After a long and intense electoral campaign, the vast majority of Mexicans bet on June 2 on the project of Claudia Sheinbaum, who will surely provide continuity to the current government in many aspects and, perhaps in others, new projects for the country. The arrival of this new federal administration represents a good time to reflect on industrial policy, and specifically, the plans required to continue strengthening one of Mexico's most important industries: the automotive industry.

Mexico currently produces 4 million vehicles, of which 3 million are light vehicles. This makes it the seventh largest producer worldwide, very close to Germany, and the largest producer in Latin America. Its global positioning is even better when it comes to auto parts: in 2023 alone, Mexico produced more than 120 billion dollars of vehicle components, which places it in fourth place worldwide and the main exporter of auto parts to the United States.

The industry is of utmost relevance for the country as it employs more than two million people and contributes 4.7% to Mexico's domestic production. The more than 14 free trade agreements and its proximity to the second largest vehicle market make Mexico an ideal destination for investment in the sector.

What's next for Mexico? The country's first automobile plant was installed by Ford in 1925. Since then, more than 20 plants have come into operation in the center and north of the country. Vehicles of all types are assembled in our country: compacts, sedans, SUVs, pick-ups, premium vehicles and, more recently, electric cars, in Ford, General Motors and JAC plants.

Audi also recently announced an investment of more than one billion euros to equip the San José Chiapa plant in order to produce its eTron line of automobiles in Mexico. During the announcement, the governor of Puebla, Sergio Salomón, emphasized the importance of Puebla as an “electromobility hub” and a “mindfacturing” center.

The comment is perhaps in the right direction and it seems to me that this is the way forward. If Mexico wants to stand out as a mobility hub, the new administration will have to define a clear public policy that can have an impact on this objective. The BYD and Audi announcements point in that direction. However, it is not enough to be open to these investments and grant facilities for their installation. The policy must be more comprehensive: it must send a message that Mexico not only manufactures, but also creates technology and adopts sustainable practices.

On this path, we should encourage greater enrollment of students in STEM careers (science, technology, engineering and mathematics) as well as the development of ad hoc technical careers, improving the performance of our students in tests such as PISA. This path should also encourage greater research and development activity not only at the public but also at the private level. A new policy would have to be looking at very specific targets to attract important activities in the battery production chain, namely the refining of lithium and other key minerals, production of cathodes, cells and battery packs.

In parallel to the arrival of investments, we should have an aggressive plan for the electrification of the vehicle fleet: more incentives for the purchase of hybrid and electric vehicles and greater investment for the development of charging infrastructure. All of this complemented by greater investment in renewable energy power generation plants.

An industrial policy that makes Mexico a global electromobility hub is laudable and desirable. The next six years will be key in making this transition possible for the country.

*Professor of Operations Management at IPADE Business School.