Tesla Expected to Reveal Plans for New Plant in Mexico During Investor Day

March 3, 2023 | Industry News

During Investor Day Wednesday, Tesla officials are expected to reveal plans for a new plant Mexico, in the state of Nuevo León, which is 150 miles away from the Texas border. 

Tesla CEO Elon Musk is expected to make the formal announcement about the plant in Mexico during Investor Day Wednesday.

The plant could cost as much as $10 billion — and several years — to complete. TheDetroitBureau.com first reported the plan last December. The initial plan called for a factory costing between $800 million and $1 billion to produce parts for the EV maker. 

Further investments — the $10 billion — could grow the plant into a Gigafactory that would produce vehicles as well.

A deal, but not agreement

Mexican President Andrés Manuel Lopez Obrador welcomed the EV maker´s potential arrival into the country, but in his welcome statement he disagreed with Tesla’s choice locate its plant in the northern state, citing water supply problems.

Mexican President Andrés Manuel Lopez Obrador still has reservations about Tesla setting up shop in Nuevo Leon.

Last year, the state chosen by Tesla for its new plant suffered a severe water supply shortage and rationing was necessary, causing Obrador’s administration to question whether the site was appropriate for the new plant. 

The governor of Nuevo Leon countered Obrador’s contention, saying the state has enough water to supply Tesla’s plant. He also mentioned the new factory would use industrially treated water, which is not the same as water used for human consumption. The governor mentioned Nuevo Leon can supply 3,000 liters, or nearly 800 gallons, of industrial water per second, and the Tesla plant would use less than a 100 liters per second.

But Obrador responded that if Tesla decided to build its plant in Nuevo Leon, he would deny the required permits, some related to electricity and natural gas supply.

Possible alternatives

The Mexican plant will produce components for Tesla’s Gigafactory Texas and other facilities at first.

The president suggested alternatives for the plant, like the southeastern part of the country, which he claims has a plentiful water supply. However, that region´s infrastructure and universities lag behind the ones in Nuevo Leon, the state Tesla selected.

He also recommended Tesla build its new plant in the state of Hidalgo, near the new, but controversial, Felipe Angeles Airport, which is one his signature works.

As a result of President Obrador´s no vote to Tesla´s choice for the location of its new plant, 10 other states in Mexico expressed interest in the new factory.

Tesla is typically tight lipped, but rumors started flying that the EV maker has no Plan B for Mexico and that if the Nuevo León factory plans were denied, Tesla would take its investment to Indonesia.

After a week of official statements and rumors, and two videocalls with Elon Musk, president Andrés Manuel Lopez Obrador stated today that an agreement has been reached and that he will approve Tesla´s plan, which is to build the new factory in Nuevo León.

The president stated that Tesla agreed to use industrially treated water for the manufacture of its vehicles and that Mexico will offer no subsidies like the ones offered in the U.S. for manufacture of batteries and semiconductors.T

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