The U.S. and China are in an influence wrestle proper now, and its end result goes to reorganize the roles each international locations play in world automotive manufacturing. The U.S. desires to be extra unbiased from China for its EV manufacturing, however China shouldn’t be going to cede its dominance. In reality, China plans to extend its footprint in EV manufacturing and is eyeing Mexico as the subsequent market to infiltrate. In so doing, it’ll be that a lot nearer to the U.S. if it succeeds. Or if it fails, it’ll at the very least nonetheless be a part of America’s EV provide chain, by proxy. Welcome to Mexico, China, the place the pan dulce is sweet and the U.S. market awaits.
Go watch this video from MotorTrend, that includes Jalopnik alumnus Kristen Lee. It’s a protracted video, however is well worth the time funding as a result of she lays out how Chinese automakers are making inroads into Mexico’s budding EV auto market. And that could possibly be their approach into the U.S. auto market, ultimately. Whether by precise Chinese EVs coming to the U.S., or by manufacturing partnerships with legacy automakers which are based mostly in America.
Mexico is already a producing powerhouse for lots of the auto giants. Whether that’s GM, Ford or Stellantis, Mexico is host to an enormous sector of automotive manufacturing that yields merchandise destined for the U.S.
And that is why Mexico is such a lovely marketplace for the Chinese. Mexico is likely one of the three key gamers within the USMCA. Dammit, it’s proper there within the identify: the United States-Mexico-Canada Agreement. The newest free commerce settlement between the U.S. and its direct neighbors affords these adjoining international locations advantages that many different international locations should not aware about.
In essence, automobiles manufactured in Mexico are given preferential remedy as import items. This is already taking place now. BMW, GMC, Chevrolet, Ford. They all make automobiles in Mexico which are bought within the U.S. exactly as a result of they’ll pay employees in Mexico lower than employees in America, then promote their automobiles with big revenue margins. The GMC Sierra and Chevy Silverado come to thoughts.
These are veritable money cows for General Motors when you think about the meager funding in labor and prices in comparison with the costs of those full-size vehicles in America.
Chinese-made automobiles can be too expensive to promote in America, making them uncompetitive. But Mexican-made Chinese automobiles are a pure development for automakers like BYD, JAC, Chirey and MG — all of that are planting their flag in Mexico. The USMCA itself outlines the advantages to creating automobiles within the nation, which the Chinese can leverage.
The secret’s legacy automakers themselves are going to allow the Chinese to assert victory in Mexico, and, by proxy, the U.S. Well, perhaps. Or on the very least, use Mexico because the pathway to the U.S. in some unspecified time in the future.
The prospect of being a serious participant in an auto market so near the U.S. is just too tempting for China to miss. These OEMs from the East don’t have to interrupt by the U.S. gates, as a result of automakers will open the door for them.
The Chinese are already making big investments in Mexico: in 2022, they dumped $397 million into the republica within the type of investments for auto meeting, per MotorTrend. Battery manufacturing, too. All China has to do is cozy as much as our Southern neighbor, and earlier than we all know it, China is an important participant in North American EV manufacturing.
Cars are a part of the cultural cloth of the U.S. and the EV transition has given China a handy approach to reshuffle the board on the subject of world auto manufacturing. Mexico is the approach into the U.S., and the Chinese realize it.
Source: jalopnik.com