In addition to the small market, the people are really not good enough. Why are Chinese electric vehicles flocking to Mexico?

What role do small and medium-sized countries play in today's global economic system?

Ordinary small and medium-sized countries have little significance in the global system; but those small and medium-sized countries with important geographical locations and certain development potentials may become the "little strong countries" of the new era.

Taking the new energy vehicle industry as an example, China, the United States and the European Union are the three major players, each with a complete industrial chain and a large number of independent brands. At the same time, there are also some small and medium-sized countries that benefit from this wave of global new energy vehicle division of labor, Mexico is a typical example.

Mexico has a territory of 1.96 million square kilometers and a total population of 130 million. Its GDP reached 1.78 trillion U.S. dollars in 2023, with a growth rate of 3.23%, ranking 11th in the world, surpassing developed countries such as South Korea and Australia. Obviously, Mexico is a typical representative of a "middle power".

What role does Mexico play in the new energy vehicle trend sweeping the world?

In 2023, Mexico's automobile production reached 3.78 million units, ranking seventh in the world. It is also the world's fourth largest automobile parts manufacturer, but sales in the domestic market of Mexico are only 1.47 million units, and the rest are all exported.

Just like Spain in southern Europe and Hungary in central Europe, Mexico has almost no local brands. Due to the small domestic market and the fact that foreign brands have long dominated the industry, Mexico has to settle for the next best thing, hoping to become a processing base for major automakers and a springboard to enter markets such as the United States.

This feature is particularly evident in the field of electric vehicles. In 2023, Mexico's electric vehicle production exceeded 100,000 units, a year-on-year increase of 37%; of which only 14,000 units were sold in Mexico, and the remaining more than 75% were exported to the United States.

From January to August 2024, Mexico's electric vehicle production reached 120,000 units, which has exceeded the full year of 2023. It is expected that the production will reach 180,000 units within the year, a year-on-year increase of 70%.

It is worth mentioning that the current Mexican electric vehicle market is mainly dominated by Chinese manufacturers. As of August 2024, Mexico's domestic electric vehicle ownership is about 60,000, of which about 40% are Chinese brands, making it one of the countries with the highest proportion of Chinese brand electric vehicles in the world.

Interestingly, Mexico also established an Electric Vehicle Association in April 2024, which includes Chinese brands such as BYD, JAC Motors, and Volvo.

In addition to Chinese brands, other brands have also begun to increase their investment in the Mexican electric vehicle market. In 2024, BMW announced that it would build a new battery assembly plant in San Luis Potosi. The plant has begun construction in May and is expected to begin operations in 2027.

Before BMW, brands such as Stellantis, Audi, and Volkswagen have also announced plans to set up assembly plants in Mexico, and will gradually increase the production of pure electric vehicles.

In March 2023, Tesla announced that it would build a super factory in Mexico, which will produce automobiles, batteries, and semiconductors, as well as carry out software development.

Influenced by this news, electric vehicle supply chain manufacturers from China and other countries and regions in the world have flocked to invest in Mexico, and there are now more than 30 of them. Nuevo León, where Tesla's super factory is located, has become Mexico's most important electric vehicle industry cluster.

Due to various practical conditions, Mexico does not seek to cultivate its own local brands or master core technologies. It just wants more assembly plants, more employment opportunities, and a more complete industrial chain. Mexico is completely different from China on this issue.

However, Mexico still needs to introduce various industrial incentive policies. According to the Mexican Electric Vehicle Association, the association will strive to increase the penetration rate of electric vehicles in Mexico to 50% by the end of 2030. The reason is simple: if Mexico wants to become a heavyweight player in the global electric vehicle market, the transformation of the local market must be done.

Despite the small domestic market, the Mexican government has formulated a large number of policies to support the new energy vehicle industry, providing support for foreign investment and local electric vehicle infrastructure construction. According to the Mexican Automobile Industry Association, by 2041, Mexico will need about 40,000 public charging stations to meet the growing demand for electric vehicle charging, but there are only 2,000 at present.

It should be noted that there is an important historical background for the popularity of countries like Mexico. That is, the US-led "decoupling between China and the United States" has forced most electric vehicle manufacturers to move the production of electric vehicles to Mexico to avoid geopolitical risks. This does not mean that Mexico is ready to become a major electric vehicle country.

Take Tesla as an example. It announced in March 2023 that it would establish the world's largest super factory in Mexico. However, on July 23, 2024, Musk personally announced that the construction plan of the Mexican super factory had been suspended and it might have to wait until after the US presidential election in November before it could be promoted again.

The rise of Mexico's electric vehicle industry has benefited from global geopolitical changes, but will also inevitably be dragged down by such changes. These are two sides of the same coin.

In fact, there is another important reason why Musk postponed the construction plan of the Mexican super factory, that is, Tesla's sales volume is lower than expected. Mexico is a large-scale production workshop, which will inevitably be affected by the operating conditions of automobile manufacturers and is unlikely to take the lead in the development of the industry.

In addition, the development of Mexico's electric vehicle industry is also constrained by some off-site factors.

As early as April, Toyota Motor pointed out in a letter that the employee turnover of North American suppliers in Mexico and other countries was too high, the skill level was low, the locals were rather casual in their work style, and there were bottlenecks in the supply of equipment and raw materials.

In June, some Chinese brands and supply chain companies that entered Mexico also reported low efficiency, poor logistics, and serious delays in progress. An embarrassing fact is that Mexico is too close to the United States, and capable employees will choose to go to the United States where wages are higher, while employees with average abilities are difficult to manage. Mexico's low-cost advantage does not seem to be as great as imagined.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.