On June 2, I participated in a panel on the transformation of the automotive supply chain at the Mexico Nearshoring Summit 2026, alongside Daniel Hernández of the Red Nacional de Clusters Automotrices and Manuel Montoya of CLAUT. One question has stayed with me ever since: Could Mexico’s automotive industry disappear?
My first reaction was that it would be very difficult. In 2025 alone, Mexico produced nearly 3.95 million light vehicles and exported around 3.39 million, according to INEGI (Administrative Registry of the Automotive Industry of Light Vehicles, RAIAVL, December 2025). Behind those figures are assembly plants, suppliers, engineers, technicians, and more than a century of accumulated industrial knowledge. Mexico’s integration with North America and its extensive supplier network are strengths that would be difficult to replace, even amid the uncertainty surrounding the USMCA.
But production can move. Australia experienced this between 2016 and 2017, when Ford, Toyota, and Holden — General Motors’ Australian subsidiary — ended local vehicle manufacturing, bringing to a close an automotive manufacturing industry that had existed for nearly a century, much like Mexico’s (NBC News, “Australia’s 100-Year-Old Automobile Industry Just Closed Down,” 2017).
There are also more recent examples closer to home. In July 2026, Toyota announced a US$3.6 billion investment in Texas that includes gradually shifting Tacoma production from Baja California to the United States, while maintaining manufacturing operations in Mexico. There is also the case of COMPAS, the Aguascalientes plant developed by Nissan and Mercedes-Benz, which ended manufacturing operations in May 2026.
These are different situations and do not necessarily represent a broader trend. Decisions to eliminate a production line or move it to another country depend on multiple factors, including trade policy, tariffs, demand, and the global restructuring strategies of individual companies. Yet both cases brought me back to the question raised during that panel: If a plant closes or moves elsewhere, what remains in Mexico? Do we have the ability to develop the next product, find new customers, or apply that knowledge to other industries?
Manufacturing Does Not Always Mean Developing
Mexico is already manufacturing electric vehicles for global markets. Models such as the Ford Mustang Mach-E, Chevrolet Equinox EV, and Blazer EV, along with the recently introduced Kia EV3, now produced in Nuevo Leon, demonstrate the country’s industrial capabilities and its participation in the global transition to electric mobility. But how much of the engineering, software, and technology behind these vehicles can we develop and control from Mexico?
Manufacturing a vehicle and participating in the decisions that define its technology are not the same thing. A plant can produce thousands of vehicles designed elsewhere, just as a supplier can manufacture excellent components without participating in their development. This is common in the global automotive industry, and there is nothing inherently wrong with it.
The challenge is that production volume alone does not reflect how much technological knowledge we are developing locally. The transition to electric vehicles offers Mexico an opportunity to move beyond manufacturing and build greater technological capabilities of its own.
Value Is Not Always Where the Product Is Manufactured
The semiconductor crisis of 2021 demonstrated this clearly. Automakers had factories, workers, and production orders, yet they could not complete vehicles because critical electronic components were unavailable. Global consulting firm AlixPartners estimated that the shortage would result in 7.7 million fewer vehicles being produced and US$210 billion in lost revenue for the global automotive industry.
In electric vehicles, batteries and their management systems, power electronics, and software account for a significant share of technological and economic value.
The International Energy Agency’s Global EV Outlook 2026 reports that sales of battery-electric and plug-in hybrid vehicles in Mexico tripled during 2025 and that approximately 85% of those vehicles were imported from China.
That figure describes Mexico’s domestic market; it does not tell us where the vehicles were produced or who owns their technology. But it raises an important question: How much of that development can we undertake from Mexico?
Mexico can remain a major manufacturing hub while still having limited participation in the decisions that define technology. The factory may stay while the value moves elsewhere.
What We Have Learned With Zacua
During the years I have had the opportunity to work with Zacua and Motores Limpios, I have seen firsthand the challenges involved in developing electric vehicles in Mexico.
At first, we were looking for domestic suppliers: Who could manufacture a battery enclosure or specific structural supports? Over time, the questions changed. It was no longer simply about who could manufacture a component, but who could understand an entire system, modify it, validate it, or develop a new solution.
One example is the development of our own Vehicle Control Unit (VCU), which coordinates different systems within an electric vehicle. This experience has allowed us to strengthen our engineering capabilities, develop our own technological knowledge, and move beyond assembly toward solutions that can be applied to future projects.
That experience also taught us that national integration should not be measured only by where a component is manufactured, but also by the knowledge developed around it. Yet knowledge alone is not enough. A significant part of the value lies with those who develop and control the technology.
Beyond asking how much local content a vehicle has, we should also ask how much of its technology belongs to us.
Made, Integrated, and Designed in Mexico
At the 2026 Tlaxcala Automotive Forum, during my presentation, “Electromobility Made in Mexico,” I shared a distinction that I believe is important.
Made in Mexico means having the industrial knowledge, processes, and quality required to manufacture a product. Integrated in Mexico means having the ability to make different components and systems work together as a whole. Designed in Mexico means participating in the engineering decisions that define how a product is created.
All three capabilities can coexist within the same project. The next challenge is to turn that knowledge into proprietary technology, software, patentable innovations, and intellectual property that can create new business opportunities from Mexico.
I do not believe Mexico needs to manufacture everything domestically; that would be unrealistic. What matters is identifying the technologies in which we can build competitive and sustainable capabilities: software, battery systems, power electronics, testing, or specialized components.
It can begin by solving an engineering problem for a customer and eventually evolve into a proprietary product or access to new markets.
Many of the capabilities we need already exist in Mexico: universities and researchers, testing laboratories, companies with deep industrial expertise, and engineers specializing in electronics and software. The challenge is finding them and connecting them around specific projects, because conducting research, building a prototype, and bringing a commercial product to market are very different activities that require resources and continuity.
None of this diminishes the importance of foreign investment, on which much of Mexico’s automotive strength has been built. The opportunity is to leverage those relationships to participate in increasingly complex projects, as we are seeking to do through our initiative, the Red Mexicana de Capacidades para la Electromovilidad, which promotes collaboration among industry, academia, and research centers to strengthen Mexico’s technological development.
What Should Remain
My concern is not that Mexico’s automotive industry will disappear tomorrow, but rather what we are building for its future.
If a plant moves to another country or a new technology transforms the industry, Mexican companies and professionals should have alternatives that allow them to continue participating. Even while manufacturing plants remain here, it is worth asking how much we are learning in order to develop the products of today, such as electric vehicles, and those of tomorrow, such as autonomous vehicles.
Mexico has already demonstrated that it can manufacture vehicles for the world. Now it can increasingly participate in their design, development, and technology.
Vehicles may leave Mexico. The ability to create the next ones should remain.
Source: mexicobusiness.news
