MEXICO CITY — Following a lack of interest from Tesla, the new administration in Mexico has committed to developing an affordable electric vehicle designed and produced in the country, aimed at challenging Chinese imports. President Claudia Sheinbaum expressed that Tesla’s models, especially the Model 3 priced around $30,000, are too costly for Mexican consumers.
Earlier in July, Tesla CEO Elon Musk mentioned that the company had suspended plans for a manufacturing facility in Mexico due to concerns regarding potential tariffs raised by former President Donald Trump. In light of this, Sheinbaum’s government plans to unite local companies and research institutions to create an accessible and compact electric vehicle. She highlights the intent to harness local ingenuity, emphasizing the goal of establishing production chains that would ensure the vehicle is fully manufactured within Mexico.
Sheinbaum pointed to the influx of electric vehicles from China and India into the Mexican market, particularly noting the surge of small electric motorbikes flooding the streets. However, she expressed concerns regarding safety as these motorbikes, commonly used by multiple passengers, pose risks.
The initiative, however, is fraught with challenges. Currently, Mexico lacks domestic lithium production, which is essential for electric vehicle batteries, as well as sufficient battery manufacturing capacity. Additionally, high electricity costs for consumers could hinder the project. Although there are lithium deposits in northern Mexico that were nationalized previously, Sheinbaum stated that current mining methods for these resources are not economically feasible, indicating production would be a longer-term goal.
Home battery charging may become a significant concern as well. While Mexico offers subsidized electricity for low usage at about 10 cents per kilowatt hour, any consumption above a minimal threshold incurs steep rates. This minimal usage is only adequate for basic household needs such as lighting and appliances. Furthermore, the country’s aging power infrastructure struggles to meet existing demand, complicating the potential for widespread home charging of electric vehicles.
Sheinbaum has not provided a specific target for the price of the proposed compact electric car, though this could be a significant hurdle. Cheap electric models from China, some priced around $1,000, present fierce competition that could challenge Mexican manufacturers to offer a viable alternative.
The disappointment over Tesla’s decision to defer plans for a Gigafactory in Nuevo Leon earlier in the year has left ripples across the state, sparking fierce competition among local governors striving to provide incentives for the plant. Musk has indicated that the future investments in Mexico depend on the unfolding political landscape, especially with concerns over tariffs on vehicles manufactured in the country.
The outcomes of these initiatives remain uncertain as Mexico endeavors to carve out a space in the electric vehicle market, spurred by both local ingenuity and global competition.
