Mexico to build own electric car

Date: 23 FEB 2017posted by Car Rentaledited by WinX

This most recent American Presidential election has put Mexico on its toes. During Donald Trump's campaign, he has targeted Mexicans as one the many reasons for their woes in their economic disparity - the Mexicans have been an economic leech by stealing American jobs by luring American companies across the border. The sector to have seen the most damage from Donald Trump's rhetoric has been the auto manufacturing industry. Even before his inauguration, he was on twitter, actively threatening auto manufacturers producing cars in Mexico, a huge tariff for importing finished goods from south of the border. Mexico has lost billions of dollars from investments that would have went to producing new factories and jobs. Ford had cancelled a $1.6 billion investment in Mexico and opted to reinvest in Michigan instead. But Trump isn't the only influential billionaire to affect Mexico's auto industry, and also in a positive way. Carlos Slim, a Mexican magnate worth over $50 billion wants to revitalize Mexico's auto industry and prove that Mexico can still do well without American investments. The goal of his newly formed partnership with Grupo Bimbo - the world's largest bread company, is to design and build a 100% Mexican electric vehicle.

Slim and Bimbo's new electric car will be designed by Giant Motors and will be manufactured in a joint venture with Moldex. Giant Motors expects a complete working prototype late this year and be able to market in 2018. The company will also be seeking government funding and collaboration since the electric car will promote an environmentally-friendly alternative to combustion engine vehicles. And unlike their American counterparts, the model of their first electric car will be different than the luxury-first branding strategy. "We are developing a new Mexican electric vehicle that will not only be assembled [in Mexico], but also designed and modeled to meet the needs of Mexican consumers," Elias Massri, the CEO of Giant Motors for Latin America. While this investment is very patriotic, analysts have differing opinions on the success of this project. Experts believe the concept of a 100% Mexican electric vehicle is viable since the Mexican auto industry has benefited from the years of American investment. After decades of building cars from foreign companies such as GM, Toyota and Volkswagen, Mexico now has the talent and expertise for homegrown engineering know-how and a skilled labor force from the industry to draw from. The fact that the partnership is focusing on electric vehicles also shows a level of Mexican innovation, that Mexico is not internationally known for. The electric vehicle market and technology are still considered by some experts to be in its infant stages since there are still many major hurdles to overcome. While some of the leaders in this industry such as Samsung SDI and Tesla are capable of producing batteries that can compete with a traditional combustion engine vehicle's driving range, charging time is a major factor for some consumers.

Using a gas fueled car as a benchmark, the combustion engine vehicle can fill up at a gas station within 15 minutes, while using a super charger will require at least 30 minutes for 80-90% of that driving range, and 10 hours using a regular outlet for a full charge. And because of the slow rate of adoption, electric vehicles tend to be more expensive than a combustion engine vehicle and most markets require some sort of incentive to boost sales and adoption. Another hurdle for this enterprise would be Trump's administration and their stance on imported goods. While there has been no official bills or executive orders in progress which reflect Trump's twitter's threats, experts have speculated the Trump administration could possibly impose a 20 percent tariff on all goods imported from Mexico. And this would hurt the project's sales since 80 percent of all Mexican-made vehicles are currently exported to the United States. If the sales were to be localized and the main consumer market to be the Mexican market, it would also require a large charging infrastructure investment to make it possible for the adoption of electric vehicles in the Mexican market. And just like most countries, the market may require incentives from the government to help subsidize the cost of the electric vehicle.

A BMW report on the state of electric vehicles in Latin America in 2015 found that consumers tended to avoid electric cars since they were expensive and charging stations were not reliable, the same concerns which affect almost every market. The only market to have seen wide spread adoption of the electric car is Norway. The country is on pace to have electric cars overtake combustion engine cars in new car sales by the end of this year. The reason for the success is due to the high average income, extremely generous tax breaks in an otherwise very expensive auto market which include regulation costs and government sponsored incentives. While many of these hurdles and questions are unanswered, this is not Slim and Bimbo's first joint venture in electric cars. The pair have already collaborated on an electric delivery truck, designed and built by two of Slim's Mexican companies, Giant Motors and Moldex, and is in the process of being able to be sold to large food companies operating in Mexico, such as Nestle. Another benefit to this joint venture would be Mexico City's Hoy No Circula ("No-Drive Days") program. It is an anti-pollution initiative that bans vehicles from driving one day a week based on the last digit of their license plate. The only vehicles exempt from this rule are electric vehicles and trucks. And for some businesses that require a vehicle that can be driven daily without restrictions, electric vehicles are an ideal option. Some experts believe taxi companies in the capital city will be the first to adopt Slim's electric car and the consumer market to follow later.

While Trump's administration has floated the idea of renegotiating or withdrawing from NAFTA, Mexico already has free trade agreements with 44 other countries. Industry leaders are not sitting around idling and waiting for the Americans to decide what to do, but has already proactively courting relationships with other export markets, including the world's second largest market, China. Last week, Slim's Giant Motors announced a $215 million USD alliance with Chinese auto maker JAC Motors to manufacture vehicles in Mexico's central stated of Hidalgo. It is possible Giant Motors will be taking notes from the Chinese automaker on producing a low-cost, short-range electric car instead of a luxury supercar like the American Tesla or Lucid Motors. Slim could follow the model similar to China's where the higher than average adoption rate of electric cars is due to cost-effective, short-range locally manufactured vehicles. Vehicles that may not be able to take you on a cross country trip, but will be extremely cost-effective for a person's daily commute.

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