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BusinessMexico

New Tesla factory to open in Mexico

February 28, 2023

President Lopez Obrador has confirmed that a new factory will be built in the city of Monterrey. The $5 billion deal represents a major victory in the president's plan to make his country a manufacturing hub.

https://p.dw.com/p/4O5Ny
A Tesla on display at a US store
Several Mexican states had been competing fiercely to host the factoryImage: STRF/STAR MAX/IPx/picture alliance

Mexican President Andres Manuel Lopez Obrador announced on Tuesday that electric automaker Tesla would be building a new plant in the north of the country.

The factory will be in the city of Monterrey, in the state of Nuevo Leon, ending speculation over which state would be awarded the factory after several vyed for the opportunity.

"This will represent a considerable investment and many, many jobs," Lopez Obrador said. He added that CEO Elon Musk had been receptive to Mexico's environmental concerns, such as the fear that the project would exacerbate water scarcity in the region.

Lopez Obrador's office had hinted at the deal earlier in the week, reporting on at least two phone calls between the president and Musk.

Massive investment

Martha Delgado, a Mexican deputy foreign minister, said Musk will invest approximately $5 billion (roughly €4.7 billion) in the plant, which is expected to be the world's biggest electric vehicle-making facility. 

"We brought to Mexico an investment of more or less $5 billion for the construction of the largest electric vehicle plant in the world," the senior government official said in video posted to Twitter.

Mexico seeks role as manufacturing hub

The deal represents a major success for the president's plan to lure manufacturing capacity away from Asia.

Further details of the project are expected to come on Wednesday, when Musk will hold an "Investor Day" and unveil what he calls his "Master Plan Part Three."

Foreign investment in Mexico reached its highest level in years in 2022, utilizing the country's skilled work force and relatively lower wages to make it a global hub for the auto industry. 

However, some investors remain timid to get involved in the country due to Lopez Obrador's plan to strengthen state control of the energy market and restrict the role of private capital.

The bulk of Tesla's manufacturing capacity and its workforce is in the US, but the carmaker also has various facilities in the Netherlands, Germany, Canada and China.

es,mk/nm (AP, Reuters, AFP)