Why this is important to Wisconsin businesses: Wisconsin companies in the electric and hybrid car sector could benefit from the growing industry in Mexico.
Sales of electric and hybrid vehicles have increased considerably worldwide, especially in European countries. Mexico is following suit but faces some roadblocks.
According to data from JATO, a marketing agency specializing in the automotive sector, in the first six months of 2019, electric vehicle sales increased 92% over the previous year, reaching 765,000 units sold worldwide. Norway, the Netherlands and Sweden have the largest share of this type of car in their markets, with 37.1%, 6.5% and 4.8%, respectively.
Mexico is no stranger to the trend. According to the Mexican Automotive Industry Association (AMIA), during July 2019, the number of hybrid and electric vehicles purchased reached 2,068, which was 66.9% more than in the same month of 2018. Hybrids were the most popular vehicles sold in their sector. For several years, the hybrid and electric vehicle sector has been the only auto industry sector that has registered constant increases in its sales. Among the factors that have led to the popularity of these vehicles is the severe air pollution that has plagued Mexico City for decades.
Despite the growth, sales of this type of vehicle still represent a very low percentage of light vehicles purchased in Mexico. Between January and July of 2021, 12,408 vehicles were sold with the more environmentally friendly technology, which represents only 1.7% of the total sales of light vehicles in Mexico during that period.
While the prices of hybrid and electric cars have fallen in recent years—and they will probably continue to fall—their cost remains high relative to combustion-engine vehicles. Electric cars are for a very small market niche—and basically, one that has the purchasing power.
In Mexico, the price of the cheapest hybrid is at least $100,000 MXN ($4,844 USD), higher than that of a car with a gasoline engine of similar dimensions and characteristics, while the performance of electric cars is still much lower than that of combustion vehicles. So, for the average consumer, it is still difficult to buy a cleaner-fueled car. In addition, Mexico does not have sufficient infrastructure or adequate policies to support and guide the development of electric vehicles.
Mexico would need strategies that support and encourage the use of electric vehicles—like the Scandinavian countries and other European nations have—in order to make much progress.
There is no doubt that prices for clean technologies will continue to fall, but reaching the goal— to reduce the emission of pollutants through the use of hybrid and electric vehicles—faster will depend, to a large extent, on coordinated efforts by the government and the national automotive industry.