A view shows the urban area of the municipality of Santa Catarina near the land where Tesla has hinted it could build a new gigafactory, in Santa Catarina, on the outskirts of Monterrey, Mexico, February 28, 2023. Portal/Daniel Becerril/ File Photo Acquire License Rights
MEXICO CITY, Oct 19 (Portal) – Mexico’s Nuevo León state said on Thursday that Tesla (TSLA.O) still plans to build a factory and that the government will spend more than $130 million on infrastructure will to support construction, a day after CEO Elon Musk said he was hesitant about the project.
Tesla announced the planned factory in the northern Mexican state in March, without providing a timeline for construction.
Musk said Wednesday that he was still at the site in the municipality of Santa Catarina in northern Mexico, but the timing was uncertain due to global economic factors and construction would likely not begin until next year.
Mexico has touted the Tesla project, estimated to cost $5 billion, as evidence that the “nearshoring” trend is growing as companies look to move production out of Asia and locate operations closer to the United States .
After a difficult process for Tesla to confirm its Mexico plans, investors are closely watching the automaker’s next moves in the country.
Santa Catarina Mayor Jesus Nava said local officials have begun improving infrastructure in the area where Tesla is set to build the factory.
“At the state and local levels, we are advancing studies for the infrastructure required by Tesla, which will amount to more than 2.5 billion pesos ($136.46 million) provided by the state,” he said in a Explanation.
“We hope to start building Tesla in the first half of 2024.”
Musk said on Wednesday that the company was “laying the groundwork to begin construction” in Mexico but had no more concrete plans yet.
“The question is really just a question of timing … we think we’ll start the first phases of construction next year,” Musk said, citing concerns about high interest rates that could impact affordability for car buyers.
Tesla suppliers looking to expand in Mexico will likely move forward even as they closely follow the electric vehicle maker’s plans, said Jay Truesdale, CEO of venture and business advisory firm Veracity Worldwide.
“You’re making a 30-year bet, not a three-year bet,” he said. “Even if your intended end customer isn’t fully operational, you’re going to produce things that have global demand.”
Nuevo Leon Gov. Samuel Garcia, who announced nearly $1 billion in expected investments from Chinese Tesla suppliers during a visit to Shanghai on Wednesday, could not be reached for comment.
His office said Musk and Nuevo Leon officials spoke by phone this week to discuss the project.
($1 = 18.3205 Mexican pesos)
Reporting by Daina Beth Solomon; Editing by Jamie Freed
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