Expanding Production Capabilities
Chinese automaker Foton has revealed plans to construct a second manufacturing facility in Mexico, enabling the company to produce electric vehicles (EVs) within the country. With a specialization in heavy-duty EV production, particularly trucks, buses, and pickups, Foton also manufactures traditional gas-powered models for the haulage and construction sectors.
Seizing Opportunities in Mexico
Since establishing a facility in Jalisco, Mexico in 2017, Foton is now seeking to expand its operations as part of the growing trend of nearshoring. Mexico has become an attractive destination for Asian manufacturers due to its cost-effective and high-quality production facilities, as well as its proximity to the important United States market. Foton is among the many global heavy manufacturers drawn to these advantages.
Transitioning to Local Manufacturing
Currently, Foton imports electric vehicles directly from China to supply the Mexican market. However, the planned manufacturing facility in Mexico will provide the company with the capability to manufacture Electric Vehicles within the country itself. Although the specific location of the new site is yet to be determined, Jalisco and Aguascalientes are being considered as potential options.
Investment and Export Opportunities
While the total investment cost remains undecided, Foton’s EV Director, Roberto Talavera, predicts that it will amount to approximately US $1 billion. The establishment of the manufacturing plant will also enable Foton to export vehicles to the United States. Additionally, Foton has set a target of selling 3,000 EVs in Mexico by 2025, with the hope that EV sales will account for 10% of all new car sales in 2024.
Current Operations and Future Partnerships
Foton is already involved in providing construction equipment to Mexican companies, including ICA and Cemex. The company also supplies buses for the Metrorrey public transportation network in Nuevo León.
In a recent report, Bloomberg mentioned Foton’s preparations for a potential partnership with Contemporary Amperex Technology Co. Ltd (CATL), the world’s largest producer of EV batteries. CATL specializes in EV battery manufacturing, as well as recycling, refurbishing, and repurposing of EV batteries. CATL is exploring potential EV battery manufacturing sites in northern Mexico, including Ciudad Juárez and Saltillo, Coahuila.
Potential Benefits of Foton-CATL Partnership
Should the partnership between Foton and CATL materialize, it would likely position Foton as the leading provider of technical support, repair, and recycling services for CATL batteries in Mexico. This collaboration could be part of a new “battery-as-a-service” venture, enabling Foton users to exchange batteries in their vehicles. Notably, Foton and CATL are already partners in China, further strengthening their potential cooperation.
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