IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v195y2024ics0301421524004051.html
   My bibliography  Save this article

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

Author

Listed:
  • Martinez, Nain
  • Terrazas-Santamaria, Diana

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.

Suggested Citation

  • Martinez, Nain & Terrazas-Santamaria, Diana, 2024. "Beyond nearshoring: The political economy of Mexico's emerging electric vehicle industry," Energy Policy, Elsevier, vol. 195(C).
    • Handle: RePEc:eee:enepol:v:195:y:2024:i:c:s0301421524004051
    DOI: 10.1016/j.enpol.2024.114385
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421524004051
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2024.114385?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Dani Rodrik, 2014. "Green industrial policy," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 30(3), pages 469-491.
    2. Tal, Gil & Pares, Francisco & Busch, Pablo & Chandra, Minal, 2023. "Implications of Global Electric Vehicle Adoption Targets for the Light Duty Auto Industry in Mexico," Institute of Transportation Studies, Working Paper Series qt1pt8q0zc, Institute of Transportation Studies, UC Davis.
    3. Laura Alfaro & Davin Chor, 2023. "Global Supply Chains: The Looming “Great Reallocation”," NBER Working Papers 31661, National Bureau of Economic Research, Inc.
    4. Carlo Pietrobelli & Cecilia Seri, . "Reshoring, nearshoring and development. Readiness and implications for Latin America and the Caribbean," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    5. Tal, Gil & Pares, Francisco & Busch, Pablo & Chandra, Minal, 2023. "Policy Brief: Implications of Global Electric Vehicle Adoption Targets for Mexico Light Duty Auto Industry," Institute of Transportation Studies, Working Paper Series qt57s3t1hg, Institute of Transportation Studies, UC Davis.
    6. Taylor, Mark Zachary, 2016. "The Politics of Innovation: Why Some Countries Are Better Than Others at Science and Technology," OUP Catalogue, Oxford University Press, number 9780190464134.
    7. Hâle Utar & Alfonso Cebreros Zurita & Luis Bernardo Torres Ruiz & Hale Utar, 2023. "The US-China Trade War and the Relocation of Global Value Chains to Mexico," CESifo Working Paper Series 10638, CESifo.
    8. Maihold, Günther, 2022. "A new geopolitics of supply chains: The rise of friend-shoring," SWP Comments 45/2022, Stiftung Wissenschaft und Politik (SWP), German Institute for International and Security Affairs.
    9. Meckling, Jonas & Nahm, Jonas, 2019. "The politics of technology bans: Industrial policy competition and green goals for the auto industry," Energy Policy, Elsevier, vol. 126(C), pages 470-479.
    10. Alicia García-Herrero & Junyun Tan, 2020. "Deglobalisation in the context of United States-China decoupling," Bruegel Policy Contributions 40447, Bruegel.
    11. Kohn, Eben & Huang, Christopher & Kong, Nathaniel & Hardman, Scott, 2022. "Electric Vehicle Incentives in 15 Leading Electric Vehicle Markets," Institute of Transportation Studies, Working Paper Series qt0tn2p4x6, Institute of Transportation Studies, UC Davis.
    12. Garrido, Celso, 2022. "México en la fábrica de América del Norte y el nearshoring," Sede Subregional de la CEPAL en México (Estudios e Investigaciones) 48056, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    13. Tilman Altenburg & Eike W. Schamp & Ankur Chaudhary, 2016. "The emergence of electromobility: Comparing technological pathways in France, Germany, China and India," Science and Public Policy, Oxford University Press, vol. 43(4), pages 464-475.
    14. Hartman, Paul L. & Ogden, Jeffrey A. & Wirthlin, Joseph R. & Hazen, Benjamin T., 2017. "Nearshoring, reshoring, and insourcing: Moving beyond the total cost of ownership conversation," Business Horizons, Elsevier, vol. 60(3), pages 363-373.
    15. Jonas Meckling & Jonas Nahm, 2018. "When do states disrupt industries? Electric cars and the politics of innovation," Review of International Political Economy, Taylor & Francis Journals, vol. 25(4), pages 505-529, July.
