A view shows the urban area of the Santa Catarina municipality near the land where Tesla has indicated it may build a new gigafactory in Santa Catarina, on the outskirts of Monterrey, Mexico, on February 28, 2023. Reuters/Daniel Becerril/File Photo Acquire licensing rights
Thank you for reading this post, don't forget to subscribe!MEXICO CITY, Oct 19 (Reuters) – Mexico’s Nuevo Leon state said on Thursday Tesla (TSLA.O) still plans to build a factory and the government is spending more than $130 million on infrastructure to aid construction. Will spend, a day after CEO Elon Musk said he was hesitant on the project.
Tesla announced the planned factory in the northern Mexican state in March, without giving any timeline for construction.
Musk said Wednesday he is still on site in the Santa Catarina municipality in northern Mexico, but the timing is uncertain due to global economic factors, and construction likely won’t start until next year.
Mexico has promoted the Tesla project, estimated to cost $5 billion, as evidence that the “nearby” trend is growing as companies look to move production away from Asia and set up operations closer to the United States. Want to do.
After a difficult process for Tesla to confirm its Mexico plans, investors are keeping a close eye on the automaker’s next moves in the country.
The mayor of Santa Catarina, Jesus Nava, said that local authorities are starting to improve infrastructure in the area where Tesla is going to build the factory.
“At the state and municipal level, we are moving forward with studies for the infrastructure requested by Tesla, which will amount to more than the 2.5 billion pesos ($136.46 million) provided by the state,” he said in a statement.
“We expect Tesla to begin manufacturing in the first half of 2024.”
Musk said Wednesday that the company is “laying the groundwork to begin manufacturing” in Mexico but that he has no definite plans yet.
“The question is really timing… We think we’ll start the initial phases of construction next year,” Musk said, citing concerns over high interest rates affecting affordability for car buyers.
Jay Trousdale, CEO of risk and business advisory firm Veracity Worldwide, said Tesla suppliers looking to expand in Mexico are likely to move forward, even if they are closely following the EV maker’s plans.
“They’re making a 30-year bet, not a three-year bet,” he said. “Even if your desired end customer isn’t quite ready, you’re still going to produce things that will have global demand.”
Nuevo Leon Governor Samuel Garcia, who announced nearly $1 billion in expected investments from Chinese Tesla suppliers during a visit to Shanghai on Wednesday, could not be reached for comment.
Musk and Nuevo Leon officials spoke by phone this week to discuss the project, his office said.
($1 = 18.3205 Mexican pesos)
Reporting by Diana Beth Solomon; Editing by Jamie Freed
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