Tesla To Build Factory In Mexico, Says President

Tesla continues to expand its manufacturing footprint with the announcement of another factory, this time in northern Mexico.

The Financial Times reported that Mexico’s president Andrés Manuel López Obrador announced the new plant on Tuesday, which will be located in the northern Mexican city of Monterrey.

The announcement ends doubts Tesla would construct the factory over conditions imposed by the Mexican government.

Mexican factory

According to the FT, Mexico’s president Andrés Manuel López Obrador announced the new plant on Tuesday after conversations with Tesla chief executive Elon Musk.

The FT suggested this may point to the Mexican President dropping earlier calls to redirect the investment to less industrialised parts of the country.

López Obrador last week had reportedly suggested he might not award Tesla permits if it pressed ahead with plans for a plant in Monterrey because of the city’s acute water shortage problems.

But on Tuesday he said the company had committed to using recycled water at the new plant.

“It’s good news, yes, the company Tesla is coming,” the president said in his morning news conference. “The battery part is still on hold but [its] the whole auto plant, which I understand will be very big.”

“He [Musk] was very receptive, understanding our concerns and accepting our proposals which will be known from tomorrow,” he added.

Tesla does not have a media relations department, but the EV giant is expected to outline more details of the project at an investors’ day on Wednesday.

The value of the deal was not immediately disclosed.

Factory footprint

Last month it was reported that Tesla had applied to expand its gigafactory in Texas with an investment totalling $775.7 million.

Tesla currently has four US factories in total, and it spent $5.5 billion constructing a gigafactory in Germany last year, joining its existing assembly plants in California, Shanghai, and Texas.

Elon Musk had opened Tesla’s factory (Gigafactory 3) in Shanghai back in 2020, but at the end of 2022 it experienced Covid-driven production and logistics snags, as well as growing concern of weakening customer demand.

The Mexican plant in Monterrey, a few hours’ drive from the Texas border, will be Tesla’s first in Latin America.