A new Chinese electric vehicle brand is coming to Mexico. Zeekr, part of the Geely Group, is seeking to conquer the Mexican luxury car market. The landing of the Asian brand, founded in 2021, occurred just last July, on the wheels of the Zeekr 001 and Zeekr X models. The price of these models ranges from 799,000 pesos to just over a million. The brand will compete directly with other players premium traditional ones like Audi, BMW, Mercedes-Benz and Volvo, its sister within the Geely group.
Industrial engineer with more than a decade of experience in the luxury electric car segment, Edgar Suárez Rubio (Mexico City, 47 years old), director of Zeekr in Mexico, has the task from the Asian country of turning Mexico into one of Zeekr’s anchor points in Latin America. With a business model based on imports, the challenge will not be minor. Starting next October, electric cars imported from countries with which Mexico does not have a free trade agreement, such as China, will lose the tariff exemption of between 15% and 20% that was granted since September 2020. The tightening of tariff barriers imposed both in Mexico and in the United States on this type of units represents a challenge for the entire sector.
Like other Chinese firms in the sector, Suárez Rubio says that Zeekr does not intend to export from Mexico to the US market. For now, its priority is to consolidate its position in Mexico through a network of sales outlets in Mexico City, Guadalajara, Mérida, Querétaro, Tijuana, among others. The high expectations in the country have figures to support them. If in 2016 just over 8,000 hybrid and electric cars were sold in Mexico, by the end of 2023 the figure exceeded 77,6000 units with an annual increase of 44%, according to information from the Mexican Association of the Automotive Industry.
Ask. Why did Geely Group decide to take a chance and bring Zeekr to the Mexican market?
AnswerThe Geely family has several brands such as Lotus, Volvo, which is the majority shareholder of Mercedes Benz, and within this family, Zeekr was born three years ago and from the first day Zeekr was born as a global company, with a view to marketing its high-end vehicles in several countries and, with this objective, Zeekr saw Mexico as an opportunity to begin marketing vehicles in Latin America. In Mexico we like to try out new things, the technology and the numbers prove it, the percentage of penetration of electric cars in Mexico has grown exponentially. Electricity is coming. The trend towards mobility is going towards electric. I was the first person hired in Mexico, it has been 10 months and the great advantage is that we are taking some of the resources from our sister company Geely, which arrived in Mexico a year earlier for the start-up.
P. What will be your strategy to conquer the luxury market in Mexico and Latin America?
R. There are many Chinese companies already, with cars that are very good, but not all of them are premium range and in Mexico there is an interesting premium offer, but their costs are very high. Our premium level is the same, or even higher, but the prices are more accessible. That gives us an advantage because we are in a separate niche. Tesla paved the way, without a doubt, and we will continue to be part of the same ecosystem that has the objective of electrifying mobility, but our cars have better assemblies, more technology, more gadgets and better quality.
P. What is your offer for the Mexican market?
R. The car that started it all is the Zeekr 001 and then the Zeekr X, with those two models we are going to start and next year we will surely bring one or two more. Officially, the launch was last July and this month we started selling. We already have about 45 units on the waiting list to be delivered and by the end of the year we hope to sell 400 cars.
P. What are your future plans in Mexico?
R. We have three phases. In the first phase we started with six points of sale in the main cities of the country, Guadalajara, Mexico City and Monterrey. In the second phase we are evaluating expanding to Puebla, Querétaro and Mérida.
P. Why is Zeekr considering a city like Mérida for growth?
R. This city is growing a lot, there is a lot of economy, and it is also a city that is preparing for electromobility. In fact, one of the main corridors that are being planned is the one that goes from Merida to Cancun, precisely to promote this type of technology in that area. And in a third phase, we would go to Guanajuato, Chihuahua and Tijuana, but we still have to evaluate it well.
P. The third phase already includes states close to the country’s northern border. Do you plan to export to the United States market?
R. In fact, Tijuana is one of the places where I think we can be more successful because it is becoming so electrified, but we want to be very careful not to send the wrong message that we want to sell our vehicles in Tijuana and then move them to the United States. We are one of the few Chinese companies listed on the New York Stock Exchange and we have a good relationship with the United States, so we don’t want to send a message that could be misinterpreted.
