Tesla in México
After a couple of months of back-and-forth with the Mexican government, it looks like Tesla might be just about ready to announce their expansion into Central America.
On February 2nd, Mexico’s Foreign Affairs Minister Marcelo Ebrard mentioned during an interview that Tesla should be making an announcement about a new facility in the country very soon; saying:
“What I would think is that we’re very close to [having] this announcement by Tesla, but I don’t have an exact date yet. They will make their announcement. We can’t announce it,”
And while we shouldn’t jump to any conclusions until we hear from Tesla, there is ample evidence that the EV company has had its eye on Mexico for some time now.
This past year especially had its moments where we saw Tesla preparing to make inroads into Latin America. Earlier in 2022, Tesla hosted Samuel García Sepulveda - the Governor of Nuevo Leon - and some other Mexican Ministers at GigaTexas. Then, in October, CEO Elon Musk was invited to Nuevo Leon for a similar meeting.
Nuevo Leon is an important area for Tesla because it shares a border with Texas - the local officials even put in a Tesla-exclusive customs gate on the border back in June 2022 - likely in a further attempt to entice the EV maker to invest south of the border.
And this definitely lines up with how Tesla operates. We saw the same back and forth with German officials in the run-up to Berlin being chosen as the site for Gigafactory 4. Musk did a lot of similar leg work to get GigaShanghai approved - visiting China several times in 2017 and 2018 to meet with officials.
And now, as Elon is hunting around for new Gigafactory sites, we see him using the same playbook in other locations. All last year, Tesla was courting Indonesia for its nickel reserves. Around that same time, Elon was spotted in Canada, meeting with some Ontario government officials - while hinting that the next Gigafactory would likely be in either Canada, or Mexico.
And Mexico is definitely working hard to get companies like Tesla to invest.
One of the biggest issues with starting a large facility in Mexico is the unreliability of their power grid. Aside from any political factors that contribute to unstable grids, Mexico is in a place that routinely gets hit with extreme weather. Tropical storms, extreme heat - both those factors alone are enough to bring down power grids in the US and Canada. So, Mexico has decided to do something about that.
Much of Northern Mexico is uninhabited desert - a perfect place for a solar farm. Project Sonara - named after the desert in Baja California, Mexico, where it’s located - is a huge, 1.6 billion dollar solar project, intended to support and stabilise the Mexican power grid.
It’s currently only about 10% finished, but once it’s done in 2027, it will have an estimated 2 million solar panels - making it the largest solar park in Central America. The Mexican government wants Sonara to set an example for sustainable green energy - but also to entice companies like Tesla to feel comfortable about opening a facility in Mexico.
So now, with Project Sonara looking to be hooked up to the grid in April this year -and the confirmation from the Mexican government that an announcement on a new Tesla facility in the country will come soon - most of us are thinking it’s gotta be a new Gigafactory. There’s even an active lithium mine in Sonara already! But is a gigafactory the most likely facility for Tesla to build in Mexico?
Starting a Gigafactory in a country like Mexico would be interesting, but with GigaTexas being relatively close to the border, would it make any sense to build a production facility there? That exclusive customs lane we mentioned earlier is only about four hours away from GigaTexas.
Then there’s a recent report from Reuters which discovered that as recently as January 31st, Tesla was looking to buy land near Mexico City’s Benito Juárez Airport - a whole 11 hours away from Nuevo Leon.
So here’s what we know: Mexico officials are putting in a lot of work to get companies - especially Tesla - to invest. They’re building an expensive solar plant, they have an active lithium mine, and they’ve been making political overtures to Tesla’s CEO. For Elon’s part, he seems to have been planning this for at least a year or more - hinting via tweet, and talking a lot about how valuable it is to secure lithium sources for battery production. Finally, Tesla is actively looking for land - just not where we expected.
So, it could be that when Tesla announces their new facility, we’ll hear that they are planning on building a whole new Gigafactory - that’s definitely not out of the question, and it would make a good deal of sense.
But.
It’s also possible that we might see some sort of specialised facility - maybe even a Tesla-owned battery production plant. With land near the Mexico City Airport, it would be very convenient to produce parts and ship them to Tesla’s American plants for use.
As usual, it’s best to be patient and wait, but it definitely looks like we won’t have to sit long before Tesla reveals what their plans are for Mexico.