Tesla to build new factory in Mexico

(image credit: bbc.com)

Tesla plans to build a new factory in Monterrey, Mexico, which would be the automaker's third plant outside the US, after its plants in China and Germany. According to Reuters, the new factory is expected to represent an initial $1bn investment that could grow to be $10bn over time, and it could produce up to one million vehicles per year, including Tesla's truck and sports car. The Mexican government has won commitments from Tesla CEO Elon Musk to ease water-related worries in the region. Tesla is expected to share more details about the project during an investor presentation on Wednesday.

Mexico has been positioning itself as a winner in the face of traditional supply chain disruptions due to US-China tensions. US President Joe Biden's "made-in-America" rules for car manufacturers' subsidies include exceptions for Canada and Mexico, where American automakers are looking to reduce costs. This move is also seen as a test of the investment climate under Mexican President Andres Manuel Lopez Obrador, a left-wing populist, who was elected in 2018.

According to Mexican deputy foreign minister Martha Delgado, the Tesla investment is worth "in excess of $5 billion." The plant is expected to represent a significant investment and create many jobs, said President Lopez Obrador at a news conference on Tuesday. However, Tesla has not yet commented on its latest expansion plans.

Tesla and other automakers are anticipating that electric vehicle purchases will grow rapidly in the years ahead as drivers increasingly opt for greener modes of transport. This trend is evidenced by BMW's recent announcement that it will be investing in a factory in Mexico, and Ford's manufacture of its electric SUV in the country. General Motors also announced last year that it would build a plant for electric vehicles in Mexico, but this decision was met with criticism from the United Auto Workers trades union, which described it as a "slap in the face."