Industry Trend Analysis - Tariff Removal To Heat Up EV Competition - MAY 2017

BMI View: Mexico ' s decision to scrap tariffs on EVs and their components will inject new life into the Mexican EV market. On the retail side, the tariff removal will lower end-prices of EVs and spur competition in the market by encouraging new players to enter , particularly from China . The move will also encourage the beginning of EV production operations in the country.

In February 2017, the Mexican government announced it had scrapped tariffs on electric vehicle (EV) imports as well as chassis, bodywork and electric motor components for EVs. The move is an additional support for the EV market introduced alongside the government's 2016 move to increase the tax deductible allowance for EVs to MXN250,000 (USD12,292), up from the normal allowance of MXN175,000 (USD8,604) applied to any conventionally fuelled vehicle.

The move will help mature Mexico's underdeveloped EV market by lowering prices and encouraging competition in the market. It also promises to spur production and assembly of EVs in the country, particularly by new market entrants. From a regional perspective, this more buoyant outlook for EV sales and production will also allow Mexico to take the stage alongside Brazil as one of the few bright spots for EVs in the Latin America region ( see ' Bright Spot Emerges In Desolate LatAm EV Market ' 18 January 2016).

Mexico: A New Bright Spot Alongside Brazil?
EV Sales By Country, Jan-Nov 2016, Units

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