Tesla cars are parked in front of a Tesla showroom and service center on May 20, 2019 in Burlingame, California. Stock for electric car maker Tesla fell to a 2-1/2 year low after Wall Street analysts questioned the company's growth prospects.
Tesla will establish a new facility in northern Mexico, signaling a drive by the electric car manufacturer to expand operations beyond the US in a deal valued at least $1 billion.
President Andres Manuel Lopez Obrador announced on Tuesday, Feb. 28, without revealing specifics, that the "whole Tesla company" was coming to Mexico. He calls the investment an automotive facility that would be quite enormous, adding that a prospective investment in batteries was still waiting.
CEO Elon Musk has been promising for months that Tesla would unveil a new plant. During an Investor Day event on Wednesday, Mar. 1, Musk intends to discuss growth plans, next-generation vehicle platforms, and other matters.
Tesla's assembly plants are already located in California, Texas, Berlin, Germany, and Shanghai, China.
Monterrey Plant
Reuter's Mexican source familiar with the situation has estimated that the first part of the investment would cost roughly $1 billion, with future stages potentially increasing this to $10 billion.
López Obrador's announcement of the Monterrey facility alleviated worries that he may upend the investment by placing limitations on the corporation owing to water shortages in the dry border region.
Musk called López Obrador after he raised concerns last week that he would veto the Monterrey investment if water were insufficient.
The president said Musk recognized water shortages and would make many pledges as part of the arrangement.
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Massive Investment
The Mexican president assured the reporters that this would represent a big investment and many jobs to offer. He added that Musk had been responsive to Mexico's concerns and had accepted their recommendations.
According to Santa Catarina's mayor, Jesus Nava, the factory will be constructed in the greater Monterrey region. This confirms rumors that have been circulating for weeks.
"Santa Catarina will have the eyes of the world," he stated on Instagram. In another video with a red caption reading "10 billion dollars," Nava claimed that Tesla's investment would be five times as much as private investment in the city had been over the previous decade.
As per business representatives, electric vehicles (EVs) manufactured in Mexico and imported to the US are eligible for incentives offered by the Biden administration to encourage the widespread use of electric cars.
Mexico is trying to become a center for nearshoring investment, taking advantage of geopolitical concerns and supply chain delays created by the COVID-19 outbreak to attract industrial capacity from Asia to North America.
Tesla's Mexico facility has been rumored for months and will be one of Lopez Obrador's biggest expenditures.
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