US electric vehicle (EV) maker Tesla Inc is to invest about US$5 billion in a massive new factory in the northern Mexican city of Monterrey, a senior government official said on Tuesday.
The move, which had yet to be confirmed by Tesla, would be a major boost to Mexico’s hopes of benefiting from US companies choosing nearby countries over Asia for their manufacturing operations.
“We brought to Mexico an investment of more or less US$5 billion for the construction of the largest electric vehicle plant in the world,” Mexican Undersecretary for Multilateral Affairs and Human Rights Martha Delgado said in a video posted on Twitter.
Photo: Reuters
“I’m going to Austin, Texas, to witness the announcement @Telsa CEO @elonmusk will make about their investments in 2023,” she added in a text accompanying a video from Mexico City International Airport.
Earlier on Tuesday, Mexican President Andres Manuel Lopez Obrador announced that Tesla was going to open a plant in Monterrey, about 200km from the US border.
The factory was expected to be “very big” and would bring “a considerable investment and many jobs,” he said.
Lopez Obrador said Tesla would give more details yesterday, including addressing the problem of water scarcity in Monterrey, an industrial powerhouse home to transnational firms.
In discussions with Elon Musk, the Tesla CEO “was very receptive, understanding our concerns,” with measures expected to include the use of recycled water, the president said.
Mexico declared a drought emergency in July last year and authorities in parts of the country, including Monterrey, were forced to ration water use due to depleted reservoirs.
Tesla, which already has plants in China and Germany, as well as the US, was due to hold its Investor Day yesterday, live-streamed from its gigafactory in Texas.
Tesla faces increasing competition in the EV sector, with a growing number of Chinese makers, as well as traditional auto firms such as General Motors Co and Volkswagen AG.
Mexico sees its lithium deposits as central to its goal of playing a major role in the production of batteries for electric vehicles and other technology.
Last year, lawmakers approved a plan to put exploration and mining of the metal under state control.
The auto industry is already a key pillar of the Mexican economy — the second-largest in Latin America behind Brazil — home to US, European and Asian manufacturers.
Mexico is the world’s seventh-largest automobile producer, having produced 3 million vehicles in 2021, the latest available figures from the Mexican Automotive Industry Association showed.
The auto industry represented 3.5 percent of Mexico’s GDP and 930,000 jobs in 2021, with foreign investment in the sector amounting to US$5.3 billion that year, the association said.
German manufacturer BMW AG recently announced an investment of US$870 million to produce electric vehicles in Mexico.
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