were 14,235 sales. This data shows the strength of the industry because in 2020 the sales only decreased by 1.14 percent.

This shows that an increasing number of people prefer some form of electrified vehicle, which takes less of a toll on the environment. Iberdrola understands this demand and is playing an important role in the implementation of charging stations, which is becoming a staple in the automotive industry. Many of these developments will only be successful if both the automotive and energy sectors work together to make them a success.

Kohlsdorf said to El Heraldo that if CFE wants to generate more electricity, the company should buy more plants, otherwise it will not be possible. He also mentioned the government’s policies could be counterproductive and that CFE does not have the capacity to supply a higher energy demand.

In an interview with Mexico Business News, Hernán González, Partner at Norton Rose Fulbright, said it is necessary to find the best balance for collaboration between the state and the private sector and that the legal framework is already in place to make this happen. The government continues to own key infrastructure and is able to control the energy sector to an extent. However, it is merely a matter of time before the government realizes the best way to lower prices is through private sector involvement, said González.

In an interview with MBN, Kohlsdorf said the global trend toward clean energy generation and emission reductions has changed consumer preferences and that they are increasingly buying hybrid and electric cars. At the local level, city governments from Paris, London, Mexico City and Queretaro are already initiating the transition to "zero" emissions transportation.

Kohlsdorf mentioned that Mexico was the world’s sixth-largest automotive manufacturer in 2019, with a production of almost 4 million cars, while auto part production reached a value of US$90 billion. This industrial platform will be affected by the transition to electric cars and many manufacturing plants will have to close or decrease their production. For Mexico to benefit from the electrification trend, it will have to attract new technologies that are critical for electric vehicles, including batteries, regenerative brakes, electric motors and onboard electronics, while at the same time attracting hybrid and electric platform manufacturers to the country.