NEW YORK (CNN) – Tesla’s next vehicle assembly plant will be in Mexico near Monterrey, CEO Elon Musk announced on Wednesday.
“We’re very excited about this,” Musk said during an investor day for the company. “We will continue to expand production at all of our existing factories. So that doesn’t mean that production is relocated to somewhere and from somewhere. This is a supplementary production.”
The company currently has the capacity to build approximately 2 million automobiles per year at four plants in Fremont, California; Shanghai, China; Austin, Texas; and Berlin, Germany. It has set itself the goal of building 20 million cars a year. The company delivered just over 1.3 million cars in 2022. The world’s largest automaker by production volume, Toyota, delivered just over 10 million cars worldwide in 2022.
Tesla did not comment on the costs of the new plant. The news was a confirmation of plans for Tesla to build its next factory in the country, announced Tuesday by Mexican President Andres Manuel Lopez Obrador. Portal reported that Mexican officials said the facility could cost $1 billion.
The company estimates that building the additional plants required to reach 20 million vehicles will cost a total of $150 billion to $175 billion, including the $28 billion in investments it has made throughout its history has.
“Maybe that overall investment looks big,” said CFO Zachary Kirkhorn. “I think it’s quite small compared to our ambitions.”
The company also announced earlier Wednesday that it had built 4 million vehicles in its history.
Shares of Tesla (TSLA) slipped more than 5% in after-hours trading on Wednesday, though that was slightly higher than a larger drop ahead of Musk’s announcement more than three hours after the presentation. Some investors had hoped that Tesla would reveal details about a next-generation vehicle. Musk declined to answer a question about the next-gen vehicle.
“We’re going to have a proper kind of product event,” Musk said. “We would be quick to take up arms if we answered that question.”
In response to another question from an analyst, Musk said he doesn’t expect Tesla to ever have more than 10 different vehicles in its lineup. He derided the wide range offered by competing automakers as simply “mixing” many similar models.
The Inflation Reduction Act, passed last year, restored up to $7,500 in tax credits to buyers of the lower-priced Tesla Model 3 and Model Y cars, as long as their list price is below $55,000. To qualify for the tax credit, the cars must be assembled in North America, so eventual output from the Mexico plant should qualify.
Most of the global automakers already have assembly plants in Mexico. According to Portal, there are 20 auto assembly plants in the country. General Motors has three, Ford has two, including one that makes its Mustang Mach-E, the EV SUV that’s a competitor to Tesla. Stellantis – which builds cars under the Chrysler, Dodge, Ram and Jeep brands – has three.
In addition, Toyota, Honda, Nissan, Volkswagen, Audi, Mazda, Mercedes, Kia and BMW have plants in Mexico.
According to statistics from the US Trade Administration, part of the Department of Commerce, Mexican plants were producing just under 4 million cars a year in the years before the pandemic reduced the supply of auto parts, particularly computer chips, and global auto production. They produced about 3.5 million cars last year. This makes it the seventh largest country in terms of car production.
But 90% of the cars it builds are exported, 76% of which are destined for the United States.