Mexico is ripe for a transportation revolution
Energy policy is a touchy subject south of the border.
Mexico is fiercely nationalistic when it comes to its oil and natural gas resources, so much so that it kicked out foreign oil companies and nationalized their assets on March 18, 1938.
Still observed each year as Oil Expropriation Day, the event remains in Mexico’s political fiber, despite the 2014 constitutional reforms that opened energy markets to foreign competition and investment. Those energy reforms, supporters argued, were needed to revive sagging production and reverse quarterly losses at Mexico’s state-owned oil company, Petróleos Mexicanos, or Pemex, which enjoyed a monopoly for more than 70 years.
Pemex’s six aging refineries are unable to produce enough gasoline and diesel to meet the demand of the estimated 45 million vehicles on the road. Mexico now imports more than 400,000 barrels of gasoline and diesel per day from American refining companies.
Keen to end his nation’s dependence on those imports, Mexico’s new president, Andrés Manuel López Obrador, has pledged to invest billions of dollars to upgrade refineries and build a new one.
The coming of EVs
But there might be another option to end dependence on foreign fuel and boost local industries at same time. What if Mexico took money for refineries and used it to boost the adoption of electric vehicles?
Mexico is ripe for a transportation revolution as electric vehicles, or EVs, take the stage in nations such as Norway and China.
More than 3.1 million electric vehicles are on the roads worldwide. That number is expected to rise to 13 million in 2020 and 130 million by 2030, the International Energy Agency reported in its Global EV Outlook 2018. As participants of the International Energy Agency’s EV30@30 campaign, Mexico and 10 other industrialized nations have pledged to increase electric vehicles to 30 percent of new-car sales by 2030.
Electric vehicles make up just under 1 percent of the estimated 45 million vehicles in Mexico, according to IEA data. The nation has an estimated 1,500 charging stations. Mexico, unlike the United States and many other countries, does not offer tax breaks or rebates for buying electric vehicles and does not provide incentives to install charging stations.
Home-grown electric cars
But imagine how far the billions that would be spent on refineries could go toward increasing electric vehicles by shifting public transit fleets to battery power, adding charging stations and offering rebates to drivers to switch to EVs. With nearly two dozen auto plants in Mexico, electric vehicles are starting to show up on assembly lines as automakers add hybrid and electric models.
Ford, for example, said last December that it would build a $1.6 billion plant in the Mexico City suburb of Cuautitlán to make an electric car that can go 300 miles before needing to recharge the battery.
Domestic automakers in Mexico are getting in the electric vehicle game as well. In April, entrepreneur Jorge Martínez Ramos debuted Mexico’s version of the Tesla — the Zacua. The 35 employees at the company’s $4 million plant in Puebla are expected to make 100 electric vehicles during the first year of production.
Renewables rising
Mexico, meanwhile, is shifting to cleaner power sources. Mexico generates 21 percent of its power from wind, solar, hydropower, geothermal and other renewable sources, and the nation aims to increase that share to 50 percent by 2050.
Mexico’s renewables goals are aligned with López Obrador’s campaign pledge of creating a more self-sufficient and independent Mexico. Investing in renewables and electric vehicles, rather than refineries, might bring energy independence to the country much sooner than investing in refineries.