Yahoo Autos Tesla’s New Gigafactory Will Be Built in Northern Mexico
On Tuesday, Mexican President Andrés Manuel López Obrador officially announced that Tesla would build its latest production plant in the northern state of Nuevo León, which shares a border with the U.S. The new Tesla plant would be the biggest one yet, according to AMLO’s statement to the press (link in Spanish).
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But Elon Musk did not confirm the news until a day later, during Tesla’s annual Investor Day presentation. Near the end of the presentation, Musk confirmed onstage what AMLO had said, explaining that the EV carmaker was “excited to announce the next Tesla Gigafactory will be in Mexico near Monterrey.” Musk added that the new plant would provide “supplemental output” to Tesla’s other factories, Automotive News reports. And according to Reuters, Mexican officials predict the new plant’s output will be at around one million EVs per year, which would account for one third of Tesla’s annual production.
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The deal will be worth $1 billion initially, or about about $18 billion pesos based on current exchange rates, which is a lot. We’re talking Pemex money here, so it’s no wonder that AMLO gave Tesla his blessing to build in the northern state, despite saying earlier that he would withhold building permits due to a lack of resources in Nuevo León, namely water.
Reporters assailed AMLO with a barrage of questions over droughts and low water levels during the announcement, but the president said he had no details other than to say that Elon Musk assured him water would not be a concern.
AMLO added that further construction phases could bring the influx of Tesla cash into the Mexican economy to a whopping $10 billion. Some of that may be used for “a potential investment in batteries,” though that’s still pending.
On-site battery production would make plenty of sense, turning Mexico into a one-stop shop for Tesla production, and also ensuring that all of the Tesla models eventually built in the country (and sold in the U.S.) will qualify for the full $7,500 EV subsidy available under the Inflation Reduction Act.
How Mexico Won the Gigafactory
This new plant will be the EV maker’s third production site outside of the States, joining Tesla’s sprawling assembly plants in Shanghai and Berlin. The site of Gigafactory Mexico had been in question for months, with a trade zone near Mexico City being another possible location for the plant, but the border state finally won out. Answers to the pressing question of water and other resources that the state will have to give up in order to host Gigafactory Mexico would only come days later, via an El País (link in Spanish) interview with Samuel García, the state governor of Nuevo León.
