During 2020, light vehicle production fell by almost 16% globally, drastically curbing all the progress Mexico had made in mobility up until that point. However, as the global economy continues its trajectory back to pre-pandemic times, we see exponential growth occurring in the region.
Big investments in Mexico
Mexico is currently thriving and showing no signs of stopping. The region is a hotbed of investment right now, with many large companies shifting their manufacturing processes there. Most recently, the European automotive firm Le Belier invested $100 million in a new plant in the region of Guanajuato. Le Belier boasts a portfolio of clients such as BMW, Mitsubishi and Hitachi. The investment is expected to create 500 jobs in the region, boosting the economy and helping locals train and progress in the field.
US-Mexico semiconductor solutions
The global shortage of semiconductors, which is integral in the production of cars, has proved problematic for the supply chain. Traditionally based in East Asia, it now looks as if the hub of semiconductor production is shifting across the world. The automotive industry is the fastest growing sector usage of such materials, and the US and Mexico recently entered a deal that may help solve the shortage. The growth is driven by a shift towards electric cars – some of which contain over 3000 semiconductors per unit.
While Mexico has a strong history of semiconductor production, it’s now poised to grow even further. In 2018, the country produced more than 10% of the world’s supply of semiconductors, with an export value of $721 million. Mexico is also the fourth largest exporter of automobiles in the world.
The global labor shortage is proving problematic for all industries. This sector is no different – without the appropriate talent to operate machinery and supervise factories, production of semiconductors and other various electronics for automotive purposes will be difficult. It will be interesting to see how the expansion of mobility into the US and Mexico plays out, combatting the labor shortage in the US with the abundance of workers in Mexico who will need training.
Who is riding this wave?
A number of large players in this industry are capitalizing on all that Mexico has to offer. For example, Panasonic is improving electronic components in automobiles, improving safety, as well as contributing to the improvement and development of electric vehicles. Some of their innovations include the battery management controller, which significantly contributes to the reduction of carbon emissions. Another example is Hella, which has existed for over a century, providing lighting and electronics equipment for automobiles as an industry leader. Over 2021, the company grew faster than the industry itself, despite the challenges the global markets were facing. The company is a pioneer of sustainability initiatives in a field that can be criticised for its contributions to carbon emissions.
Sustainability is also a major concern for developers in the market, and investments are beginning to reflect the need to transition towards a carbon-neutral – and eventually carbon-zero – future. One such company that shares this belief is Valeo.
Valeo is fully focused on the future. Aware of the new needs and challenges of the urban future, the company develops solutions to optimize transportation. The company is recognized for its low-carbon solutions and commitment to sustainability and accessibility.
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This article is part of a report from Proco Global and Commodities, “Future America.” Download the report here.