This is an excerpt from an exclusive article from the 2018 edition of Mexico Automotive Review that will be launched on Sept. 12, 2018 at Mexico Automotive Summit. Register now to get your tickets to the event and get a copy of our latest edition.
Jorge Martínez is the Director General of 100-percent Mexican OEM Zacua. The company launched its full-electric M2 coupé and M3 hatchback models in 2017 and opened and assembly plant in Puebla in 2018 with the goal of producing 100 units for that year. The company plans to triple its output by 2020.
Q: What spurred a parking lot management company like COPEMSA to launch an auto OEM and develop an electric vehicle?
A: From a business standpoint, we realized that due to the time required for electric vehicles to recharge, charging infrastructure could only be located in houses, office buildings or parking lots — places where people leave their cars for long periods. COPEMSA manages a large parking infrastructure spread across all of Mexico’s metropolitan areas, which gives us natural access to this business opportunity. Additionally, we believed this would be a good opportunity to reach out to future clients. Approximately 5 million vehicles circulate in Mexico City, plus close to 2 million more that come from the Mexico City metropolitan area. COPEMSA’s parking lots register around 7 million entries per month, which means we have access to practically the entire client base that could potentially buy a new car. This gives us an insight into what car owners are looking for and why.
Looking at the problem subjectively, we were not happy living in a country without its own OEM, particularly when the country has a strong automotive focus; a quality, efficient and well-structured supply chain and the necessary talent to develop its own technology. Our inconformity allowed us to bring a different and innovative proposal to the market.
We were initially hesitant to launch our vehicle because we were not sure what reaction we would get from the public. Zacua would be a new brand in a highly competitive market, a Mexican brand and it would focus on electric vehicles; our proposal was one paradigm shift after another. However, we were pleased to find that the market was interested in our proposal. Clients were attracted to our designs, they agreed that the car’s capabilities could help solve the city’s mobility issues but beyond that, they liked that it was a Mexican vehicle.
Q: Considering the unsuccessful previous ventures of Mexican OEMs, how are you ensuring Zacua’s success in the automotive market?
A: We do not want Zacua to be a mass-market brand. Our product targets a changing market that in the last years has been willing to pay more and even relinquish some comfort in favor of an innovative and more socially conscious offering. That being said, we had to find a way to make the project viable and bankable.
We spent years looking for the right partners to develop our technology and engineering, enabling us to create a proposal that was ready for the global industry. Although we have found these collaborators, we are still pacing ourselves to ensure our success in the market. After the M2 and M3 release in 2017, we announced we would market 100 units in our first year, 200 in the second and 300 in the third. We had a slight setback in our manufacturing output due to the Sept. 19, 2017 earthquake that impacted our operations in Puebla and forced us to move from the city center to the Puebla 2000 industrial park. But commercially speaking, we expect to beat these targets.
Q: How attractive is Mexico as an engineering destination and what can national players do to improve this image?
A: We have all the elements in place to advance as an automotive design and engineering destination. There is a strong and fully articulated supply chain, supported by quality operations and capable technical and engineering talent. We are also at the right time to make this transition and the heat we have been receiving from US President Donald Trump should encourage the country to reflect on its current capabilities and lessen its dependence on low-cost manufacturing activities.
Big national companies such as Grupo Carso and Bimbo are already investing in the development of a Mexican automotive industry and that will only incentivize more players to participate in the market. Moreover, as automotive technology moves toward alternative motorization, the technological barriers that prevented companies from participating in the supply chain are removed. Internal combustion engines are overly complex and require the combination of several systems and technologies. Meanwhile, electric, hybrid and fuel-cell systems are simpler and invite more companies to participate in their development other than the big OEMs and Tier 1 suppliers.
As the Vehicle Sponsor of Mexico Automotive Summit 2018, Zacua will showcase one of its models at the event. Register to find out more about Mexico’s electric vehicle proposal.