MEXICO - While several countries already have tax incentives for the sale of electric cars, there are none in Mexico.
Although Mexico has some attractive incentives for the commercialization of electric cars, since their owners are exempted from the payment of tenure and verification for the first eight years, other countries offer attractive tax incentives.
"For example, in the United States, for acquiring an electric vehicle, regardless of whether it is made in said country or not, there is an average tax deductibility of US$7,500, an amount that changes according to the state, informed Gerardo Gómez, director of J.D. Power in Mexico.
Likewise, in Germany, the deductibility offered to the buyer and that he would recover when declaring his taxes is about US$8,690 (8,000 euros), said Gómez.
For the expert, in Mexico the electric vehicle was thought of in the past as a niche, but little by little it is beginning to be democratized, so more fiscal, credit and infrastructure benefits will be required so that people can acquire them more easily.
In the country, the average price of a car in general is US$22,067, regardless of whether it is electric or internal combustion, so an electric car should not exceed that price by more than 20 or 30 percent.
It is also necessary to have the charging infrastructure and that the stations are efficient and fast.
In other words, it should be possible to reach 80 percent of the charge in half an hour, since currently most of the establishments offer that percentage, but in a period of three to four hours.
The use of electric vehicles opens the way to new technologies that are considered less polluting.
"We would be evolving faster to cleaner technologies and that benefit is in general, for the entire population, by having less polluting emissions that helps," he concluded.
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The electrification of transport is underway on all continents, but it is not advancing at the same pace in all markets. Mexico, a laggard in transport electrification, now shows signs of awakening to the challenge. After years of implementing lax fuel economy regulations for light-duty vehicles (LDVs) and eliminating import taxes on EVs only temporarily, pro-EV government action has suddenly picked up:
These are all strong steps in the right direction, but they need better articulation. In addition, Mexico''s strategy requires long-term binding targets, and an enabling regulatory framework.
Markets leading the transition to ZEVs have often used five policies to accelerate adoption of ZEVs: 1) phase-out targets, 2) ZEV regulations and CO2 standards, 3) fiscal incentives, 4) charging and refueling infrastructure, and 5) consumer awareness and fleet purchase requirements.
Through the lens of these policies, opportunities for Mexico to increase efforts to accelerate the transition to EVs become evident. Here are areas in which Mexico needs to step up its game:
Without EV-forcing standards, it''d be difficult to increase the national ZEV LDV sales share from the current 0.33%. The declared goal of producing 50% of the LDV fleet as ZEVs by 2030 will not necessarily boost domestic sales of EVs. Instead, the status quo could continue: the most efficient and clean vehicles would be produced in Mexico but not sold there. Keep in mind that Mexico is the 4th largest vehicle exporter in the world, with 80% of domestic production destined for the North American market.
With regard to heavy-duty vehicles (HDVs), despite progress in Latin America—Chile and Brazil have adopted HDV efficiency standards—Mexico shows no signs of following that path.
Colombia adopted the first vehicle purchase mandate in Latin America, establishing by law progressive electric bus purchase requirements starting in 2025 at 10% and reaching 100% ZEVs by 2035. Purchase mandates for bus operators and government fleets help to accelerate heavy-duty ZEV adoption in the short term. Low- and zero-emission zones are another type of policy that can support fleet transformation; Mexico City has committed to implementing a low-emission zone by 2024.
With adopted and proposed policies and targets in North America to accelerate the deployment of ZEVs, Mexico can step up and work toward a regional decarbonization economy and even explore new domestic opportunities like the manufacturing of batteries and other EV components. Domestic and export markets should both be transformed.
But the first piece of an effective EV strategy is missing: phase-out targets for all vehicle segments. Mexico needs to send a clear signal of its ambition and pace to transform the transport sector, considering its climate goals and international commitments.
Countries like Chile can be a role model for Mexico. Chile published its National Electromobility Strategy in October 2021, which includes ZEV sales targets for all types of on- and off-road vehicles starting with the phase-out of ICE sales of urban buses and of light- and medium-duty vehicles by 2035.
It''s Mexico''s turn to catch up and join the challenge. More information on ZEV adoption scenarios and recommendations for Mexico under the ZEV Transition Council, which Mexico is part of, will follow in future blogs.
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“We can’t put the future on hold,” the CEO of Ford recently commented when asked about the sudden growth of the electric vehicle (EV) industry. The era of transportation with electric motors is a reality and is experiencing significant advances and growing acceptance worldwide. Nations from Europe, Asia, and even the United States are implementing clean energy initiatives to reduce carbon emissions and the use of fossil fuels.
At this moment, Mexico finds itself in a position of opportunity since it is experiencing a change in which the country can play an essential role in the global trend of reducing the use of automobiles that use fossil fuel as an energy source. After all, Mexico is the seventh largest vehicle manufacturer in the world. In this blog post, we will review the current situation surrounding the electric vehicle industry in Mexico and the investment opportunities that will arise from the development of electric and hybrid vehicles.
In 2022, Mexico manufactured 3,068,812 vehicles with electric technology, of which 47,079 were sold within the country (the rest were exported), representing 4.1% of the total cars sold during that year.
The fact that only 4.1% of total sales of this type of car remained in the country may seem insignificant; However, it represented an increase of 61% compared to 2020. In addition, Mexico was also the largest consumer of electric vehicles in Latin America, followed by Brazil and Colombia.
The most popular electrified vehicles in Mexico are hybrid models (cars that combine the traditional combustion system with electric batteries). However, EVs (vehicles that run 100% on an electric motor) are gaining popularity. According to the AMIA (Mexican Association of the Automotive Industry), in 2020, only 1.8% of the total registered electric cars sold were 100% electric. In 2021, that amount rose to 2.4%; this last year, it jumped to 8.8%.
This trend continues to grow, and according to the INEGI (National Institute of Statistics and Geography), by 2030, Mexico will be selling 72,655 100% electric vehicles nationwide. This will represent 2,000% more than last year’s sales. This data shows Mexico is one of the main actors in the growth of electric vehicle consumption in Latin America.
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