Mexico risks falling behind in North America’s EV shift
Mexico is trailing the US and Canada in EV adoption as Chinese brands grow and limited incentives dampen demand, reshaping supply chains and logistics networks, say analysts at ALSC Mexico.
Anuar Mendez, S&P Global Mobility
ALSC Mexico 2025
Mexico’s electrification path is diverging from the US and
Canada as weak incentives and rapid Chinese brand expansion reshape demand,
sourcing and logistics. Analysts warn that EV uptake will stay low without
policy support, creating new pressures across the supply chain.
Speaking at ALSC Mexico, Anuar Mendez, associate director,
SBPT forecast at S&P Global Mobility says that Mexico is set to “lag behind”
the US and Canada if there are no incentives for electrification.
While the US and Canada are shaping policy frameworks that push EV uptake,
Mexico’s trajectory is being determined by the rapid expansion of Chinese
carmakers and a flow of China-built vehicles from global OEMs.
Mendez expects EVs to account for only 5% of Mexican sales by 2030, rising to roughly
10% by 2035. In his view, the country’s strategic debate is not centred on
electrification, but instead is about who controls the entry-level market, and
Chinese brands are moving quickly to dominate it.
“In Mexico, the conversation is not about electrification, but about the
expansion of Chinese brands,” Mendez says. “Chinese brands are pushing electrification,
but even with their entry-level EVs, the transition will take time.”
The increasing Chinese OEM presence is reshaping supply chains, altering
shipping patterns, and challenging established OEMs that had long operated in a
stable, predictable domestic market.
Complicated trade
ties with the US and China
Mexico’s automotive sector remains closely tied to the
performance of the US economy. Mendez says, “what happens in the US is mirrored
in Mexico”. The post-2009 US recovery from the financial crisis lifted Mexican
demand to a peak of 16 million vehicle sales in 2016. Political and policy
shifts then caused contraction in 2017 when president Donald Trump took office,
and again after the launch of Mexico’s “Fourth Transformation” in late 2018.
The pandemic completed the disruption, which Mendez
says, “is crucial because it enabled Chinese brands to enter Mexico in significant
numbers”. In 2019-2020 Chinese brands had less than 1% market share, but when
covid hit, supply chains froze, and inventories collapsed.
Chinese brands were among the only manufacturers
with immediate stock. “They capitalised on the fact that all other OEMs had
frozen supply chains,” he says. “Mexican consumers gave Chinese brands a
chance because they were the only ones with immediate availability. From there,
more Chinese brands entered.
“Consumer openness, affordability, low monthly
payments and technology are the key factors, and Chinese OEMs are offering
these,” he says.
As of August this year, Chinese brands have a 16.9% market share. “If
combined, Chinese brands surpass GM, VW, Hyundai–Kia and Toyota, and are very
close to Nissan,” he adds.
What
began with four Chinese brands in 2019 has expanded to 27 brands being tracked
today. And while not all 109 Chinese automakers currently exporting will enter
Mexico, Mendez noted that markets such as Costa Rica already have more than 40
Chinese brands on sale. Mexico’s trajectory suggests further expansion is
likely.
“And it is not only Chinese-owned brands selling
China-built vehicles,” he explains. “Even the so-called “all-American
brands” such as GM, Stellantis and Ford are using Chinese-built vehicles,
badged with their own brands, for the Mexican market. These Chinese-built
vehicles have become these brands’ best-selling models in Mexico.”
Chinese production has become embedded in the
portfolios of the ‘Big Three’ Detroit manufacturers. GM, Ford and Stellantis
increasingly rely on vehicles assembled in China and rebadged for the Mexican
market, where they are among their best-selling models. GM leads the list of
non-Chinese brands selling China-built vehicles in Mexico, accounting for more
than 72% of such imports.
Affordability is the decisive factor for consumers.
Many Mexican buyers prioritise low monthly payments, technology-rich interiors
and attractive pricing, Mendez explains. Chinese manufacturers have built their
Latin American strategy around precisely these attributes, offering petrol,
hybrid and entry-level EV models at price points that are difficult for rivals
to match.
This combination has forced a reappraisal of
product sourcing strategies and raised new questions for logistics providers.
The surge in China-Mexico vehicle flows has brought new volumes through ports and
increased the need for flexible outbound distribution and storage capacity. As
more brands enter, logistics networks must adapt to greater fragmentation and
more frequent model introductions.
Why EV
adoption remains slow in Mexico
The regulatory environment is the root cause of
Mexico’s sluggish EV transition. The country has few emissions standards, with
NOM 163 and NOM 194 forming the bulk of existing requirements. There are no
national purchase incentives equivalent to the US Inflation Reduction Act or
Canada’s consumer rebate schemes. Instead, Mexico offers only tax deductibility
and exemption from the ISAN purchase tax.
Without a policy framework that rewards
electrification, Mexico is drifting behind the rest of the region. In Mendez’s
forecast, petrol and hybrid vehicles will continue to dominate, supported by
incremental improvements in powertrain technology and the aggressive pricing of
Chinese OEMs.
For EV adoption to accelerate, Mexico would need to
implement regulations that both support the automotive industry and make
electrification financially achievable for consumers.
“We have seen Chinese brands disrupt what had been
a very stable industry,” Mendez says. “Without a regulatory framework or
incentives for electrification, Mexico will lag behind the rest of North
America in EV adoption. Affordability will continue to depend on petrol and
hybrid vehicles, with technology improving gradually. That is why we project a
very small EV share by 2030—around 5%—and 10–13% by 2035.”
The road
ahead for Mexico’s supply chain
Chinese brands have altered the competitive balance
in Mexico and injected new complexity into vehicle logistics, while a lack of
policy on EV incentives and regulations is slowing progress on electrification.
For the logistics sector, it means that
China-to-Mexico flows will remain strong. Port capacity, shipping routes and
inland distribution networks will need continued expansion and diversification.
Meanwhile, the slow uptake in electrification means logistics providers must
prepare for a prolonged period of mixed powertrains and fragmented sourcing
across global supply chains.
Mexico’s automotive future is being reshaped by the
US as well as forces outside the traditional North American framework, and the
industry’s ability to adapt will determine how well it navigates the years
ahead.
“What could accelerate Mexico’s EV transition?”
Mendez asks. “If the government, as in the US and Canada, were to introduce
regulations that support the industry while making electrification more
achievable, accompanied by an incentive programme. That would help push
electrification forward.”
