September 30, 2023

MEXICO CITY (AP) — Mexico’s president introduced Tuesday that electrical automobile firm Tesla has dedicated to constructing a serious plant within the industrial hub of Monterrey in northern Mexico.

President Andrés Manuel López Obrador stated the promise got here in cellphone calls he had Friday and Monday with Tesla head Elon Musk. It could be Tesla’s third plant outdoors the U.S., after one in Shanghai and one close to Berlin.

López Obrador had beforehand dominated out such a plant within the arid northern state of Nuevo Leon the place Monterrey is the capital, as a result of he didn’t need water-hungry factories in a area that suffers water shortages. However he stated Musk’s firm had provided commitments to deal with these issues, together with utilizing recycled water.

“There’s one dedication that each one the water used within the manufacture of electrical cars will likely be recycled water,” López Obrador stated.

The president stated it might be a big funding with out giving a greenback quantity, and didn’t specify what the plant would produce. He stated it was unclear if it might produce batteries, an business Mexico desperately needs regardless of not having any present home provide of lithium.

López Obrador stated the corporate deliberate to launch extra particulars on Wednesday.

“That is going to imply a substantial funding and lots of, many roles,” López Obrador stated. “My understanding is that it is going to be very massive.”

Monterrey is very industrialized and near the U.S. border, and had lengthy been thought of the frontrunner for any Tesla funding.

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However the metropolis suffered water shortages in 2022 that have been so extreme that many houses went weeks with intermittent or no water provide. The federal government is constructing a 60-mile (100 kilometer) pipeline to carry extra water in from a dam.

López Obrador had beforehand stated his authorities “merely gained’t grant permits” for any new crops there. However apparently Musk’s proposal overrode the president’s stance.

Gabriela Siller, chief economist at Nuevo Leon-based Banco Base, stated the Tesla funding — which she estimated might be price $10 billion — represented such a big quantity that it trumped any of the president’s objections.

López Obrador “couldn’t flip this down. It could have had a really massive political value for him,” stated Siller.

The announcement was a disappointment for extra water-rich southern states that had begun jockeying for the Tesla plant after López Obrador’s feedback final week.

The governor of Nuevo Leon state, the place billboards went up final 12 months saying “Welcome Tesla,” crowed about Tuesday’s announcement.

“Mexico gained, Nuevo Leon (NL) gained, WE ALL WIN!” Gov. Samuel García wrote in his Twitter account.

López Obrador stated Mexico wouldn’t match any U.S. subsidies to win the Tesla plant, referring to U.S. incentives below the 2022 Inflation Discount Act.

“A subsidy like that, we can not give subsidies like that,” the president stated, including “Mr. Musk was very attentive, respectful” of Mexico’s place.

Tesla is anticipated to announce plans for its “Gen 3” car platform on Wednesday at its annual investor day at a manufacturing facility close to Austin, Texas.

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Musk beforehand has floated the concept of constructing a $25,000 electrical car, which might value about $20,000 lower than the present Mannequin 3, now Tesla’s least-expensive automobile. Many automakers construct lower-cost fashions in Mexico to avoid wasting on labor prices and shield revenue margins.

Musk additionally is anticipated to indicate off the corporate’s manufacturing line on the Austin plant, in addition to talk about long-term growth plans, the way it will spend capital funding {dollars}, and different topics.


AP reporter Tom Krisher contributed to this report