Mexico’s Ambitious Olinia EV Project Faces Budget and Timeline Challenges

Amidst a global shift towards sustainable transportation, Mexico is stepping into the electric vehicle market with an ambitious project called Olinia. Announced in Mexico City by President Claudia Sheinbaum, Olinia promises to be the first series of electric vehicles fully designed and assembled in Mexico, aiming to significantly impact both the local and global automotive scene.

During a media briefing, President Sheinbaum introduced the Olinia project, with plans to launch three compact EVs. Roberto Capuano, the project’s director, emphasized that these vehicles are designed to be “safe, efficient, sustainable, and within reach for millions of Mexicans.” The first model is anticipated to debut by the 2026 World Cup in Mexico City, with full public availability by 2030.

Olinia is positioned as a local solution to meet Mexico’s target of 45% clean electricity by 2030 while countering the influx of Chinese EVs like BYD and Chery, which now make up nearly 10% of new car sales in the country.

Despite its promise, the Olinia project faces significant hurdles, including limited funding, undeveloped lithium resources critical for battery production, and a challenging timeline. Experts highlight the complexity of building a new EV industry from scratch in Mexico, where infrastructure is not yet prepared for such an endeavor.

“It’s an interesting concept, but making an EV from zero, in Mexico, without existing infrastructure, is extremely complicated,” a local Tesla service manager, who wished to remain anonymous, told Rest of World. This perspective underscores the technical, economic, and logistical challenges that question the short-term viability of Olinia.

Mexico’s automotive industry is robust, producing over 3 million cars annually, primarily for the U.S. market. The local EV market is expanding rapidly, with sales of hybrid and electric vehicles growing by 80% in early 2024 compared to the previous year, according to official data. The EV market is poised for continued growth, projected to rise by 25% to 30% over the next five years.

Olinia’s vehicle lineup, which includes two small passenger cars and a delivery truck, aims to attract business owners, young urbanites, and families. These vehicles are expected to be priced between 90,000 and 150,000 Mexican pesos ($4,420–$7,367), significantly lower than entry-level models from BYD or Tesla in Mexico.

However, financial constraints could impede Olinia’s success. The government’s 2025 budget for technology, science, and innovation is the lowest since 2008, and the initial investment of 25 million Mexican pesos ($1.2 million) is minimal in the context of automotive production, according to Abe Askenazi, COO at Zero Motorcycles.

“In the car world, you probably consume that in a week. That’s nothing,” Askenazi said.

Another significant obstacle is the limited availability of public charging infrastructure. Most existing charging points are in private or corporate spaces, with few public options. To address this, Askenazi suggests that the government either subsidizes the development of charging stations or incentivizes private companies to build them for public use.

Capuano did not respond to a request for comment from Rest of World.

The Olinia initiative aims to source most vehicle components from within Mexico. However, despite the presence of lithium reserves, crucial for EV batteries, the country has yet to produce lithium commercially. This poses a challenge, as local lithium is more costly due to its location in hard-to-access clay deposits, according to Diana Avalos, director of the Electric Mobility Association in Mexico.

“The issue of the batteries is going to be a complex part of the story,” Avalos said, highlighting the complications even established manufacturers face in sourcing lithium. It involves a complex, often international, supply chain.

Time is another critical factor. Askenazi noted, “Developing your own vehicle from scratch takes no less than five years.” He and the Tesla manager both doubt the feasibility of Sheinbaum’s timeline, suggesting that while a prototype might be ready by 2030, mass production would likely not occur before 2035.

The Ministry of Science, Humanities, Technology, and Innovation, overseeing the Olinia project, did not provide comments.

Olinia is part of a broader trend of homegrown EV initiatives in Latin America, where the availability of affordable Chinese EVs is accelerating market adoption. Bolivia’s Quantum and Argentina’s Tito are examples of regional mini EVs gaining traction.

Given Mexico’s technological and mineral constraints, Diego Marroquín Bitar from the Woodrow Wilson Center suggests focusing on assembly, components, and battery manufacturing, leveraging trade ties to import key resources. Local production may not be cost-effective, but strategic partnerships could help Mexico become a significant EV player.

Trade issues could further complicate Olinia’s prospects. A possible trade war with the U.S. could increase manufacturing costs, potentially making the project unviable.

Still, optimism persists due to Mexico’s long-standing automotive industry, which began with Henry Ford’s first plant in 1925. Today, Mexico hosts plants for Audi, Nissan, Fiat, BMW, and others, and is the fourth-largest global manufacturer of car parts. The skilled workforce is well-positioned to transition to EV production, as highlighted in a National Auto Parts Industry Association report.

Overcoming some challenges is possible. Avalos advocates for establishing trade alliances with Latin American lithium producers like Chile, Argentina, and Bolivia — the “lithium triangle.” Importing lithium from these nations could enable Mexico to meet its EV targets and eventually develop domestic production.

Avalos believes Mexico’s focus on overlooked segments — low-income families and young individuals — is strategic. The project resonates with people like Damián Vázquez, a sales clerk who commutes daily on a motorcycle in Mexico City. He is excited about the prospect of affordable and accessible EVs.

“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.”