BMW to put US$865mn into EV, battery manufacturing in Mexico

German car manufacturer BMW is preparing to invest 800mn euros (US$865mn) to expand its plant in San Luis Potosí, Mexico.

The investment includes US$550mn for a new facility where high-voltage batteries for electric cars will be assembled. It will be built at BMW's 300ha complex in Villa de Reyes municipality, which currently produces three models that are supplied to 74 markets worldwide.

The announcement was made on Friday during an event led by Mexican President Andrés Manuel López Obrador and BMW officials, who stated that this is part of the company’s plans to scale up its production of electric vehicles.

“By 2025 we ought to have more than 2mn fully electric vehicles on the road. Before 2030 our aim is to have at least every second BMW being a fully electric vehicle. To achieve these targets, we are now investing in our production network worldwide,” said BMW board member Milan Nedeljković.

He added that the 800mn euros will be invested over the next four years to enable production of the “Neue Klasse” electric vehicle line in Mexico starting in 2027. 

The adjacent battery manufacturing facility will supply the batteries for the vehicles that roll off the line in San Luis Potosí. 

This will benefit the company's exports to the rest of North America as, under USMCA rules, 75% of a vehicle's parts must be made in the region in order for it to qualify for tariff-free status.

Foreign companies from Asian and European countries have recently expressed interest in investing in Mexico as part of their own nearshoring strategies. According to Germany's ambassador to Mexico, Wolfgang Dold, this interest for German companies has been boosted by the war in Ukraine. 

“We have noticed a few things: the dependance on supply from Russia and a concentration of investments in some specific countries. In this sense it is very logical to search for new places to invest who may have the capacity to receive German industries, and this is part of a restructuring of foreign investments,” he said during a press conference on Friday.