Mexico’s Nemak Gears Up for Electric Vehicle Boom With $1.1B Investment

The Mexican auto parts manufacturer’s investment comes as the US is seeking to improve the North American supply chain for electric vehicles

By 2030, more than 30% of the vehicles sold in North America will be electric, while the percentage will be around 60% in Europe and China, according t industry estimates.
November 15, 2022 | 06:51 PM

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Mexico City — Mexican multinational aluminum auto parts manufacturer Nemak (NEMAKA) is gearing up investments of $1.1 billion in order to fulfill contracts with electric vehicle manufacturers, orders that will represent revenues of $1.57 billion annually for the company.

To date, Nemak invested $600 million in the electric vehicle segment, part of which has been allocated to the construction of three production centers in Mexico, Germany and the Czech Republic, according to a company presentation.

The company, formerly part of Alfa (ALFAA), anticipates an acceleration in the adoption of electric vehicles between 2027 and 2030, and estimates that its electric-focused business will account for 60% of its revenues by 2030, and contribute a larger share of its EBITDA.

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By 2030, more than 30% of vehicles sold in North America will be electric, while the percentage will be around 60% in Europe and China, which for years have implemented regulations to promote their use, according to industry estimates.

Nemak’s investment in Mexico comes at a time when the US is seeking to improve the supply chain for the manufacture of electric vehicles in North America and lessen its dependence on China.

The US government launched an initiative in October to make the country more competitive in electric vehicle production. Mexico, with its lithium reserves, seeks to be part of that plan, as a battery supply center.

The center that Nemak is building in Mexico will manufacture battery casings for 100% electric vehicles in the new production centers.

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Other Mexican companies are also gearing up for the boom. Orbia Advance Corporation, a Mexican irrigation, telecommunications and construction supplies and solutions conglomerate, has partnered with Belgian chemical company Solvay to supply critical materials for the battery market in North America.

Orbia and Solvay will build a plant in Augusta, Georgia that will require an initial investment of $850 million, with plans for the establishment of two production centers in the southeastern US.