Tesla factory gets green light in northern Mexico

MEXICO CITY, Feb 28 (Reuters) – Tesla Inc (TSLA.O) will build a new factory in northern Mexico, the country’s president said on Tuesday, marking a push by the electric vehicle maker to expand operations outside the United States under an agreement. from a source worth at least $1 billion.

Without providing details, Chairman Andres Manuel Lopez Obrador said “the whole Tesla company” was coming to Mexico, describing the investment as an “automotive factory” that would be “very big” and noting that the potential investment in batteries was still pending.

Lopez Obrador’s announcement of the plant in the Monterrey metropolitan area has allayed recent concerns that he could reverse the investment by imposing conditions on the company due to water shortage concerns in the border region. laughed at.

The initial investment will be around $1 billion and subsequent phases could bring total spending to $10 billion, according to a Mexican source with knowledge of the matter.

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Tesla did not immediately respond to a request for comment.

The company has automotive plants in California and Texas in the United States, Berlin in Germany and Shanghai in China.

Tesla Chief Executive Elon Musk has said for months that the electric vehicle maker will announce a new factory, and he’s set to discuss expansion plans, next-generation vehicle platforms and… other topics at an “Investor Day” event on Wednesday.

The news is a boost for Mexico, which is struggling to establish itself as a hub for so-called investment offshoring – capitalizing on geopolitical tensions and supply chain disruptions caused by the pandemic. of COVID-19 by attracting manufacturing capacity in North America, and away from Asia.

Lopez Obrador said the two sides reached an agreement after a call with Musk on Monday, following a separate conversation he said he had late last week.

“It’s going to be a huge investment and a lot of jobs,” Lopez Obrador told reporters, saying Musk had been receptive to Mexico’s concerns and accepted its proposals.

The plant will be built in Santa Catarina in the greater Monterrey region, said the municipality’s mayor, Jesus Nava, echoing reports that have been circulating for weeks.

“Santa Catarina will have the eyes of the world,” he said on Instagram. In another video, captioned “$10 billion” in bright red, Nava said Tesla’s investment would be five times greater than private investment in the municipality over the past decade.

Mexican-made electric cars shipped to the United States are eligible for subsidies provided by the Biden administration to boost the adoption of electric vehicles, industry officials say.


The call between Musk and the Mexican president came after Lopez Obrador raised fears on Friday that he could block investment in Monterrey if water was scarce there.

The president said Musk understood the challenge posed by the water shortage and the company would make a series of commitments as part of the deal.

The Tesla talk has been a major test of how investors have reacted to Lopez Obrador’s resource nationalism, which has consistently sparked apprehensions among business groups.

Speculation about Tesla leaving Mexico has been circulating for months, and the plant is set to become one of the major investments of the Lopez Obrador administration.

Mexico received its highest foreign direct investment inflows in years in 2022, official data shows, as companies took advantage of cheaper, skilled labor that made the country a global hub of the automotive industry.

However, overall investment has been held back by companies destabilized by Lopez Obrador’s efforts to tighten state control over the energy market at the expense of private capital.

Reporting by Dave Graham and Daina Beth Solomon in Mexico City Additional reporting by David Shepardson in Washington and Hyunjoo Jin in San Francisco Editing by Ben Klayman, Sharon Singleton and Matthew Lewis

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