Tesla Could Start Making Cars in Mexico 2023:- “The most significant announcement of the day is that we’re excited to announce that we’re going to be building a Gigafactory in Mexico.” Elon Musk said on Investor Day.
Lately, Tesla announced that the project, now called Gigafactory Mexico, will be built just outside Monterrey in Nuevo León, Mexico. However, this electric automaker hasn’t released any details about the factory other than it will be used to produce vehicles based on the automaker’s new vehicle platform.
Many questions have been raised such as how much would Tesla invest in the factory in Mexico, when will the construction start, how many people would work at the plant, and others.
Now, Samuel García, Nuevo León’s governor, has started to release more details about the project. The governor confirmed that Tesla secured a substantial piece of land spanning 4,200 acres. That’s about twice the size of the land Tesla has secured to build Gigafactory Texas and all adjoining projects, like its cathode material factory.
He also confirmed that Tesla plans to spend about $5 billion to build the factory, which is in line with the planned capital expenditure at other Gigafactories. It’s important to note that this is generally over years and several phases of construction, with other phases coming after the start of production in order to support the investment.
Moreover, during an interview, officials of the state of Nuevo León revealed that Tesla executives had told them that the factory — outside Monterrey, the state’s capital could grow to be the company’s largest, producing not only cars but also batteries, semiconductors, and software.
Over time Tesla could double or triple the initial $5 billion investment. As per some sources, Tesla plans to employ 7,000 people at Gigafactory Mexico directly. This is on par or lower than at other Tesla Gigafactories.
It could create tens of thousands more jobs indirectly as suppliers move to the region or ramp up production as Tesla already has several suppliers in Nuevo León. One of the reasons for choosing Monterrey is its closeness to Gigafactory Texas and Tesla’s headquarters, which is about a seven-hour drive away from the new plant site.
Tesla has also managed to negotiate an interesting deal that will allow efficiency for travel between the sites. Accordingly, Tesla had struck a deal with the state of Nuevo Leon to have its own lane at the border crossing in order to reduce wait times for cargo going through the border. So when will Gigafactory Mexico officially start construction?
Mexican officials said Tesla is aiming to start construction on its new factory in Mexico later this month and could start building its first vehicles at the plant as soon as early 2024. To be specific, Nuevo Leon’s Governor, Samuel García confirmed the timeline of Tesla Gigafactory Mexico to the press: “They are waiting for the final permits once that’s done, they can start, hopefully, this very month, in March.”
In addition, Tom Zhu, Tesla’s head of automotive and the person in charge of Gigafactories, added that his team plans to build the Gigafactory Mexico at a record pace like Gigafactory Shanghai, which went from breaking ground to production in about nine months.
Governor Samuel García sees this as a once-in-a-lifetime opportunity that could transform the region’s economy. On top of that, Elon Musk and Tesla recognized Mexico’s potential in the development of lithium and lithium-ion batteries.
Mexico has one lithium mine under development in the northwestern state of Sonora, and the Tesla plant could encourage the country to undertake more projects. Latin America has lots of lithium, and Chile is a major producer of the metal.
However, efforts to mine it in Argentina and Bolivia have been less successful. Tesla’s plans in Mexico could help make the country a central player in the development of lithium and lithium-ion batteries in the Western Hemisphere.
President Andrés Manuel López Obrador of Mexico is a strong proponent of oil production and has been criticized for being slow to embrace green energy, whereas Nuevo León’s Governor, Samuel García, who is not a member of President López Obrador’s party said he was satisfied that the president supported investment in lithium. So how will Tesla’s new factory in Mexico affect the company’s operations?
It seems unlikely that any Tesla factory will surpass the company’s plant in Shanghai, which serves the fast-growing Chinese market and exports vehicles to other Asian countries and Europe. A senior Mexican official has said the Gigafactory in Mexico will produce about 1 million vehicles a year, which would represent a third of Tesla’s global capacity.
