The widespread arrival of electric vehicles is imminent and the Mexican automotive industry and society must be ready to participate, panelists said at the Mexico Automotive Summit 2018 on Wednesday as they reflected on the challenges and opportunities for the industry to adapt to new technologies and a new mobility industry.
“In the same way that people would not trade their smartphone for their previous phone, consumers need to try 100 percent electric vehicles to understand what they offer and why they might prefer them over internal combustion engine vehicles,” said Óscar Albin, Executive President of INA, during the discussion at the Hotel Sheraton María Isabel in Mexico City. “Change is generated by consumers.”
Albin was joined by Juan Carlos Meade, Automotive Industry Director of ProMexico; Mario Rodríguez, CEO of Arbomex; Jorge Martínez, Director General of Zacua; and Elías Massri, Director General and Chairman of the Administration Board at Giant Motors Latinoamérica.
Martínez said the government plays a key role in generating changes in preferences through incentive schemes, yet “despite a few initiatives aimed at increasing the number of hybrid and electric vehicles, the government has been rather timid and has not created a full package of incentives that includes tax deductions for both, companies and individuals.” Zacua is Mexico’s first 100 percent electric light-vehicle manufacturer.
Massri added that individuals also play a key role in spurring the change from traditional vehicles to vehicles powered solely by electric energy. “There is no better vehicle than the one that fits the needs of the country where it is being sold. For electric vehicles to take hold in the Mexican market, they need to be price-competitive with internal combustion engine cars, otherwise they will never reach the sales volumes of traditional vehicles.” Massri also acknowledged that making electric vehicles affordable for the entire Mexican market would be a team effort between OEMs, car dealerships and financial institutions. “We need to bring the entire industry on board, otherwise it will not be possible to make electric vehicles a mass market product.”
For all the advantages electric vehicles provide, Meade said that an industry transformation was bound to alter the Mexican automotive industry. “An electric vehicle has three times fewer parts than an internal combustion engine vehicle. As Mexico is the fifth-largest producer of auto parts, the production of electric vehicles is inevitably going to modify the Mexican value chain.”
Although change is inevitable, Rodríguez said that Mexican companies must make the necessary changes to adapt and continue being relevant players. “The change to electric vehicles is something that we are working on, which is why we are betting on three main pillars: vertical integration to take advantage of our existing technology and develop new solutions, agreements with research and development centers and talent development.” While Rodriguez acknowledged that camshafts might become irrelevant in an age driven by electric vehicles, he noted that the company is doing its part to venture into new areas of specialization that the industry will need, such as 3D printing, batteries and graphene.
Albin acknowledged the change in production and that it would pose a challenge for some manufacturers, but he said that new technologies also offered opportunities for the country. “Although electric cars have fewer parts, they have three times more harnesses and Mexico is an important manufacturer of harnesses.” Despite the opportunity, Albin also warned that the US could pose a challenge for Mexico to achieve this transformation. “NAFTA does not produce the vehicles that the world wants, it produces that vehicles that NAFTA wants, and right now NAFTA does not want electric vehicles. That is why the challenge is to lure new consumers in the US to electric vehicles.”
Still, Albin said that the US reluctance to use electric vehicles does not mean that Mexico cannot make the change on its own, “Ford announced that its Mexico plant in Cuatitlan Izcalli will only produce electric vehicles for the rest of the world. This is a first step for Mexico to become a producer of vehicles for the world and not only for NAFTA.”
Mexico Automotive Summit 2018, organized by Mexico Business Events, is also the launch event for the fifth edition of Mexico Automotive Review, a publication by Mexico Business Publishing.