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Mexico urgently needs electromobility policy to maintain automotive leadership – study
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Mexico requires a comprehensive policy to promote electromobility to maintain its regional and global leadership in the automotive industry and meet its international commitments on climate change, according to a study commissioned by Mexican automotive association AMIA.
The study, titled “Recommendations for the national electromobility policy”, was conducted by consultancy Frost & Sullivan and contributes to a series of recommendations for a comprehensive policy that, in a joint strategy with the government, includes incentives for production and consumption, development of charging infrastructure and availability of sufficient and affordable clean energy.
“The development of electromobility has different stages that require coordinated actions, with a regulatory framework that has a robust promotion and incentive scheme that allows companies to invest in new production plants or in the reconversion and expansion of current ones, and infrastructure conditions that go hand in hand with clean and renewable energies,” said José Zozaya, CEO of AMIA, in the presentation of the study.
The Mexican electric vehicle market saw sales rise from 8,265 units in 2016 to an estimated 52,906 units in 2022, according to Frost & Sullivan, based on information reported by statistics agency Inegi, plus sales from companies such as Zacua and Tesla that are not reported.
If Mexico implements a comprehensive policy to promote electromobility, the share of electric and hybrid vehicles of total vehicle sales could climb from the 5.1% forecast in 2023 to 38.9% in 2030, reaching approximately 645,000 units, the study states.
Without such a policy, the research projects that sales of hybrid and electric vehicles would only reach about 317,000 units in 2030, which would represent around 19.1% of total vehicle sales in Mexico.
“The impact that a policy can have is clear, as is the imperative need for it to be adopted as soon as possible. To achieve these objectives, immediate action is needed, not only to increase penetration [of hybrid and electric vehicles], but so that Mexico can maintain its leadership in global manufacturing,” said Lorena Isla, Frost & Sullivan's consulting director for Latin America.
The country is currently the seventh-largest automobile manufacturer worldwide and is ranked fourth in exports, according to AMIA, which considers that a comprehensive policy such as that proposed could make Mexico the main “hub” of automotive manufacturing in Latin America.
“There are countries that are adopting more aggressive plans and if Mexico doesn’t start in the next 3-4 years it may be too late,” Isla added, warning that because 2024 is an electoral year, there is a risk that there will be further delay and any such policy would then not be implemented by the current government, but the next administration.
Mexicans go to the ballot box in June next year to elect the next president, state governors and lawmakers, with the new government taking over in October.
For the consulting firm, the strategy would ideally come from the office of the presidency or the federal government, so that all the entities involved can be aligned based on the objectives established.
TARGETS
The study, which was also shared with key government actors and legislators, concludes that, “if there is not a policy and strategy for the promotion of electric vehicles, which includes an incentive scheme that directly affects the price of vehicles, it will be difficult to achieve the emissions reduction goals and international commitments acquired by the Mexican government.”
In November 2022, the government signed a new commitment at the COP 27 climate summit in Egypt, where it pledged to reduce emissions by up to 35% by 2030 and to become carbon neutral by 2050.
The country previously signed the Glasgow Climate Pact at COP 26 in the UK in 2021, which considers a commitment to accelerate adoption of electromobility, with 100% of passenger vehicle sales to be zero-emission by 2040.
And together with the US government, an intermediate goal was set to have zero-emission vehicles account for 50% of passenger vehicle sales by 2030.
The transportation sector is responsible for around 25% of total carbon emissions in Mexico, so the transition to electromobility is a viable and efficient alternative to reduce the country's CO2 emissions, according to Frost & Sullivan.
The study projects that the incorporation of hybrid and electric vehicles in the national vehicle fleet will result in 15.8Mt of CO2 no longer being emitted in 2016-2030, considering penetration of these units under natural market growth.
“If a national policy were introduced that includes an incentive scheme, the savings in CO2 emissions could reach 26.2Mt. This would be an increase of 65.8%, or 10.4Mt of additional CO2 [savings],” Frost & Sullivan calculated.
“If it is considered that Mexico's commitment in its updated NDCs [nation determined contributions] requires a reduction of around 281Mt of CO2, a comprehensive policy to promote hybrid and light electric vehicles can contribute approximately 9.3% of Mexico's total commitment to reducing CO2 emissions," the study adds.
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