With a global consumer market paying closer attention to environmental issues, automotive manufacturers in Mexico are responding. Nissan in particular is one brand that has devoted a substantial amount of resources into delivering green vehicles, chief of which has been the electric model Leaf. According to Manufactura, the Mexico-based industry news source, the Leaf has become the best-selling electric vehicle across the globe and Nissan has plans to launch a manufacturing facility for the environmentally-friendly car in Mexico later this year.
Missing the bigger picture
Although Nissan is the least profitable of the Japanese automakers, that doesn't necessarily reflect how successful the company has been in the international markets. In fact, Bloomberg News reported net income for Nissan increased 57 percent - reaching $825 million - during the last quarter of 2013. What's more, global deliveries jumped 3.3 percent last year after sales in the U.S., Mexico and China reached record-breaking levels. In total for 2013, the Japanese automaker delivered an all-time high 5.1 million units. Accordingly, Nissan corporate vice president Joji Tagawa explained the fact that other Japanese car producers outpaced Nissan doesn't paint a complete picture. In fact, Nissan's focus on electric vehicles remains a strong point and a characteristic that differentiates the brand compared to its competitors.
In Mexico, Nissan anticipates annual output will increase by 25 percent - or 850,000 cars and trucks. This is one reason why Nissan is expanding in Mexico by opening up a third manufacturing facility. With its sights set on holding the largest consumer market share in the region, the automaker continues to increase its manufacturing capabilities. For instance, Nissan opened a $2 billion plant in Aguascalientes in 2013 that the company expects will produce 175,000 vehicles annually, according to USA Today. Ildefonso Guajuardo, secretary of economy for the Mexican government, explained the country has picked up significant speed in manufacturing because the quality of production remains high and the regulatory climate is welcoming for foreign investment.
New facility requires infrastructure development
Manufactura indicated Nissan will open a new facility dedicated to manufacturing the Leaf in the second half of 2014, and the company hopes to sell more than a thousand units during the first year of operation. In order to prepare for greater access to electric vehicles, Mexico will have to invest in infrastructure projects, such as electric car charging stations. One option is installing these charging locations on main thoroughfares, shopping centers and in consumers' homes. Stakeholders are working with the Federal Electricity Commission to create a payment plan that will provide incentives for car owners. For example, if drivers who owned a Leaf were to recharge their vehicles at home, they would pay a different utility rate than standard domestic use. At the same time, Nissan is working with the Mexican government to create priority parking areas for electric vehicles as well as develop an initiative that would allow Leaf owners to avoid paying a value-added tax when purchasing the vehicle.
While there are obstacles to manufacturing electric vehicles in new markets, Nissan recognizes the excellent opportunity it has by expanding in Mexico.
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