Electric vehicles, far from ‘killing’ oil refining in Mexico

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Only 2.6% of the automotive fleet in the country is hybrid or electric: AMDA

The vehicle fleet in Mexico will continue to demand gasoline constantly, at least in the next 15 to 20 years, despite the decision of the global automotive assembly companies to start migrating to the manufacture of hybrid and electric units, for which reason it is expected that the future profitability of refineries, such as the one that Pemex bought in Texas, Deer Park, will be sustainable, experts said.

Last week, Pemex announced that it agreed to buy Shell’s 50 percent stake in the refinery in the Houston suburb of Deer Park for $ 596 million.

In Mexico firms such as General Motors, in Ramos Arizpe, Coahuila; Ford, in its unit in Cuautitlán Izcalli, State of Mexico; and the German company e.Go Mobile in Monterrey, begin to invest to make adaptations in their plants in the country to produce electric models.

While Volvo announced that by 2030 its entire portfolio will be electric, for which it began to deploy electric stations in Mexico, like Porsche.

In the same vein, the Taiwanese firm Foxconn Technology Group recently announced that it will decide this year between Mexico and Wisconsin to install its first electric vehicle plant, in a great commitment to the nascent business at a time when technology giants, as its main client Apple, seek to expand with this type of vehicle.

In 2020, 24,405 ‘green’ cars were sold in Mexico, 4.7 percent less than that reported a year earlier due to the coronavirus pandemic, but almost three times what was sold in 2016, according to information from INEGI.

However, this amount only represents 2.6 percent of the total market for cars sold last year, and 100 percent electric is only 0.05 percent.

Guillermo Rosales, deputy general director of the Mexican Association of Automotive Distributors (AMDA), highlighted that according to his expectations, it is necessary for the country to have sufficient fuel in 20 years because, despite the increase in the purchase of more cars Ecological such as hybrids, gasoline units are still moving.

“The sale of electric and hybrid cars grew in the last five years, but most are hybrids, units that continue to consume gasoline, although 40 percent less (depending on the use) compared to an internal combustion engine. It must be taken into consideration, this indicates that the demand for gasoline and diesel in the country will continue significantly for at least 20 years ”, he explained.

In the first two months of 2021, 5 thousand 822 electric and hybrid cars were sold in the country, 18.7 percent more than that reported in the same period last year, of that amount, were 100 electric.

“The Mexican market is an economy with consumers with middle and lower-middle incomes, the average cost of a car is between 300 thousand and 350 thousand pesos, which is very far from what is currently the cost of electricity, which is What is required is a technological development and its overcrowding to make these cars low-cost units, ”he explained.

Brais Alvarez Gallardo, Automotive Account Manager of the consulting firm JD Power Mexico, also said that the fact that automakers such as Ford, General Motors, JAC, Questum, among others, have plans or already assemble electric cars in Mexico means that in the short term or medium-term lower their prices in the country because that market does not work.

“It is important that (electric cars) be produced in Mexico, because that allows an evolution in the national industry so that it continues to generate jobs and well-being, but it must be recognized that the manufacture of cars in the country is designed for export, not for Internal market”

“The manufacture of batteries continues to be the main weight in the cost of cars, and these will reduce their price as this development progresses, not because these cars are made in the country,” explained Alvarez Gallardo.

He said that worldwide it is expected that in 2030 around 45 percent of the cars sold will be “green”, but for Mexico, it is projected that it will not represent even 5 percent, “and even if efforts are duplicated, it would only reach 10 percent of the market ”.

Necessary push from the government

For automotive companies, government collaboration is necessary to encourage the sale of electric cars in the country, since, in addition to allowing the development of infrastructure for recharging, their collaboration is also necessary for other aspects.

“A greater technological offer is required, but also government policies that contribute to greater attractiveness for all users,” said the Chinese firm JAC, which is the one that sells the most electric cars in Mexico.

In a response sent to El Financiero, the company explained that it is also required to allow the development of schemes focused on financing, leasing and insurance for these units, as well as promoting a pre-owned market.

In this regard, Guillermo Rosales of AMDA assured that the government can also support with tax incentives in the purchase of “ecological” vehicles, which can accelerate their adoption.

Source: elfinanciero.com.mx

Mexico Daily Post