Earlier this year, Mexican President Claudia Sheinbaum beamed as a rendering of three boxy, compact electric vehicles was displayed on a screen during a media briefing in the capital city.
Named Olinia, or “to move” in the Nahuatl Indigenous language, they will be the first EVs to be fully engineered and assembled in Mexico. They will be “safe, efficient, sustainable, and within reach for millions of Mexicans,” Roberto Capuano, the director of the project, said during the presentation. The first model will be ready by the time the 2026 World Cup kicks off in Mexico City, and be available to the general public by 2030, he said.
Slated to make EVs with almost entirely Mexican components, the Olinia project is touted as the answer both to the government’s ambitious goal of generating 45% clean electricity by 2030, and the influx of imported Chinese EVs, including BYD and Chery, which now account for nearly a tenth of new cars sold in Mexico.
But Olinia faces a number of challenges, including an inadequate budget, an undeveloped lithium industry that is essential for battery manufacture, and an unreasonable timeline, experts said.
“It’s an interesting concept, but making an EV from zero, in Mexico, without existing infrastructure, is extremely complicated,” a local service manager for Tesla, who requested anonymity because he was not authorized to speak to the media, told Rest of World. “Project Olinia is ambitious, but it presents various technical, economic, and logistical difficulties that put into question its short-term viability.”
Mexico is an important automotive hub, producing more than 3 million cars annually, over 80% of which are exported to the U.S. It is also a growing EV market: Between January and July 2024, more than 54,000 hybrid and electric vehicles were sold in the country, an 80% increase from the same period in 2023, according to official data. The country’s EV market is expected to grow between 25% and 30% over the next five years.
Olinia vehicles — including two mini passenger vehicles and a small delivery truck — are aimed at business owners, young city dwellers, and urban families. The no-frills EVs are expected to be priced at 90,000–150,000 Mexican pesos ($4,420–$7,367), less than half the price of an entry-level BYD or Tesla in Mexico.
But while Mexico’s ambition is big, it is unclear if the Olinia project will meet its goals. The government’s 2025 budget for technology, science, and innovation is the smallest it’s been since 2008. The initial investment of 25 million Mexican pesos ($1.2 million) is “chump change,” Abe Askenazi, a Mexican engineer and chief operating officer at Zero Motorcycles, an electric motorcycle maker in California, told Rest of World. The limited funds will make it hard for Olinia to compete with BYD and other Chinese EVs in the country, he said.
MMariceu Erthal/Bloomberg/Getty Images
“In the car world, you probably consume that in a week. That’s nothing,” Askenazi said.
Another roadblock for Olinia is the limited number of public charging stations. The majority of the current infrastructure is housed in private residences and corporate facilities. The government should subsidize charging stations, or offer incentives for the private sector to build them and make them available to the public, Askenazi said.
Capuano did not respond to a request for comment from Rest of World.
The Sheinbaum administration’s vision for Olinia includes sourcing the “majority” of the parts in Mexico. But despite having lithium deposits — an essential component in rechargeable EV batteries — the country is yet to produce lithium at commercial scale.
A part of the problem is that local lithium is “much more expensive” because it is embedded in clay reserves that are harder to access, Diana Avalos, executive director of the Electric Mobility Association in Mexico, a lobby body, told Rest of World.
“The issue of the batteries is going to be a complex part of the story,” she said. Even for established EV manufacturers, sourcing lithium can be a complicated cross-continental journey.
It’s not just a question of money and access to resources such as lithium — it’s also a question of time, said Askenazi. “Developing your own vehicle from scratch takes no less than five years,” he said.
The Tesla manager, too, finds Sheinbaum’s goal unrealistic. “If everything advances perfectly, the first actual prototype could be available in five years [2030],” he said. “But to reach mass production, [you] would need at least 10 years [2035].”
The Ministry of Science, Humanities, Technology and Innovation, which is overseeing the Olinia project, did not respond to requests for comment.
Olinia is the newest among homegrown EVs across Latin America, where the easy availability of affordable Chinese EVs is driving faster adoption. In Bolivia, there is Quantum, a mini EV that can be plugged into a wall socket, and which is now also available elsewhere in the region. Argentina has Tito, a mini EV designed for city use.
In Mexico, given the technological constraints and limited access to critical minerals, “fully vertically integrating EV production isn’t cost-effective,” Diego Marroquín Bitar, a scholar at the Woodrow Wilson Center, told Rest of World. The more feasible option is for Mexico to “leverage its trade ties,” and focus on assembly, components, and battery manufacturing, “while sourcing key inputs from its regional partners,” he said.
Then there is the issue of possible tariffs. The automotive supply chain, which depends on parts crossing the borders between Canada, the U.S., and Mexico, could be upended, disrupting production and increasing costs for manufacturers. A brewing trade war with the U.S. could “raise costs to a point where the project is unviable” for Mexico, Marroquín Bitar said.
Despite these challenges, there is optimism around the Olinia project, in part because of the robust automotive industry that dates back to 1925, when Henry Ford built Mexico’s first auto manufacturing plant. Today, Mexico is a manufacturing hub for Audi, Nissan, Fiat, BMW, General Motors, and others, and is the world’s fourth largest manufacturer of car parts. The industry’s highly skilled workforce could quickly adapt to the needs of EV manufacturing, according to a recent report from the National Auto Parts Industry Association.
Bénédicte Desrus/Associated Press
Some of Olinia’s challenges can be overcome. To source lithium for the battery, for example, Avalos has called for new trade alliances with other Latin American lithium producers, like Chile, Argentina, or Bolivia, which together are known as the “lithium triangle” and produce 75% of the global supply. Importing lithium from these countries to make batteries would allow the government to meet its goals, “and then eventually migrate toward those parts being assembled” domestically, said Avalos.
“If we already make non-electric cars, then why can’t we be a key player in the EV space as well?” she said.
Focusing on a segment of the population that has been largely ignored — low-income families and young people — is also smart, she said.
Like Damián Vázquez, a sales clerk at a men’s clothing store in Mexico City. As someone who used a motorcycle to travel short distances every day in areas with heavy traffic, he represents Olinia’s target audience. And he is definitely keen.
“I like that the government is taking this initiative,” Vázquez told Rest of World. “As long as the car is cheap and I can charge it, I’m all in.”