Analyst’s comments suggest that the Tesla Gigafactory Mexico will be a “new centerpiece” of the company’s operations, allowing the company to build cars more cheaply than it could in the United States and better respond to growing competition from established automakers like General Motors and Volkswagen.
Those companies already offer electric vehicles that cost less than Tesla, like the Chevrolet Bolt and the Volkswagen ID.4 and are planning to sell many more mass-market models in the coming months. Furthermore, Tesla’s investment in Mexico is part of a trend by American manufacturers to reduce their dependence on China while keeping costs low.
Jesus Nava, the mayor of Santa Catarina in the state of Nuevo León said: “The new massive factory of Tesla in Mexico will bring a great economic spillover, moreover, auto industry suppliers have already been expanding their presence in the area, which has ample industrial space.”
Currently, Mexico also has factories that produce cars and auto parts for famous car manufacturers such as Ford, Chevrolet, Volkswagen, and BMW. On the other hand, there are concerns about the impact of the new Tesla factory on the environment and the local community.
Monterrey, about 140 miles from a major U.S. border crossing, where the factory will be built, is a manufacturing hub. Its explosive population growth has strained public services, particularly the water supply. Last year, some neighborhoods went weeks without running water.
Auto body painting equipment, essential to the manufacturing process, uses lots of water, raising the question about how Tesla would justify straining Monterrey’s resources while portraying itself as an environmental pioneer.
However, Nuevo León’s Governor, Samuel García pointed to an array of new infrastructure projects, including an aqueduct and dam, that he said would ensure a steady supply of water. He added that Tesla’s factory will use recycled water. The use of recycled water in the factory could significantly reduce its impact on the local water supply, but it remains to be seen how effective this measure will be.
Not only that, Jesus Nava, the mayor of Santa Catarina in the state of Nuevo León believes that: “Tesla Gigafactory Mexico project in Nuevo Leon state had never been at risk of falling through, even when Lopez Obrador had said he would withhold permits if not enough water was available in the arid region, which last year was hit by severe drought.”
Another concern is the potential impact of the factory on the local environment. Monterrey is known for its air pollution, and the new factory could add to the problem. Tesla has a reputation as an environmentally friendly company, and it will need to ensure that the factory meets the highest environmental standards.
The company has stated that the factory will provide an impetus for the region to switch to green energy, but it will need to follow through on this promise if it wants to maintain its reputation. Despite these concerns, the announcement of the Gigafactory Mexico is a significant development for Tesla.
The announcement of the new factory comes at a time when demand for electric vehicles is growing rapidly. Consumers are becoming more aware of the environmental impact of traditional gasoline-powered vehicles, and many are choosing electric vehicles as a more sustainable alternative.
Tesla has been at the forefront of this trend, and the new factory in Mexico will help the company to meet the growing demand for electric vehicles. In addition to producing vehicles for the Mexican market, Gigafactory Mexico will also produce vehicles for export to the United States and other countries. This will help to further establish Mexico as a major player in the global automotive industry.
The Mexican government has been actively promoting the country as a destination for foreign investment in the automotive industry, and the announcement of the Gigafactory in Mexico is a significant step in this direction. Not only that, Tesla’s CEO, Elon Musk elaborated that Gigafactory Mexico will focus on building the company’s next-gen vehicle.
Tesla adopted a similar strategy for Giga Texas, also known as the company’s Cybertruck factory. While Giga Mexico may focus on Tesla’s next-gen vehicle, it may also build other models of the company. Last but not least, in your opinion, will the Gigafactory Mexico be Tesla’s largest North American electric vehicle hub in the near future?
And when the factory is officially in operation, will Tesla’s next-generation model of this plant bombard the world electric car market? In conclusion, the announcement of the Gigafactory Mexico is a significant development for Tesla and the global automotive industry.
The factory will allow Tesla to produce vehicles more efficiently and cost-effectively, and it will help the company to compete with other electric vehicle manufacturers.
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