Sheinbaum confirmed on Friday that Mexico is building a series of small, cheap EVs that are expected to challenge those made in India and China. The country already has several prototypes. Contact online >>
Sheinbaum confirmed on Friday that Mexico is building a series of small, cheap EVs that are expected to challenge those made in India and China. The country already has several prototypes.
"We are going to generate supply chains so that everything that is in the electric car is manufactured in the country and we import as little as possible," Sheinbaum explained. The move comes as Mexico looks to wean off Asian imports while securing a domestic supply chain.
The electric car, called "Olinia," is one of 100 key priorities Sheinbaum will pursue as President. She explained that an affordable EV will help boost adoption while making transportation safer in the region.
Although she didn''t specify which companies would build the new models, Sheinbaum said the plan is for Mexican automakers to work together with researchers to launch multiple models.
Companies in Mexico have been making "electric motors for a long time," she said, adding, "so the idea is to bring them together with Mexican researchers so that they can assemble this electric vehicle."
It seems they have the expertise and a cost effective environment so they will be able to manufacture at cost that will mean it makes little sense to import from Asia. Shipping costs on low cost cars are a much bigger factor than on high cost cars.
Chinese EV makers, like BYD, are quickly gaining market share in the region with low-cost models. BYD''s Dolphin Mini (Seagull EV in China) starts at under $20,000 (358,800 pesos) in Mexico.
BYD wants to sell 100,000 EVs in Mexico by next year. This year, it plans to hand over 50,000 vehicles to customers in the region. By the end of 2024, China''s leading EV maker is also expected to announce the location of its massive new manufacturing plant in Mexico.
Kia, BMW, Stellantis, and others all plan to build EVs in Mexico as the region becomes a hot spot for electric car production. Mexico hopes that building cheap EVs domestically will help reduce its reliance on imports from China.
Peter Johnson is covering the auto industry’s step-by-step transformation to electric vehicles. He is an experienced investor, financial writer, and EV enthusiast. His enthusiasm for electric vehicles, primarily Tesla, is a significant reason he pursued a career in investments. If he isn’t telling you about his latest 10K findings, you can find him enjoying the outdoors or exercising
Politicians and auto industry groups in the U.S. and Canada have upped their criticism of Mexico, expressing concern that the country is becoming a haven for Chinese automakers trying to circumvent North American tariffs on its products.
Ontario Premier Doug Ford suggested this month that Mexico be kicked out of the Canada-United States-Mexico-Agreement (CUSMA), the trilateral trade agreement that will be up for review in 2026.
Ford said that Mexico has become a "back door" for Chinese auto part makers and car manufacturers, amid a growing perception that Mexico is allowing Chinese manufacturers to set up shop on its shores to circumvent strict tariffs imposed by the U.S. and Canada.
The U.S. and Canada penalized Chinese electric vehicles, steel and aluminum this year in a bid to combat Chinese overcapacity and shore up domestic manufacturing. Some have criticized Mexico for not matching the tariffs in solidarity with its North American trade partners, and U.S. president-elect Donald Trump has threatened to slap Mexico with additional tariffs. Mexican officials have warned that the country would retaliate.
Ford's claim about Mexico is "making the rounds in Washington, and has been for some time, that the Chinese have redoubled their efforts to find a way into North America, and they're looking at all of the opportunities [to do so]," said Flavio Volpe, president of the Automotive Parts Manufacturers' Association, during a recent interview on CBC's Metro Morning.
Trump has promised a 10 per cent tariff on all imported goods and has indicated that his administration will renegotiate the terms of CUSMA (also known as USMCA). Trump has accused China of bypassing the agreement by importing car parts into the North American market via Mexico.
Chinese electric vehicle maker BYD — like its peers Chery and SAIC — has publicly shared plans to build a manufacturing plant in Mexico, and is reportedly courting state governments for incentives (such as tax cuts and public land) that will enable it to do so. Mexico's federal government, meanwhile, has refused to offer incentives, given pressure from the U.S.
Chinese auto part companies are also setting up around Monterrey, Mexico, in anticipation that Elon Musk's Tesla will eventually build a new Gigafactory there. The project was confirmed to be on pause in the summer, with Musk saying that he would wait out the results of the presidential election to weigh the risk of tariffs by a Trump administration that he is now part of.
"One of the things that the auto industry wants is stability," said Anastakis, the professor, with automakers slowing their roll on EVs amid a downturn in growth and a bumpy political landscape.
"If there's so much uncertainty and disruption, car manufacturers are just going to pull back. They don't know what's going to happen, and that's going to have such a profound knock-on effect."
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