Alexander Katsouris, Ep Automotive’s director, reflects how the fast accelerating trend on electric cars and the market changes imposed by the contingency show how Mexico can be a global powerhouse for the Automotive sector.

By the end of 2020, 175 different models of electric cars must be in production. By 2025, over 350 models of electric cars must be on the market.

Mexico has positioned itself over the past three decades largely in Electronics Consumer Goods manufacturing, as well as the Automotive sector. Today, the country has over 600 plants of Tier 1 suppliers dedicated to around 30 OEMs –specialized both in heavy and light vehicles–, producing approximately 4 million vehicles per year.

Market consultancies consider the possibility that the United States shall grant economic incentives for companies manufacturing electric cars in Mexico, once its president-elect promotes policies on pollutant emission reduction that he must foster within the G20, perhaps even beyond the ones determined on the Paris agreement.

Recently, Ford invested $ 420 million in the Cuautitlán plant to manufacture the new Mustang Mach E electric pickup.

Another example of impact in terms of investment in Mexico related to electronic cars is given by General Motors. Increasing by 35% its investment in autonomous and electric vehicles (EV) between now and 2025, they expect to reach 27 billion dollars. That should boost the development of new models worldwide, generating a greater mobility of inputs and parts.

This now raises Mexico to a global powerhouse, combining the skill set to attend the more recent requirements of the Automotive Sector.

Is the Mexican automotive supply chain ready?

All these variables prove that the automotive supply chain should become even more challenging, as manufacturers need technology to provide smart solutions and efficient practices within their production systems.

In turn, this presents a more unpredictable trend in how materials and components can be purchased. It also increases the pressure to maintain high levels of quality with shorter production runs, initially designed for standardized mass production processes.

Companies in the automotive and electronics industries have complex supply chains, and for their correct management they need sophisticated tools and services that enable them, on the one hand, to monitor risks and predict interruptions, and on the other hand, to generate logistics strategies that support a fast recovery in critical moments.

All of that with a logistics approach that combines the authority of companies that deeply understand the automotive supply chain pain points and the start-up mindsets: innovation, creativity and the need to generate processes, build historical data servers and deal with the high rate of churn in their product, process and location.

Logistics partners for the electric cars supply chain

As a strategic logistics ally, some of the challenges we are working through at EP Automotive with our customers are:

– More sensitive cargo: electronic components often require anti-static or reinforced packaging.

– High value product in transit/in stock: designing transit times with low risk whilst meeting our clients’ needs of inventory management.

– High quality transportation equipment requirements: new units for moving high value, sensitive goods.

– Competitive pricing: clients are now more sensitive to the cost per unit within their production process, as components are becoming obsolete faster due to the demand of new technologies.

– Capacity to answer to critical situations: all supply chains have time-sensitive areas that logistics companies must know as the palm of their hands.

Several assessments indicate that the main strategy in our times of change is to seek for agile logistics, which goes beyond generating faster deliveries, prioritizing easily changing tactics. In other words, relying in partners flexible to offer alternatives and take different action plans on the move.

Europartners at the forefront of e-car logistics

Some of the main actions recommended by our international consultants in the automotive vertical to build a highly efficient logistics strategy to develop the whole potential of the Mexican market are:

  1. Build plans related to business continuity and risk management in the supply chain, with an emphasis on the complex interconnection between suppliers and customers.
  2. Diversification. Enterprises cannot concentrate their supply in a single latitude anymore, they cannot rely on a single supplier. It is time to diversify key components.
  3. Control Tower Strategy. Having the ability to react immediately, checking alternatives in real time (even after hours). Logistics and product suppliers aligned to this policy add agility to decision making.
  4. Inventory management. Purchasing and inventories strategies with risk assessment and designing alternatives to mitigate those risks in any unforeseen event.

At Europartners Group, our focus is to remain continuously sensitive to these changes in demand in the market. Our teams are prepared to provide standardized transportation solutions for planned base volumes or to design tailor-made solutions that comply with all the requirements that our clients establish, offering a time critical focus, providing contingency plans to action with agile processes to avoid line stoppages.

Our experts are strategically positioned through 32 cities in 21 Mexican states, 14 cities in the United States and other 29 own offices in Latin America and Europe, focused on providing the Automotive sector OEMs and Tiers dedicates attention for the best customer experience, with the flexibility the industry needs to import and export to Mexico, leveraging the country’s market potential in this accelerating trend on electric cars.

Alexander Katsouris picture. He is EP's director of the automotive vertical.