After a highly touted Investor Day event this week that turned out to be pretty bland, there’s some real news about Tesla that should get people — investors included — excited. The President of Mexico announces to the world that Tesla has agreed to build its next Gigafactory in Santa Catarina, a city west of Monterrey in the state of Nuevo León. President Andres Manuel Lopez Obrador said “the entire Tesla company” is coming to Mexico to build a “very large” car plant, according to Portal.
Tesla, of course, refuses to speak to the press, so any details on this announcement must have come from other sources. The official announcement said Tesla would invest up to $5 billion to build the new factory, but a source told Portal the initial investment will be worth around $1 billion and further phases will bring the total spend to $10 billion could bring US dollars. Some say this could be Tesla’s largest factory to date and that it will make the Tesla Semi and Roadster 2.0, while at least one other source has suggested a new SUV-type vehicle could also be assembled there.
Samuel García, the governor of Nuevo León, told the New York Times in an interview that Tesla executives had told him the new factory could become 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, he said. In addition, he claimed that the factory will blow up very quickly and could start making cars as early as next year. “These opportunities, I think they come once every 100 years,” he said.
Rumors of a new Tesla factory in Mexico have been in the wind for a while. There were suggestions that Tesla might consider several smaller factories to build components that would then be shipped to Austin’s Gigafactory to be installed in the cars built there. Last December we reported that several lots near Santa Catarina were being purchased under different names – Tesla Turbo, Tesla Engineering, Tesla Consultores, Tesla Electromechanics, Tesla Plastics and Tesla Smart Sport. This may have been a tactic to acquire the land for the factory without revealing what it would be used for, information that would likely have pushed prices up.
At the time, Governor Garcia said: “Due to different global circumstances, they forced me to sign confidentiality agreements, so I can’t speak more about that, but I can halfway tell you that historic investments are coming for Nuevo León, some of them. To give you an idea, it will be the largest investment in the country’s history.”
There were fears that Mexico’s factory plan would be scrapped because of critical water shortages in and around Santa Catarina, but Elon Musk assured President Lopez Obrador in a recent phone call that the factory would recycle most of its water. This was the crucial piece of the puzzle needed to get final approval for the factory.
Whether the new factory will be Tesla’s largest remains to be seen, but Governor Garcia told the New York Times that he spoke to Tom Zhu, the former head of Tesla China who now oversees factory operations for Tesla. Zhu told him the company wants to build the new plant in Mexico faster than the Gigafactory in Shanghai, which began producing cars less than a year after groundbreaking. “He told me that he was very optimistic that he would break his record again,” García said.
Model Y “Jupiter” upgrade is coming
The Tesla Model Y has been in production for about two and a half years and is the best-selling electric car in the world. But Tesla isn’t resting on its laurels. Sources tell Portal that the company is about to introduce a major upgrade to the Model Y, known internally as the “Jupiter” project. The sources say the changes to the Model Y will affect both the exterior and interior of the car and will be introduced in 2024.
“Since the Model Y is not only Tesla’s best-selling vehicle, but also the best-selling electric vehicle in the world, it’s important to keep it updated,” AutoPacific president and chief analyst Ed Kim told Portal. He added that he’s been following Project Juniper for a while. “As a global leader in electric vehicle sales, Model Y has a purpose on its back. As with Project Highland (the rumored refresh for the Model 3), Project Juniper should deepen Tesla’s already massive production cost advantages over the competition.”
Currently there are differences in the Model Y depending on which factory they are made in. It is believed that with the Jupiter program, Tesla intends to standardize the production process across its factories in order to achieve even lower production costs. Tesla already leads the industry on this metric.
Tesla has asked suppliers for bids for exterior and interior components used in the Project Juniper version of the Model Y, two of the people with knowledge of the plan said. The expected start of production is October 2024. Tesla is also said to be working on a refresh of the Model 3 sedan in the project codename Highland. Details about that effort are few, but the selling price of the Model 3 is higher than the Model Y. Presumably, Tesla wants to apply what it’s learned from building to the Model Y to update that car and to reduce production costs.
Tesla heat pumps?
As this story was being written, an email arrived from Bloomberg Green that suggested Tesla might be considering delving into the production of consumer heat pumps. Tesla already has extensive experience with heat pumps, having introduced it on the Model Y, and Bloomberg notes that at the recent Investor Day, Elon Musk made some flimsy claims about how the world will transition to a sustainable economy in the foreseeable future.
Heat pumps are important for the same reason electric cars are important. Both use energy much more efficiently than the devices we rely on today for heating, cooling and transportation. Efficiency is one of the keys to a sustainable world. Replacing furnaces and boilers with heat pumps powered by renewable electricity could save 500 million tons of carbon emissions annually.
However, there are hurdles that must be overcome. The pool of qualified installers is limited, but the potential for Tesla is huge. Bloomberg says, “Onboarding heat pump customers would reinforce the company’s push for its own ‘walled garden’, where a home’s all-Tesla technology – electric car, solar panels, Powerwall battery and heat pump – could remain seamlessly connected. Smart home technology that allows users to get the most out of their green devices (e.g. capture solar energy during the day and store it overnight for use in heat pumps and chargers) may prove to be the key to avoiding grid congestion in to avoid a world dependent on electricity.”
During an investor call in 2021, Musk said, “It’s really going to be a pretty compelling solution for the consumer if you integrate EV charging, solar storage, hot water, and HVAC into a very tight, compact package that does well.” looks. It just doesn’t exist.” One might think that a company with access to engineers who can fly a rocket backwards could make such a system possible.
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