Present and Future of Electric Vehicle Production in Latin America: A Brief Overview

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Anyone who follows my reports knows that electric vehicle sales in Latin America are growing. In some countries, they may not be growing as fast as we would like; in others, they are growing faster than we ever expected; but the trend remains clear.

The Latin American* market is about 5 million vehicles per year, 70% of which correspond to just two countries (Brazil and Mexico), with another 20% belonging to four countries (Argentina, Chile, Colombia and Peru). The remaining 10% is left to another dozen countries or so. (*Minus the Caribbean, which is not a big market anyway.)

The region is also known for its highly protectionist nature, with tariffs being imposed to promote local industry, either due to US pressure (as in the case of Mexico) or out of regional interest (as in Brazil, Argentina, Uruguay, Ecuador, Colombia and Peru). This means that local manufacturing is necessary if the EV revolution is to succeed. So, how are things faring on that front?

It will come as no surprise that the two largest markets and two largest manufacturers are also the two pioneers in EV production in Latin America: Mexico and Brazil. Together, these two countries account for at least five factories already producing EVs, and at least six with production plans before 2027.

However, their stories are very different.

Mexico

Mexico is a global player, an extremely competitive producer, key to the massive North American market thanks to the defunct NAFTA and the USMEC that replaced it. Mexico has free trade agreements with half the world, and it has become a hub for manufacturing and innovation. As such, the country began its journey as an EV producer when legacy cars began pivoting to EVs, starting in 2019 when Ford began production of the Mustang Mach-E.

Back then, China was just a player when it came to electric vehicles. BYD hadn’t yet unveiled its Blade Battery, Chinese EV adoption was suffering from the blues due to a sudden reduction in incentives, and the strategy of several legacy brands still seemed reasonable. China, although already the world’s largest EV market, wasn’t yet the giant that would take over the world and destroy legacy cars and their ICEVs.

This means that Mexico’s early start wasn’t influenced by the (now) ubiquitous presence of Chinese EV brands, but was instead led by legacy cars looking to capture a bigger share of this growing market. Today, EV production in Mexico is heavily focused on legacy cars, with Ford, GM and Stellantis leading the way in production, and JAC trailing far behind.

The case of JAC is quite special. The richest man in Mexico, Carlos Slim, wanted to get into car production and decided to choose JAC as his partner. The first activities in 2017 were mainly focused on ICEV models. Even today, electric vehicles represent only 1/6 of JAC’s total assembly in Mexico.

This means that the Chinese are actually latecomers to Mexico when it comes to EV production, with Dongfeng (via ally SEV), BYD and Jetour not starting production for another two or three years. MG is also interested in turning Mexico into a local development and production hub, but the announcement was made in August and there is no information yet on timing.

This doesn’t mean that legacy cars are safe, or that the Chinese won’t be successful in Mexican territory, of course. But it does mean that in addition to these Chinese brands, some legacy brands have also made Mexico a cornerstone of their EV plans: Kia is expected to begin production of its Kia EV3 at some point in the future, and BMW has made Mexico one of the major epicenters of its Neue Klasse platform, which is scheduled to be operational in 2026.

Overall, GM and Ford are the undisputed leaders when it comes to electric car production in Mexico, as the data for August clearly shows (with an unknown number of RAM Promaster EVs, which are unfortunately not listed separately from the ICEV version):

In addition, 7 International and 10 Kenworth EV Trucks were built last month.

One final thought: With the Ultium siblings producing around 10,000 units per month, plus the Lyriq and Honda Prologue in the US, and the upcoming Optiq, I think GM is not far off from the magic number for EV profitability (which is 300,000 per year according to Hyundai, and 500,000 according to BYD).

Brazil

Unlike Mexico, Brazil is a less globalized market, with production focused on South America. Although it is also heavily protected, in this case being the largest member of Mercosur. Brazil was not so early interested in electric vehicles, and therefore progress in this direction has been completely influenced by the arrival of Chinese brands.

Like in Mexico, some of these brands already came up with ICEV options in the past decade and are now moving to EVs (Great Wall Motors and Chery), while BYD arrived in 2023 and focused entirely on EVs. Some traditional car companies have shown interest in building EVs in Brazil, but for now, these three Chinese companies are the only ones willing to do so in the next three years.

Brazil is also a major market for flexi-fuel vehicles (perhaps the most important in the world), and there is a large ethanol lobby that wants to make biofuel the future of zero-emission transport, instead of electricity.

Apart from Mexico and Brazil, electric vehicle production is limited to the assembly of two-wheelers, three-wheelers and a few local brands of four-wheelers (including Quantum in Bolivia, Tito in Argentina and Eolo in Colombia) that sell at most a few hundred units per month, and at worst a dozen. The lack of competitive electric vehicles in these segments (as evidenced by their small sales figures) is downright worrying, especially for two-wheelers, whose value for money has not improved in the region in six years. While electric cars are getting cheaper and better, electric motorcycles have come to a complete standstill… and the latter are much more important in bringing electric vehicle production to smaller countries.

Finally, I focused on BEVs for this analysis, as I found it much more difficult to get numbers for PHEVs, many of which are also built as HEVs and ICEVs.