South Korean automaker Kia Motors will invest $649mn in Mexico between 2026 and 2028 to expand electric vehicle production, the government said on July 29, as the country seeks to shore up investor confidence amid uncertainty over US tariffs on the automotive sector.

The investment, unveiled by Economy Secretary Marcelo Ebrard at President Claudia Sheinbaum's morning press conference, will allow Kia to manufacture an electric vehicle in Mexico for the first time. Production of the Kia EV3 will begin on August 4 at the company's plant in Pesquería, Nuevo León, where the model is currently assembled in South Korea.

"This is great news because it allows us to produce an electric vehicle in Mexico with a number of very advanced and highly competitive features," Ebrard told reporters.

The project is expected to create 500 jobs this year, with a further 1,500 direct positions added between 2027 and 2030, Ebrard said. He added that the vehicle would carry Mexican content of around 27% from the outset, a share he said would rise as the project matures.

Kia Mexico commercial director Horacio Chávez said the EV3 marked the first time the company would produce and sell a fully electric vehicle in Mexico. "For the first time in our history, we will produce and market a fully electric vehicle in Mexico. This commitment is realised with the Kia EV3, which will be proudly made in Mexico," he said.

Chávez said the initiative extended beyond manufacturing to building an ecosystem to support EV adoption, including mobile car-to-car charging units for battery emergencies, home and public charging installations and support services for electric vehicle owners.

Kia Mexico president Young Sam Kim said the company would remain a strategic partner to the country and that the investment was aligned with the government's Mexico Plan industrial strategy.

Kia Mexico administration director Marianela Calderón said part of the funding would go toward environmental projects, including a 2-megawatt solar park that the company plans to expand to 8 megawatts by 2030, generating power equivalent to the annual consumption of more than 4,000 Mexican households. A second wastewater recycling plant is also planned, capable of reusing about 1,050 cubic metres of water a day, equal to roughly 70% of the water treated at the facility and comparable to the usage of more than 2,000 homes.

Sheinbaum said the announcement reflected Kia's confidence in Mexico and reinforced the government's strategy to promote electromobility, pointing to the inclusion of EV charging stations and networks as key to expanding adoption of the technology. "The idea is to strengthen the adoption of electric vehicles in the country," she said.

While Kia has not disclosed production forecasts, Sheinbaum said a significant share of output would be directed to the domestic market, in line with a pledge under the Mexico Plan. Kia has said it expects the EV3 to become a flagship export model for other Latin American markets.

Ebrard said the decision by Kia, one of the world's largest automakers, to relocate production to Mexico signalled confidence in the country's productivity, investment climate and workforce at a time of uncertainty for the global auto sector stemming from US sectoral tariffs and revised trade rules.

The announcement comes about two months after Sheinbaum and South Korean President Lee Jae-myung held a call pledging to deepen bilateral trade, economic and cultural ties. South Korea is among Mexico's leading trading partners and investors, with more than 2,000 Korean firms operating in the country.

The investment offers a measure of reassurance for Mexico as it navigates a fraught investment climate shaped by US protectionism and an ongoing review of the USMCA trade pact. The agreement faces its most serious test in three decades, with Washington pushing to tighten rules of origin for regional automotive exports while Mexican officials negotiate to end tariffs of up to 25% on the country's vehicle exports to the United States.

The automotive sector remains one of Mexico's top export earners, with the country ranking as the leading supplier of vehicles to the US market. The industry has faced pressure since last year from US tariffs that, from 2025, apply an average 19% levy on vehicles shipped to the United States. Mexican automotive exports still rose 1.4% in the first half of 2026 compared with the same period a year earlier.