    16. Mengqi Wang & Mrs. Swarnali A Hannan, 2023. "Trade Diversion Effects from Global Tensions—Higher Than We Think," IMF Working Papers 2023/234, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Diogo Ferraz & Fernanda P. S. Falguera & Enzo B. Mariano & Dominik Hartmann, 2021. "Linking Economic Complexity, Diversification, and Industrial Policy with Sustainable Development: A Structured Literature Review," Sustainability, MDPI, vol. 13(3), pages 1-29, January.
    2. Meckling, Jonas & Nahm, Jonas, 2019. "The politics of technology bans: Industrial policy competition and green goals for the auto industry," Energy Policy, Elsevier, vol. 126(C), pages 470-479.
    3. Zimm, Caroline, 2021. "Improving the understanding of electric vehicle technology and policy diffusion across countries," Transport Policy, Elsevier, vol. 105(C), pages 54-66.
    4. Zhu, Zhaohui & Tan, Yafei, 2022. "Can green industrial policy promote green innovation in heavily polluting enterprises? Evidence from China," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 59-75.
    5. Lizbeth Salgado-Conrado & Carlos Álvarez-Macías & Rodrigo Loera-Palomo & C. Pamela García-Contreras, 2024. "Progress, Challenges and Opportunities of Electromobility in Mexico," Sustainability, MDPI, vol. 16(9), pages 1-26, April.
    6. Duran-Fernandez, Roberto, 2024. "Nearshoring in Mexico: Navigating Expectations and Realities of the Reconfiguration of Global Value Chains," EconStor Preprints 301885, ZBW - Leibniz Information Centre for Economics.
    7. Maldonado, Josué & Jain, Apollo & Castellanos, Sergio, 2024. "Assessing the impact of electric vehicles in Mexico’s electricity sector and supporting policies," Energy Policy, Elsevier, vol. 191(C).
    8. Patrice Bougette & Christophe Charlier, 2019. "Subsidies and Countervailing Measures in the EU Biofuel Industry: A Welfare Analysis," Post-Print halshs-02306022, HAL.
    9. Lamberova, Natalia, 2021. "The puzzling politics of R&D: Signaling competence through risky projects," Journal of Comparative Economics, Elsevier, vol. 49(3), pages 801-818.
    10. Mbassi, Christophe Martial & Messono, Omang Ombolo, 2023. "Historical technology and current economic development: Reassessing the nature of the relationship," Technological Forecasting and Social Change, Elsevier, vol. 195(C).
    11. Silvia Cosimato & Roberto Vona, 2021. "Digital Innovation for the Sustainability of Reshoring Strategies: A Literature Review," Sustainability, MDPI, vol. 13(14), pages 1-16, July.
    12. Asier Minondo, 2024. "El desempeño exportador de España: claves de un éxito," Studies on the Spanish Economy eee2024-32, FEDEA.
    13. Enrico Bergamini & Georg Zachmann, 2020. "Exploring EU’s Regional Potential in Low-Carbon Technologies," Sustainability, MDPI, vol. 13(1), pages 1-28, December.
    14. Jonas Meckling & Jesse Strecker, 2023. "Green bargains: leveraging public investment to advance climate regulation," Climate Policy, Taylor & Francis Journals, vol. 23(4), pages 418-429, April.
    15. Sarah Armitage & Noël Bakhtian & Adam Jaffe, 2024. "Innovation Market Failures and the Design of New Climate Policy Instruments," Environmental and Energy Policy and the Economy, University of Chicago Press, vol. 5(1), pages 4-48.
    16. Buchetti, Bruno & Miquel-Flores, Ixart & Perdichizzi, Salvatore & Reghezza, Alessio & Lin, Luca X., 2024. "Loan guarantee and portfolio greening: evidence from European credit registers," Working Paper Series 2916, European Central Bank.
    17. Cui, Li & Chan, Hing Kai & Zhou, Yizhuo & Dai, Jing & Lim, Jia Jia, 2019. "Exploring critical factors of green business failure based on Grey-Decision Making Trial and Evaluation Laboratory (DEMATEL)," Journal of Business Research, Elsevier, vol. 98(C), pages 450-461.
    18. Mealy, Penny & Teytelboym, Alexander, 2017. "Economic Complexity and the Green Economy," INET Oxford Working Papers 2018-03, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford, revised Feb 2019.
    19. Linghong Zhang & Wence Shi, 2025. "The Impacts of the US Inflation Reduction Act on EV Supply Chains," Sustainability, MDPI, vol. 17(2), pages 1-19, January.
    20. Zhang, Yijun & Li, Xiaoping & Song, Yi & Jiang, Feitao, 2021. "Can green industrial policy improve total factor productivity? Firm-level evidence from China," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 51-62.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:195:y:2024:i:c:s0301421524004051. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.