Mexico is poised to become a major hub for electric vehicle (EV) production with the opening of Tesla’s $5 billion Gigafactory in Nuevo Leon. But while the government has set ambitious targets for EV ownership, challenges including the high cost of EVs and a lack of charging infrastructure threaten to slow progress.
According to the Auto Industry Association AMIA, EVs made up just 0.5% of domestic auto sales in Mexico last year, compared to 5.8% in the US. Foreign Minister Marcelo Ebrard has said that the government wants EVs to account for 50% of all cars sold domestically by 2030, including hybrids and hydrogen-powered vehicles.
However, a lack of incentives for buyers, high installation costs for home charging devices, and a shortage of public charging stations are all obstacles to the adoption of EVs in the country.
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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.”
Mexico has approximately 1,100 charging stations, primarily in major cities, according to AMIA. Evergo, a platform for EV charging stations, plans to install 4,000 public chargers in the next four years.
Tesla’s cheapest model, at $55,000, remains out of reach for most Mexicans, who earn an average of $366 a month. Cheaper models, such as the Nissan Leaf and Zacua, are also prohibitively expensive for many.
“I have my reservations that we can reach authorities’ expectations by 2030,” said Nazareth Black, CEO of Zacua. “A real government incentive scheme would be necessary to really accelerate adoption of electric vehicles.”
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While Mexico has yet to make a commitment to phase out gasoline-powered vehicles, other Latin American countries have included EV targets in their commitments under the 2015 Paris climate accords.
“There are great benefits of having an electric car,” said Pedro Corral, director of operations for Evergo. “But they are costly, and people worry about the range.”
Mexico’s EV ambitions are admirable, but they will need to address these challenges if they hope to achieve their goals. As Nazareth Black said, “A real government incentive scheme would be necessary to really accelerate adoption of electric vehicles.”