P. At the moment, with the tariff barriers in the US, it seems like a very remote possibility, however, as a businessman and in the medium term, do you see it as viable to knock on the doors of the US market?
R. We have to wait to see who wins the US presidential election, what kind of decisions are made on tariffs and the relationship with China and, as I mentioned, we were welcomed with open arms at the New York Stock Exchange and we do not want to undermine that relationship.
P. Behind closed doors, the tariff exemption for the import of electric cars in Mexico will also end next October. How will this tariff change affect your business plans?
R. We started to do our own thing business plan since October of last year and we did it taking into account that we could lose that government subsidy, we already knew that that subsidy had an expiration date. In fact, from the Mobility Association in Mexico [EMA, por sus siglas en inglés] There is a lot of pressure to extend this period and, obviously, we would like to see it extended, it would be the best for all of us, for our business, but, yes, the trend is that these types of tariffs are increasing, both in Europe and in the rest of the world.
P. What will be your strategy to overcome this tax increase?
R. From the beginning, it was planned that we would be able to absorb this increase in taxes and that it would not affect the price for the end customer. Obviously, we will have price increases, but the increases will be normal, like those that occur in January or due to the introduction of new models.
P. What do you think of your Chinese competitors in Mexico?
R. BYD is not a premium brand, it is a brand mainstream, I’m not saying it’s a bad brand, it’s a very important player for us because we want to promote electromobility in the country and in the world. Here, the more vehicles are sold, the more infrastructure there will be and the demand for electric cars will grow, so we can’t see ourselves as competitors, we have different products, but we can work together to grow.
P. As an ecosystem, is it a bad sign that a player as relevant as Tesla is postponing its plans in Mexico?
R. Elon Musk is deciding to focus his efforts elsewhere and it is a normal slowdown due to the pace of demand for electric cars, due to price competition, but it is also his strategy. The electric market is going to get bigge
r and Tesla is going to start to make its participation in this sector a little smaller, so, several companies that sell electric cars are excited to occupy that space that will be left behind.
P. A few years ago, Tesla was the only company to be talked about as the precursor of electric cars. However, Chinese brands are increasingly gaining ground in Mexico and Latin America. What do you attribute this growing participation to?
R. Chinese electric cars have always been characterized by having a perfect level of assembly, we have very good technology, a good product, with good materials and at a very good price, that is why I think the market is increasingly seeing the adoption of Chinese brands. We would have liked to arrive in Mexico earlier because we already needed a product like this, however, having arrived later has allowed us to learn from the mistakes of others and, for example, the strategy we set since last year is not to deliver a single car until we had all the spare parts in our warehouse.
P. Your business model is based on imports, but do you ever plan to build a manufacturing center in the country?
R. In the medium term, it is not in our plans. The factory where Zeekr cars are made, in Ningbo, China, is one of the most technologically advanced and optimized plants. Right now it would be very complicated to bring a plant with that level of quality to the country.
P. What are your growth goals for the next year?
R. We started in Mexico City, Guadalajara and Monterrey, and we hope to reach the third phase of growth at the end of 2025. So far, our sales goal is to reach 1,700 units for next year, but if the market begins to grow, it is likely to raise this forecast to 2,000 or 2,500 units annually.
P. Could these forecasts be altered by external factors, for example, the upcoming election results in the US?
R. Anything that happens in our northern neighbor always affects us. If more tariffs begin to be imposed, even in other sectors, not just cars, obviously, it will have an impact, but not just cars, but the entire Mexican economy. However, local elections affect us more.
P. In order to promote electromobility in the country, what will you ask of the next Government of Claudia Sheinbaum?
R. It would be very helpful if we extended this tariff exemption and had a concrete plan for electrifying the country. We need to increase the level of electricity production and have a clear plan to know where we need charging points, as well as making it easier for users to process their electric car battery at home with the Federal Electricity Commission (CFE).
P. Taking stock and with just 10 months in office, what has been the biggest challenge in this project of landing in Mexico?
R. We are very confident in our product and our brand, but our biggest challenge is getting people to start looking at us, getting people to know that we exist and that we are already here.
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