Misguided energy policies threaten its manufacturing sector and the global fight against climate change.

The combustible engine’s end date is firming up: General Motors Co., the largest of the Detroit big three, plans to stop making gas-driven cars by 2035. The global green shift goes beyond vehicles, as hundreds of companies and a growing number of nations pledge to neutralize their carbon footprints. Mexico’s natural bounty in alternative energy sources and its close industrial ties to the United States give it advantages going into this new era. Yet Mexico’s government is squandering them by rejecting the green revolution just as it picks up its global pace.

Mexico’s manufacturing base rests heavily on autos. The factories of Ford Motor Co., GM, Nissan Motor Co., Volkswagen AG, Toyota Motor Co., and other companies fill its industrial heartland and churn out nearly 4 million vehicles a year, making Mexico the world’s sixth biggest producer. Global parts-makers have followed their clients: Aptiv Plc set up with GM, Visteon Corp trailed Ford, and Denso Corp came with Toyota. Mexico developed sophisticated homegrown suppliers, too: Brake and suspension maker Rassini SAB, chassis provider Metalsa SA, powertrain manufacturer Nemak SAB, as well as hundreds of smaller shops that make the basic nuts and bolts assembled into seats, dashboards, mechanical systems and more. The sector is now Mexico’s biggest export driver by far, bringing in $100 billion in annual revenue. 

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