After being snubbed by Tesla, President Claudia Sheinbaum of Mexico announced plans to create an affordable electric car made in Mexico to compete with imported Chinese vehicles. The decision was motivated by the high cost of Teslas, which start at around $30,000.
President Sheinbaum stated that her government aims to collaborate with Mexican companies and researchers to produce a compact, affordable electric car. She cited examples of electric vehicles from China and India, which are already flooding into Mexico.
However, several challenges need to be overcome before this plan can become a reality. Firstly, Mexico does not have any domestic lithium production, which is essential for battery production. Although there are clay-encased lithium deposits in the north that were nationalized by the previous administration, Sheinbaum believes that extracting them is currently not commercially viable.
Another issue is the high electricity rates in Mexico, which could make it unfeasible to charge vehicle batteries at home. The country’s power grid is also struggling to keep up with current demand, making widespread at-home charging of vehicle batteries an additional challenge.
Sheinbaum did not disclose what sales price Mexico was aiming for its ultra-small electric car but acknowledged that competing with the low prices of imported Chinese cars would be difficult. A tiny mail-order Chinese electric car is currently available in Mexican discount stores for around $1,000, making it a challenging task for Mexican manufacturers to compete with this price level.
The announcement by President Sheinbaum comes after Tesla’s CEO Elon Musk announced that the company had “paused” plans for a plant in Mexico due to potential auto tariffs under Donald Trump’s administration. This move has led to stiff competition among Mexican governors to get the facility, highlighting the significance of foreign investment in the country’s automotive sector.
In summary, Mexico’s plan to create an affordable electric car made in Mexico is ambitious but faces significant challenges related to lithium production, high electricity rates, and the competitiveness of imported Chinese cars. The success of this project will depend on finding solutions to these problems and creating a favorable business environment for domestic manufacturers.
Source: Fortune
