The automotive industry  is continually transforming and is redefining the path of the industry for the next decade. The replacement of internal combustion cars with electric ones is already a reality worldwide.

In addition, the configuration of the value chains, especially in North America, which represents the largest market for vehicles and auto parts for Mexico, means that the country has challenges and opportunities to be a benchmark in automotive production worldwide.

According to the study 'Electric vehicles and the future of the automotive value chain in Mexico' , carried out by the United States-Mexico Foundation for Science (Fumec), electrification in land transport implies strong changes in the structure of each unit, its components, materials and manufacturing processes, therefore, original equipment manufacturers (OEM) have detected that the number of components of a car will be reduced, however, the integration of digital systems and computer processing will be They will become more and more relevant.

Eugenio Marín, CEO of Fumec , commented that OEMs and suppliers must prepare for this change, which implies having the productive and financial flexibility to acquire new technologies and machinery, with the intention of adapting their processes to new materials, as well as having the digital tools necessary to respond quickly to the demands that will arise in the value chain.

REGULATIONS

Mexico is currently the fourth world exporter of light vehicles and the fifth exporter of auto parts . In addition, 36% of manufacturing exports belong to this category, which contributes 3.8% of GDP. The trends that are changing the automotive industry are electrification and automation, which are mobility models that are transforming the entire value chain of this sector.

Fausto Cuevas, general director of the Mexican Association of the Automotive Industry (AMIA), explained that for Mexico to continue being a benchmark in the production and export of light vehicles with these new technologies, it is necessary to establish a public policy that would regulate and create a line to follow for the transition of electrification in the vehicle fleet in the country, in order to take into account the infrastructure requirements for the development of the charging network of this type of units, as well as having an offer 5G technology that allows communication between cars and users on the roads. 

“We believe legal certainty and the rule of law are relevant to promote the attraction of new projects and investments in the country, precisely aimed at this new segment. It is important that we can insert ourselves into the program at the regional level based on the opportunities offered by the USMCA to adopt these new technologies”. 

The Mexican automotive industry has taken advantage of the opportunities since the signing of the Free Trade Agreement , the competitive globalization of value chains and, recently, the dislocation of value chains caused by the pandemic, adjusting to the increased percentage of regional integration required by the USMCA.

SUPPLY 

One of the pending issues in Mexico is to generate a greater number of Tier 2 and Tier 3 suppliers, preferably by adding SMEs to the value chain, and ensuring that they have a technological level similar to that of their competitors in other countries.

It should be noted that electric vehicles (EVs) are simpler in mechanical terms. The engines that power electric cars comprise far fewer components and lack many essential systems than a traditional internal combustion (ICE) car, as an electric motor can have three moving parts as opposed to 113 in an internal combustion engine. . This reduction represents a great impact on manufacturing processes and its supply chain, but also on the reliability and maintenance requirements of the car.

This is because the units will have new high-voltage battery systems, high-voltage electronic harnesses, power electronics for motor transmission, design simplification and, therefore, cost reduction by having a high-level flexibility of configuration or customization of units and functions.

Julio César Galván Cruz, manager of economic studies at the National Auto Parts Industry (INA), stated that Mexico is at the forefront of technology, materials, processes and installed supply, and in order to have the components required by electric vehicles, it is necessary to a preparation period of up to four years, for which he assured that they have been working with the companies in the design, engineering and in the process, with the intention that they can provide the necessary components for the production of these cars. 

He said that it is important that the companies that contribute to this transformation develop a repositioning plan with their clients in time to determine what type of electric vehicle parts they can manufacture competitively and plan the financial and technological route.

"The plants are working and reconditioning to be able to offer what the automotive industry will demand, and what the INA does is that we are being the watershed to be able to hold a business meeting with the companies, with the intention of being able to expand the panorama in the search and development of suppliers so that they can have a portfolio of sellers in the region”.

RAW MATERIAL

The winners regarding the need for raw material are copper, the use of which is estimated to increase by up to 80% due to the windings of the electric motor and the increase in harnesses; aluminum will be useful to replace steel in many support elements of the car. 

Regarding the materials for the batteries, lithium, cobalt and graphite will be essential, which is estimated to take between seven and 8% of the new materials and the permanent magnets of the new motors (neodymium); there will be an increase in the use of plastic components and, finally, semiconductors, carbon fibers and aramids.

Likewise, the access and processing of several of the materials in the North American region to which Mexico is integrated is considered critical for the development of a robust supply chain in the region, according to Securing America's Future Energy.

The study 'Electric vehicles and the future of the automotive value chain in Mexico', prepared  by Fumec , reported that  China has extensive control of each stage of the EV supply chain globally. It has concessions in Bacadéhuachi, Sonora, with probable reserves of 243 million tons of minerals, from which millions of tons of lithium carbonate could be extracted for use in batteries.

Therefore, Sonora will have an operation that will double production capacity to 35,000 tpa. In Mexico and in the world, one of the main players is Gangfeng Lithium  which, through Bancanora Lithium  in this entity, is already in the exploration phase and is estimated to be the largest and most opportunity globally, since it stands out for being the largest deposit that  the organization is developing.

It should be noted that the federal government granted 31 concessions to explore lithium deposits in five states of the country, mainly to Canadian and English mining companies, but also from the United States, Australia, Spain and two Mexican ones.