Mexico to become EV production hub despite low local demand

Robert Besser
24 Mar 2023, 05:45 GMT+10

Amid Tesla's plan to open a $5 billion Gigafactory in the country, Mexico will soon become an electric vehicle production hub
However, such cars remain too expensive for most Mexicans and cannot be used in much of the country, due to the lack of charging stations
Under President Andres Manuel Lopez Obrador, Mexico has prioritized reviving fossil fuel production, frequently stifling investment in renewable energy sources

MEXICO CITY, Mexico: Amid Tesla's plan to open a $5 billion Gigafactory in the country, Mexico will soon become an electric vehicle (EV) production hub, even though such cars remain too expensive for most Mexicans and cannot be used in much of the country, due to the lack of charging stations.

Under President Andres Manuel Lopez Obrador, Mexico has prioritized reviving fossil fuel production, frequently stifling investment in renewable energy sources.

However, Mexico also aims to increase slaes of electric vehicles, in line with the its status as an EV production hub.

Tesla's new factory in the northern border state of Nuevo Leon will see it join General Motors, Ford, BMW and Audi as producers of EVs in Mexico, which also has at least one local EV-maker, Zacua.

Foreign Minister Marcelo Ebrard, a leading candidate the become Mexico's next president, said the government's goal is for EVs to account for half of all cars sold domestically by 2030.

According to Mexico's Auto Industry Association AMIA, EVs made up just 0.5 percent of local auto sales last year, compared with the US percentage of 5.8 percent, as stated by research firm Motor Intelligence.

Mario Hernandez, KPMG's lead manufacturing partner in Mexico, said, "There are still a number of issues that need resolving in Mexico before there's a massive influx of electric cars," as quoted by the Associated Press.

Obstacles included a lack of subsidies, high costs for installing charging devices at homes and a shortage of public charging stations, he added.

Tesla's least expensive model costs some $55,000, not including the cost of a charger, while more affordable models, such as the Nissan Leaf, costs more than $50,000, and even the two seater Zacua costs some $31,767.

According to official data, the average wage of Mexican workers is $366 per month, while the statutory minimum wage is $11 per day, meaning that most Mexicans cannot afford to buy an EV.

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