Why does Chevy make vehicles in Mexico? – Jalopnik

For many, owning a Chevrolet is as patriotic as it gets. After all, the bow tie badge represents an important part of the made-in-the-US movement. But what if your wheels of freedom aren’t made in the USA at all? An easy way to find out is to take a look inside the door frame of your Chevrolet car or SUV. If the chassis number starts with 3: congratulations, your pride and joy is made in Mexico.

This is nothing new for General Motors. The car conglomerate focused on our neighboring country a long time ago – in 1935 to be precise. In fact, Mexico is an automotive powerhouse for GM, building everything from simple work trucks to advanced electric vehicles. So if you own a Silverado workhorse or an electric Blazer, chances are your car will cross the border in a rail car before it arrives at your door. There are many reasons for this, and politics is the least important of them all.

The simple answer is money, and lots of money. Making a car in Mexico is much cheaper than making a car in the United States. It also goes beyond the cheap labor trope. It’s about geography, infrastructure and an automotive ecosystem decades in the making. This is also thanks to the United States-Mexico-Canada Agreement (USMCA), which was drafted in 2020, a successor to the North American Free Trade Agreement (NAFTA), which was established in 1994 and aimed at facilitating easy trade between the three neighboring countries.

And of course there are labor costs involved. Labor in Mexico is cheap, almost a fraction of American wages. That’s a huge savings when it comes to production, and one that also helps keep vehicle costs low and competitive.

Contrary to popular belief, Mexico has state-of-the-art factories that rival the best automotive assembly lines in the United States. And it’s supported by level one and level two suppliers who are literally next door to these factories. GM has four major factories in Mexico. They are Ramos Arizpe in Coahuila, Silao in Guanajuato and San Luis Potosi. The one in Toluca is an engine factory that mainly produces gasoline engines.

The Equinox crossover is sold worldwide and is the flagship product of GM’s San Luis Potosi plant. The factory displaces a large part of the global supply of this gas-powered crossover. The Chevrolet Trax SUV is now a global product. Most come from GM’s Korean plant, but San Luis Potosi has been a crucial part of the Trax’s North American supply chain and has been instrumental in keeping the SUVs’ prices competitive without sacrificing quality.

Those are just Chevrolet’s bread and butter models; the automaker also has a stake in the Mexican EV production facility.

The Ramos Arizpe plant in Coahuila has been under General Motors for its other automotive offerings since 1981 and has seen the production of cars such as the Pontiac Aztek and the Chevrolet HHR. Today it is the centerpiece of Chevrolet’s electrification plans, producing battery-powered vehicles such as the Chevrolet Blazer EV, Equinox EV and even the ICE Blazer.

In July 2022, GM announced its intention to produce the Blazer EV in Mexico, at the same time the electric SUV was unveiled. Officially, production started at the Ramos Arizpe factory in late 2023. In addition to importing the Blazer EV to the US, Chevy also sells the Blazer EV in Mexico. Chevrolet also makes the gas-powered Blazer here, with the SUV being one of the older products manufactured at this plant.

The other battery-powered product from the Ramos factory is the Equinox EV. After the Blazer EV, it was GM’s second EV to be assembled at that factory. The Ramos plant also used to make the gas-powered Equinox, but that was discontinued in April 2024 as part of GM’s plan to convert the plant into a pure EV production center.

The USMCA was an attempt to modernize these trade rules to make them more fit for the 21st century. To qualify for zero tariffs, automakers had to meet a number of provisions under USMCA. For starters, 75 percent of the vehicle’s components must be made in North America, compared to 62.5 percent under NAFTA. Another crucial provision was the Labor Value Content rule, which requires 40 to 45 percent of the work done on the vehicles to be done by workers earning at least $16 an hour.

Although these rules were created with the intention of bringing work back to American shores, many manufacturers simply chose to focus more on Mexican production to offset the associated rising costs.

While the recent tariffs are intended to bring jobs back to the US, it will be a lot more complicated and time-consuming. The Mexican-North American supply chain is so closely intertwined that making an engine can cross the border multiple times, adding both cost and time. If automakers decide to move production to Mexico, the 25 percent tariffs will also increase costs, some of which will trickle down to U.S. consumers in the form of higher car prices. Some of these fare costs will hit you in the form of destination fees. GM has estimated that total tariff costs for its vehicles will be about $4 billion to $5 billion.

According to the Center for Automotive Research in Michigan, these tariffs are expected to cost the U.S. auto industry nearly $108 billion. To counter this, many automakers announced domestic investments, including Chevrolet’s parent company, GM, which announced plans for a $4 billion injection to move production from Mexico to its three main production centers in Kansas, Michigan and Tennessee. This includes moving production of the Blazer and Equinox to the US

It remains to be seen how this will impact Chevy’s larger manufacturing footprint in Mexico, but it is already starting to impact automakers’ bottom lines. In fact, GM disclosed that it suffered a 35 percent drop in profits in the second quarter after Trump’s tariffs went into effect, and there are further indications that 2026 will likely be tough for auto sales as well.