GREEN MACHINE

Mexico 2021 | INDUSTRY & AGRICULTURE | FOCUS: ELECTRIC VEHICLES

With an already strong market, Mexico is ideally positioned to take advantage of the increasing demand for electric vehicles, especially locally.

Mexico represents one of the world's largest auto manufactures. Chrysler, Ford, and General Motors have all been operating in the country for nearly a decade, and other auto giants such as Volkswagen, Nissan, and Toyota have also opened factories. Thanks to some of lowest costs of labor in all the Americas, the industry is expanding rapidly, especially in states like Aguascalientes and Guanajuato. With an increasing number of regions and countries implementing bans on the sale of conventional petroleum cars, Mexico and the many companies operating in the country are already ramping up their production of electric vehicles and strengthening existing supply chains and creating new ones.

The country is aiming to reduce CO2 emissions by at least 50% from 2000 levels by 2050 and boost renewable energy production by 35% by 2024. In Mexico City, for example, new diesel vehicles will be banned starting in 2025, joining the ranks of Paris, Athens, Rome, and Madrid. The goal in Mexico City is to lower emissions by up to 30% from typical levels. Wider uptake of electric vehicles, for both public and private use, will be key to the government's efforts. In the metropolitan area of Mexico City alone, nearly 30% of all daily travel, or 6.3 million trips, is by private vehicle. Just over 60% of trips are taken on low-capacity public transport means, such as vans, minibuses, taxis, or suburban buses. Just 8% of daily travel is taken on the city's mass transit systems, which include the trolley bus, light rail, metrobus, and metro. Around 2.5% of trips are made on motorcycles or bicycles.

A relatively inefficient public transportation system has taken its toll on the city: not only have the millions of vehicles on the road contributed to longer and longer commuting times, air pollution levels have continued to increase in the capital, where particulate matter concentrations frequently sit at unhealthy levels. In an effort to both combat pollution and achieve its climate goals, the government has offered an array of incentives to electric or hybrid vehicle owners, such as emission control verifications and exemptions from certain local taxes. Other factors are making owning a traditional vehicle less hassle-free; in addition to rising prices for gasoline, certain cities in the country have implement pollution alerts that, when active, prevent vehicles from entering certain parts of the city or traveling altogether at selected times.

These efforts have resulted in increased sales for electric vehicles. In 2018, the country saw a 68% year-on-year increase in electric vehicle sales, and in 2019 there were nearly 19,000 hybrid or electric vehicles on the road. The country currently has a large and growing electric vehicle market. Among the most important electric vehicle producers in the country are Nissan, Tesla, BMW, General Motors, Renault, and Porsche, and the most popular models being driven in the country are the Renault Twizy, Nissan Leaf, BMW i3, the Chevy Bolt and various Tesla models. Mexican manufacture Zacua's namesake electric vehicle, the Zacua M2, is also among the most popular electric vehicles in the country.

In a sign of the growing popularity of such vehicles, in late 2020 Ford announced it would speed up its transition to electric manufacturing in Mexico. The company is increasing production of the electric version of its F-150 pickup truck, as well as beginning production on a yet undisclosed battery-powered model at factory in Cuautitlan. That same factory is also the exclusive producer of Ford's Mach-E, an electric Mustang SUV, of which the company currently expects to manufacture around 50,000 per year. The country is also picking up pace with other brands as well. While production for Toyota vehicles declined in both Canada and the US in 2019, production in Mexico actually increased by around 48,000.

While the country is indeed moving in the right direction and incentives are growing, some hurdles remain. On a broader level, while the government is encouraging private citizens to purchase electric vehicles, it lacks a strategy that will see the altogether replacement of existing fleets dependent on fossil fuels with electric ones. If and when a plan is put into place, regulatory stability will pose a challenge as well. Throughout Mexico, there are also a limited number of charging stations. While there are around 900 stations currently operating, uptake has been slow. BMW, however, has invested in six fast-charging stations throughout the country, though many more are still needed. Perhaps the largest hurdle to widespread adoption is price. Though the price of electric vehicles has steadily fallen in recent years, in Mexico they average some MXN100,000 more than gasoline vehicles, rendering them inaccessible to a majority of Mexicans.