Electric vehicles (EVs) are becoming increasingly popular as passenger and commercial vehicles as consumers and companies look to reduce their carbon emissions in support of national climate pledges. Many countries have introduced financial incentives to encourage EV uptake, while others are introducing eventual bans on internal combustion engine (ICE) vehicles, driving consumers to shift. What was once a niche industry is rapidly expanding, with a wide range of EV startups and well-known automakers offering a variety of EV models.
Advantages of Electrifying Commercial Fleet Vehicles
We expect EV sales to reach between 60% to 70% of vehicles sold globally by the decade's end as global demand continues to increase. In 2023, the sale of LCVs outpaced that of electric passenger cars, as automakers offered EVs with improved capabilities at a lower cost. We expect more commercial vehicle purchasers to shift to EVs as charging infrastructure becomes more widely available, and the price of EVs compared to ICE vehicles improves.
There are several advantages for companies to invest in electric LCVs over ICE alternatives. Companies can significantly reduce their carbon footprint by adopting EV fleets in response to growing pressure to decarbonize and respond to public expectations around ESG. Further, as several governments introduce low- and zero-emission zones in major cities, it will ensure companies with electric LCV fleets have free access to these areas.
Rapid Growth but Infrastructure Challenges Remain
The EV market in Mexico is growing steadily, with a significant EV manufacturing pipeline that we expect to spur market growth. We expect Mexico to become an EV manufacturing hub for the Americas, developing its strong reputation in the automotive industry. The EV share of car sales in Mexico is forecast to reach between 4% and 8% by 2026, with the potential for much more rapid growth as EV prices decrease and charging infrastructure becomes more widely accessible.
While the EV market is relatively tiny, Mexico could benefit significantly from market expansion, especially in densely populated urban areas with high levels of air pollution. We have previously identified that Mexico has significant potential to expand its renewable energy capacity, which could drive down the cost of the electricity needed to power EVs.
Large Corporations are Leading the Way in Mexico
A few major companies in Mexico are leading the way regarding electric LCV uptake. Grupo Bimbo, the world’s largest baked goods company, has pledged to reduce its direct and indirect emissions to 50% by 2030. One of its initiatives to achieve this goal is to switch its vehicle fleet to electric.
The company introduced its first electric LCV fleet in 2013, growing the number of EVs in its fleet to 1,186. In 2023, it aimed to more than double that figure to 2,508 EVs. Meanwhile, PepsiCo Mexico launched a fully electric delivery fleet at five distribution centers in 2023.
The publication of the government-backed U.S.-Mexico Task Force for the Electrification of Transport - Diagnosis and Recommendations for the Transition of Mexico’s Automotive Industry report helped lay out the current EV situation in Mexico and present opportunities and challenges for the market. We expect recommendations from this report to help inform government policy and encourage businesses to invest in electric LCV uptake over the coming years.
The Growth of Electric Fleets Remain Strong
The global uptake of electric LCV is steadily increasing in response to government pressure for companies to decarbonize, stricter ESG standards, and improved EV offerings. As technological innovations enhance EV performance and drive down costs, we expect the uptake of both passenger EVs and electric LCVs in Mexico to increase significantly.
The positioning of Mexico will further support this as an EV manufacturing and trade hub within the Americas. At Mexico Energy Partners, we are revolutionizing how multinational companies operate their commercial fleets in Mexico. Our expertise in EVs positions us as your ideal partner in embracing a sustainable future. Contact us to begin migrating your fleet to electric vehicles.