Beyond nearshoring: The political economy of Mexico's emerging electric vehicle industry

Nain Martinez and Diana Terrazas-Santamaría

Energy Policy, 2024, vol. 195, issue C

Abstract: Nearshoring and global value chain reconfiguration trends have gained renewed relevance amid mounting disruptions in globalized production models. However, the precise dynamics behind shifts in the nascent electric vehicle (EV) industry value chain remain unclear. This study examines the factors that drive direct investment into Mexico's EV production ecosystem. It analyzes how these investment patterns reshape regional value chains while accelerating the transition toward electromobility. This analysis is based on an original 2019–2023 dataset of 48 Mexican EV production investment projects and three emblematic case studies: Tesla, Metalsa, and Sanhua. The findings suggest that the confluence of USMCA trade pact stipulations, US-China tensions, climate policy, and consumer incentives in the US, alongside specialized capabilities in Mexico, catalyze this nascent EV industry. In this fluctuating landscape, Mexico plays a dual role, both reducing US reliance on Chinese-dominated chains while attracting international firms interested in integrating into regional production networks. Thereby, the study delineates the specific drivers beyond nearshoring that have attracted EV production investment to Mexico. It, therefore, provides insights into the forces shaping Mexico's emergence as a strategic hub for regionalized EV manufacturing and outlines implications for future corporate strategies and public policies.

Keywords: Nearshoring; Climate policy; Electric vehicles; Auto industry; Clean energy transitions; USMCA; Industrial policy (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:195:y:2024:i:c:s0301421524004051

DOI: 10.1016/j.enpol.2024.114385

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