2021 Auto News USA automobiles


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The multibillion-dollar North American automotive sector, which includes one of the largest components of U.S.-Mexico trade, could dramatically change as many automakers make a substantial shift to manufacturing electric vehicles.

On April 30, General Motors (NYSE: GM) became the first U.S. automaker to announce it would build electric vehicles in Mexico. GM said it would invest $1 billion in its factory in Ramos Arizpe to produce electric cars.

As U.S. automakers pivot into the electric, autonomous vehicle era, cross-border operators say Mexico is more than ready to seize the moment.

“GM’s announcement is really exciting news for Mexico because it’s one of the very first electrical vehicles that’s going to be made in Mexico,” said Jordan DeWart, managing director at Redwood Mexico based in Laredo, Texas. Redwood Mexico is part of Redwood Logistics, headquartered in Chicago.

GM’s facility in Ramos Arizpe currently makes the Chevrolet Blazer and Equinox SUVs, along with engines and transmissions. GM aims to manufacture two electric Chevrolet SUVs in Ramos Arizpe starting in 2023, according to Reuters.

GM said it will have 30 all-electric vehicles by 2025, including the Chevrolet Bolt and Silverado electric pickup truck, Cadillac Lyriq EV SUV, GMC Hummer EV SUV and Hummer EV pickup, and the Cruise Origin.

The Ramos Arizpe plant will be GM’s fifth electric vehicle factory, joining plants in Spring Hill, Tennessee; Factory ZERO in Detroit and Hamtramck, Michigan; Orion Assembly in Orion Township, Michigan; and CAMI in Ingersoll, Ontario.

The Ramos Arizpe factory employs 5,600 workers and could expand its workforce, according to Francisco Garza, CEO of GM Mexico.

“We trust that the necessary economic conditions will be met so that eventually the complex can grow the workforce one more shift in some operations,” Garza said in a statement.

GM currently employs 5,600 workers at its plant in Ramos Arizpe, Mexico. Company officials said the workforce could be expanded once production on electric vehicles begins by 2023.

In addition to building electric vehicles in Mexico, GM plans to convert its entire portfolio of vehicles to an all-electric platform by 2035.

“GM’s announcement will bring a lot of new suppliers to that marketplace that haven’t been there before,” DeWart said. “Suppliers typically set up in Asia, in China, obviously, and even some in the U.S., but they will definitely come to Mexico to set up plants.”

Deepak Chhugani, founder and CEO of Nuvocargo, said GM’s announcement that it will build electric cars in Mexico shows that the cross-border market is only going to grow. Nuvocargo is a digital logistics platform for cross-border trade between the U.S. and Mexico.

“We think it’s proof of the thesis behind Nuvocargo, which is that bigger and bigger firms in the U.S. are finding that Mexico is a very attractive place to manufacture,” Chhugani said. “Anywhere in Mexico, whenever there are tier one companies from the U.S. setting up manufacturing, that’s attractive for carriers, because that means that they’re typically going to have larger and more predictable volumes.”

In Mexico, Ford Motor Co. (NYSE: F) recently began producing the Mustang Mach-E at the company’s assembly plant in Cuautitlan, just north of Mexico City. The Mach-E is Ford’s first all-electric crossover vehicle.

Ford also announced in March two additional midsize electric crossovers — one Ford and one Lincoln (Ford’s luxury vehicle line) — will be built in the Cuautitlan plant. 

Joshua Rubin, vice president of business development at Javid LLC, said more electric vehicle production in Mexico could lead to increased cross-border freight. Javid is a Nogales, Mexico-based firm that helps facilitate foreign manufacturers that want to move operations to Mexico.

“As GM grows and needs additional suppliers, there is a good chance that we are going to see more companies looking to move into Mexico to nearshore their operation closer to GM’s,” Rubin said.

US-Mexico auto industry is big business

In 2020, the U.S. automotive industry accounted for about $630 billion, 3% of gross domestic product (GDP), according to a report, “State of the U.S. Automotive Industry,” by the American Automotive Policy Council (AAPC). 

“Automakers and their suppliers are America’s largest manufacturing sector,” according to AAPC’s report. “They are also America’s largest exporters. Over the past 10 years, automakers have exported more than $1.1 trillion in vehicles and parts — nearly $36 billion more than the next largest exporter (aerospace).”

The U.S. automotive industry — which includes automakers and their suppliers, as well as vehicle dealerships and auto parts retailers — employs more than 4.1 million people, according to AAPC.

Mexico’s automotive industry accounted for about $32 billion (3%) of the country’s GDP in 2020, according to the Mexican Automotive Industry Association (AMIA). Mexico is also the world’s sixth-largest producer of cars and light trucks and fourth-largest exporter of vehicles.

The Mexican automotive industry employs around 900,000 people, according to Mexico’s National Institute of Statistics and Geography.

Roy Austin, business development manager for The ILS Co., said the U.S. and Mexican automotive industries have been linked for decades. The ILS Co., based in Tucson, Arizona, is a third-party logistics provider serving the U.S. and Mexico. 

“GM, Ford and other automakers have already been in Mexico for over 50 to 60 years or more,” Austin said. “They have enjoyed a relationship with Mexico to great success.”