Electric Vehicle Manufacturers in Mexico: Why to Shift EV Operations Here

September 2, 2021

Automotive manufacturing in Mexico has a rich history, and the country is currently the seventh-largest producer of passenger vehicles in the world, containing manufacturing plants for some of the biggest names in the industry.

As a result of this significant growth, big manufacturers are continuing to choose Mexico as their location for producing 100% electric vehicles. In addition to low wages, Mexico has educational systems, existing infrastructure close to one of the world’s biggest automotive markets, and dense supply networks that make the country well suited for the future of automotive manufacturing.

Here are our four top reasons that you should consider shifting your EV manufacturing to Mexico.

Reason 1: Strategic Location

Mexico’s proximity to the United States has made it an attractive location for manufacturers in general, but even more so for automotive manufacturers looking to shorten U.S. supply chains.

The country’s largest automotive manufacturing clusters, where the most important auto parts are produced, are located in the states closest to the U.S. border, allowing for short transportation times to target markets and the reduction of production cost, which is cut down even further because of the tax exemptions provided by Mexico’s IMMEX program. In addition to their advantageous location, these states contain connected infrastructure already in place.

 

Reason 2: Supply Chain Changes

The push for more electric vehicles, especially in the United States, will cause notable changes to Mexico’s current automotive supply chain, but with continued foreign investment, the country will be well-equipped to handle the need for new materials and components.

Lithium-ion batteries, perhaps the most crucial component for electric vehicle production, have typically been imported from Asia, but automotive manufacturers are looking at strategies for sourcing these batteries domestically. One possible solution is lithium battery recycling plants, which are currently present in Mexico and would allow for lithium battery construction that complies with USMCA requirements. Mexico also contains abundant lithium deposits, which could lead to more domestic suppliers, and even in-house production, of electric vehicle components.

While the results of these changes are still unclear, Mexico is continuously favored by large companies committed to building electric vehicles. Thanks to the country’s many free trade agreements, geographic advantages, and the strength of the existing automotive industry, Mexico is perfectly positioned to take part in the EV manufacturing race.

Reason 3: Existing Automotive Clusters

Many of the world’s largest automotive manufacturers, such as Ford Motor Company and Volkswagen, are already manufacturing in Mexico thanks to the USMCA and IMMEX program. As a result, they have attracted supplier networks and have been instrumental in the formation of automotive clusters located primarily in the nation’s regions closest to the U.S. border.

Through economies of scale and shared resources and R&D, the clusters are helping to create regional value chains and promote growth within the industry.

Reason 4: New Skill Sets

As the EV manufacturing industry continues to expand, companies will require more workers with unique knowledge and skills. Mexico also provides manufacturers with advantages in this area. The country has invested heavily in education, with world-class universities and more annual engineering graduates per capita than the United States. Mexico is also well-known for its vocational schools, with which many companies form partnerships to provide employees with specialized training.

The already skilled workforce and opportunities for further training will ensure that manufacturing companies and suppliers moving production to Mexico will be able to find the labor they need to successfully grow their operations.

Setup EV Manufacturing with NAPS

From site selection to materials sourcing, NAPS offers a full-service Administrative and Compliance Management program. We’re ready to help automotive manufacturers ramp up their operations in Mexico while you maintain full control of production and company direction. Contact us today to learn more about what we can do for you.