Electric vehicle regulation and law in Mexico

The Mexican EV market is currently at a very early stage of its development. EVs only started to be commercialised in 2014 and, although tax incentives and other measures to increase their use have been implemented, the number of electric vehicles in the country remains low. According to data from the Mexican Automotive Industry Association (Asociación Mexicana de la Industria Automotriz), in the first month of 2018 only 11 EVs were purchased in the country.

As an emerging market, Mexico has significant room for investment, for example in the development of EV charging infrastructure to help consumers cope with the low distance ranges offered by today’s EV batteries.

Because Mexico has important multilateral trading agreements, it has started to be the focus of attention for investment capital from large manufacturing countries, such as China, looking to set up electric automobile spare parts factories. International and domestic companies have also been introducing EVs to México and are planning to develop charging centers and other infrastructure.

To date, the following EVs have been commercialized in Mexico: Renault Twizy; Zacua M2; Nissan Leaf; Chevrolet Bolt; BMW i3; and Tesla models 3, S and X. According to the Mexican Automotive Industry Association (“AMIA”) the amount of EVs purchased in Mexico since 2016 and until January 2018 is equal to 539.

The Mexican legal system does not have specific legislation or by-laws for EVs. However, general regulations concerning vehicle weight, security measures and other requirements are applicable to EVs.

Mexican legislation, federal and local, provides for diverse incentives or supports for the use of EVs.

Federal taxation law includes several significant measures. The Federal Law on New Automobiles Taxation exempts vehicles propelled by electric rechargeable batteries, as well as hybrid vehicles, from fees concerning their sale or import.

The Income Tax Law grants benefits, in the form of higher amounts for permissible deductions, to persons who invest in electric and hybrid vehicles, or acquire their temporary use. A further fiscal incentive takes the form of a tax credit of 30% of the investment made in public power supply facilities for EVs.

The Comisión Federal de Electricidad (CFE), the largest electricity supply company in México, promotes the use of EVs through the installation of an independent light meter. This prevents the applicable electricity tariff range from increasing, keeping the EV-user’s fee within the domestic standard spectrum instead of the high consumption rate.

The CFE, along with the vehicle industry, is working to improve the recharging infrastructure in the country. Charging facilities have been installed in various states and, according to statistics published by the Federal Government, in February 2017 there were 699 in place, 68% of which are public. During the Mexico Energy Forum 2018, the CFE announced that there are currently 900 charging facilities in the country, which means an increase of 201 charging centres, financed through a trust for Energy Transition and Sustainable Energy Use.

In Mexico City, local regulation provides EVs with attractive benefits to promote their purchase and use. Electric and hybrid vehicles are excluded from the vehicle verification proceedings and can circulate daily without limitation, unlike other urban vehicles subjected to “no-circulation” programmes. Parking lots, whether public and privately operated, must include exclusive parking spots for electric and hybrid vehicles.

Mexico City also has the EcoTAG, a special type of the prepaid card used to transit through the city’s urban highways. The EcoTAG is exclusively for electric and hybrid vehicle owners and grants them a 20% discount on the regular fee.

Supports are available for providers of sustainable public transportation. In Mexico City, public or private operators of public transportation electric or hybrid vehicles are exempt from the requirement to renew their fleet every ten years – the renewal cycle is linked to the technical guidelines of each vehicle. Providers of public transportation using sustainable technology are also given special acknowledgement.

The main entities involved in activities including EV commercialisation, regulation or manufacture range from authorities to government institutions, private corporations and civil associations.

The Ministry of Environment and Natural Resources is one of the central agents concerning EV dynamics in Mexico. The Ministry focuses on public policy geared towards environmental preservation and improvement.

The Federal Electricity Commission is a major player. It is responsible for the commercialisation of electric energy, for example, which constitutes a major input for EVs. It has taken measures to promote the widespread use of electric and hybrid vehicles, such as providing independent light meters and installing charging facilities.

The Ministry of Economics is playing an important role. It has issued standards concerning vehicle security measures which, while not specifically aimed at EVs, must be taken into account by EV developers and retailers.

Leading private associations highly involved in promoting and providing and market information on EVs include the Mexican Automotive Industry Association and the Mexican Automotive Distributors Association. These associations have conducted surveys of EVs and their presence in Mexico.

Further deployment of EVs in Mexico faces various challenges, including:

• Charging infrastructure – while there has been an increase in the number of charging stations, the energy supply infrastructure is still thin and focused in a few locations, such as Mexico City and Nuevo León. Without a large number of charging facilities it is not attractive for users to acquire EVs, given the low distance ranges of today’s batteries.
• EV trip range – EVs are not yet capable of providing the user with a long-range ride. Although there are models, such as Tesla Model S, that guarantee a 500km trip, the widely commercialised vehicles have not yet passed the 200km trip mark. The weight-power ratio in EVs needs to be improved in order to increase battery capacity without making the vehicle heavier.
• Electricity grid capacity – the electricity grid serving Mexican homes does not have enough capacity to efficiently charge EVs. A domestic station would take between 12 and 14 hours to fully charge a vehicle.
• Price – the price of an “accessible” EV is around USD 16,500, which matches the price of a well-equipped petrol- or diesel-propelled vehicle. Understandably, users therefore prefer to invest their money in higher specification petrol or diesel vehicles than in the most basic EV models.

These challenges are shared by Mexican government entities and private EV and infrastructure developers. Making EVs more attractive for users is the key to their widespread use.