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The challenges and opportunities of the electric car industry in Mexico

The auto industry has recently increased its investment in the electric car industry in Mexico. Some experts predict that industry giants will invest $1.3 trillion in related technologies. Research and innovation in batteries, motors, and electric car designs will increase in the coming years.

This interest has grown in line with the human quest to stop global warming. Tesla pioneered this initiative, but other companies have already developed their models. In this context, Mexico leads the way as the headquarters of factories and assembly centers for electric cars.

The Mexican automotive industry is one of the country’s most stable and growing economic sectors. Since last year, thanks to foreign investment, the production of electric cars has increased in Mexico. Therefore, it is necessary to evaluate the challenges and opportunities of this industry.

Challenges of the electric car industry in Mexico

Although the auto industry has focused its vision on the electric car industry in Mexico, the demand still needs to grow. In other words, the business model still needs to be sustainable. The price of electric vehicles remains high, and most buyers prefer to buy hybrid cars or cars with gasoline engines.

Mexico is no exception to this phenomenon. In 2022, Mexicans bought a total of 5,631 electric cars, which represents 0.5% of the vehicles sold in total. This amount needs to be higher for a growing industry. However, this number represents a 394% increase in sales compared to 2021.

On the other hand, the best-selling electric model in Mexico was the JAC E10X. This model is the lowest cost on the market. In this sense, in the Aztec country, practicality and price prevail over luxury and eccentricities that predominate in the industry. Electric cars continue to be a luxury good in the international market.

A commitment to mass

This reality imposes a challenge for the creators of electric vehicles. With a massive and sustainable market, it will be possible to increase production. For this reason, several companies are already looking for ways to lower the price of vehicles and their production. Local initiatives can take advantage of this absence and innovate to meet it.

Innovation and technological development policies

The conditions in the electric car industry in Mexico still need to meet the market’s needs. Although the automotive sector has grown significantly in recent years, there must be a platform for collaboration between the industry, the educational sector, and government policies. This dialogue would facilitate the training of a qualified and specialized hand.

Local initiatives could benefit from this collaboration. The state must promote innovation and development of the sector from education. Thus, the country’s workforce would offer better conditions for international investment. On the other hand, the state must guarantee tax conditions and incentives to the sector.

Another area that would benefit from skilled labor is electric car charging infrastructure. At this time, the loading and transport capacity needs to be increased. This limits the number of vehicles that can be exported. The sector needs to innovate to face this particular problem.

Opportunities in the electric car industry in Mexico

Due to the geographical location and production costs, Mexico is an attractive territory to establish new production headquarters. First, its proximity to the United States and Canada put it in a privileged position in this market. Most of the factories established in Mexico export their electric cars to these countries.

At this time, several companies dedicated to producing electric cars have established a branch on Mexican soil. What projects a massive growth of the sector? Ford, Tesla, GM, VW, BMW, Stellantis, and Jetour have factories and assembly plants in Mexico. This international investment will make the market more dynamic in the coming years.

These companies seek to produce and supply to export to the United States and the Latin American region. With time and increased professionals, new local initiatives will emerge covering the electric car and mass transportation market.

Massive transport

One of the most promising markets is buses and mass transit vehicles. Many local and national governments want to invest in electric vehicles for urban areas. The companies that seek to satisfy this market represent an excellent opportunity for the sector’s development.

A promising industry on Mexican soil

As long as the government manages to meet the demands of the automobile industry, Mexico will be able to establish itself as the leading distributor of electric cars. This is due to the increase in factories and production in recent years. However, this market depends on the ability of the Mexican workforce to innovate and adapt to local and global needs.

Achieve success in the electric car industry in Mexico with AMN

If your company is linked to the automotive industry, and you want to maximize the quality of your products, do not hesitate to contact AMN Quality Solutions. Our quality, logistics, and advanced manufacturing services are the key to exponentiating your operations.

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