Tesla plans to develop a new facility in Mexico

Together with other automakers expanding their presence south of the US border, Tesla intends to construct a new factory in Mexico.

According to President Andres Manuel Lopez Obrador of Mexico, the electric car company will have a plant in Monterrey, about three hours from Texas.

In its Wednesday investor presentation, Tesla is expected to provide additional information.

Mexico had previously expressed concerns regarding the factory’s potential water consumption in the region.

However, Mr. Lopez Obrador claimed that he had secured promises from Tesla CEO Elon Musk that had eased those concerns.

As tensions between the United States and China disrupt traditional supply chains, Mexico is attempting to position itself as a winner.

At a press conference on Tuesday, Mr. Lopez Obrador stated, “This will represent a considerable investment and many, many jobs.”

For cars to be eligible for new subsidies as part of a massive spending plan approved last year to combat climate change, US President Joe Biden has stressed the importance of making cars in the United States.

Canada and Mexico, on the other hand, are exempt from the rules. Mexico’s role in automobile manufacturing has grown as American companies look to other countries to cut costs.

After opening facilities in China and Germany in recent years, this would be Tesla’s third manufacturing facility outside of the United States.

According to Reuters, the most recent Tesla factory required an initial investment of $1 billion, which could increase to $10 billion over time.

Mexican deputy foreign minister Martha Delgado told Milenio Television that the investment was “in excess of $5 billion” and that the factory would make about one million cars a year.

The plant would be a Tesla “gigafactory,” according to another unidentified Mexican official, and it would produce vehicles like the company’s truck and sports car.

A request for information regarding the company’s most recent expansion was unanswered.

Similar to other automakers, Tesla anticipates a rapid increase in the purchase of electric vehicles in the coming years as motorists switch to greener modes of transportation.

Tesla’s plans have been confirmed just a few weeks after BMW announced that it would invest in a factory in Mexico. The country is also where Ford makes its electric SUV.

The United Auto Workers trade union referred to the decision as a “slap in the face” when General Motors announced plans to build an electric car plant in Mexico last year.

As a test of the investment climate under Mr. Lopez Obrador, a left-wing populist who was elected in 2018, the investments in Mexico have been closely watched.