The electric car (EV(Market is exploding worldwide. In 2030. the International Energy Agency predicts That’s 60% of All vehicle sales worldwide will be be EVs. And the U.S. Sales declined by 8.8% in 2022 despite the drop in total vehicle sales. of According to the EVs, they grew by 65% to data Kelly Blue Book Although China and other countries have been the focus of headlines, the EV race, the biggest beneficiary of All that growth might be be Mexico.

“Mexico has unique advantages that could help solidify its position in the automaking industry amid the EV transition,” UBS’ Alejo Czerwonko, chief investment officer (CIO) for Emerging Markets Americas, and Gabriela Soni, CIO for MexicoThis is explained in a Thursday Note.

Mexico It has the world’s tenth-largest store of Which is lithium? is A key component in EV Batteries that is Commonly referred to as to As the industry’s “white gold.” Also the country’s current auto manufacturing strength, coupled with an increase in nearshoring—where manufacturers rework supply chains closer to home—after pandemic-era supply chain mishaps, is Most likely to Make it an EV Intense powerhouse the Czerwonko, Soni said future.

However the Also, the pair was careful to Beware Mexico’s EV It was a great success is It is not possible to guarantee it. “faces a long road ahead” due to One key element: A lack of it of It is essential to have an energy infrastructure to Get all the details EV manufacturing.

It is serious EV The Advantages

Mexico is It is already the Fourth-largest exporter, seventh-largest manufacturer of Cars worldwide, with a variety of hosts of big name automakersNissan, Toyota and Kia. Ford also produces the Mustang Mach-E EV at The Cuautitlán Stamping and Assembly Plant in the Cuautitlan Izcalli About 20 Miles outside of Mexico City. 

Multiple automakers recently made moves to enter the market. Mexico to Produce EVs. General Motors (GM). said It was built last year. the 2024 Blazer EV Equinox EV Ramos Arizpe is a north-facing city that houses its factory. the Coahuila state. BMW claimed that last month The company will invest $866 millions in EV Production in the country. Tesla also announced plans to build a $5 Billion Gigafactory at Monterrey (Nuevo Leon). MexicoAbout 120 miles from the U.S. border last week. 

According to local officials, the 4.200 acres is Nearly double the Size of the EV giant’s Texas facility. 

“This is a game-changer for a transition from traditional industry to an industry of the future, a green industry,” Nuevo Leon’s Governor Samuel Garcia said Friday, adding that it could lead to His state has received $10 billion of total investments the Coming years Bloomberg reported.

Czerwonko and Soni called Tesla’s move “a vote of confidence in Mexico’s auto manufacturing industry and its hopes of  gaining market share in the global electric vehicle (EV) space,” and noted it’s just one of Many data points can be used to show this. Mexico is Already benefitting from nearshoring Nearshoring is a great option. the first nine months of 2022, direct foreign investment into Mexico • Increased by 29.5% the Most since 1999 according to to data From Mexico’s Confederation of the National Chambers of Commerce (CONCANACO). 

The energy problem

However, it has its drawbacks. of Stable energy infrastructure is Problems when they arise to EV Production in Mexico. EV As such, production plants are extremely energy-intensive. the They produce vehicles. 

UBS’s Czerwonko and Soni said that energy availability is A major source of They should be taken into consideration to Mexico’s reliance on fossil fuels and frequent power outages. Mexico is Take note of the Problem, Foreign Minister Marcelo Ebrard stated last month that he would support several manufacturing centers for electric vehicles in the Five large solar farms built by the government of Ghana to Produce 5 gigawatts of energy. He told Reuters That was what he wanted. to All are attracted the Foreign investors that he might be able to with the project, noting BMW, Audi and GM as well as Fiat Chrysler. of Tesla, all of them had expressed an interest in producing EVs. the country.

“Big questions remain about the financing of such an ambitious plan, as well as the efficiency and operational management capability of the state-owned power company to deploy an investment of such scale,” UBS’ Czerwonko and Soni cautioned, arguing “significant additional investment is required to develop Mexico’s renewable energy sources.”

UBS noted that Mexico Hoffnungen to Funding for the energy project can be obtained through the North American Development Bank, or NADB (North American Development Bank), was founded by the Governments of Mexico And the U.S. to Finance infrastructure projects. But that’s not a sure thing. 

“It seems unlikely that the NADB would provide the amount of resources that the Mexican government needs. Hence, the plan will likely require a mix of private, public, and development bank funding,” They were clear.

You are planning for the Future

Still, the Mexican state electricity utility CFE is already working on the first solar power plant. be the Largest in All of Latin America. the North state of Sonora. Also, the government plans to Increase its renewable energy production to By 2030, 30 gigawatts

Mexican President Lopez Obrador nationalized the Production of The 2022 edition of lithium is also available. set LitioMx is a state owned company. to You will manage the exploration, mining, refinement. last month Hope to attract foreign investors. The company is Already in discussions with the Advanced Lithium, a Canadian lithium miner to mine the For metal EV Reuters, Battery Production reported Thursday.

Soni and Czerwonko said they think that overall Mexico can “capture the emerging EV opportunity,” As long as the public-private partnership works as it should.

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