Mexico sees industrial revival as Tesla and other big companies settle in

Yusin Hu, DIGITIMES Asia, Taipei 0

Aerial view of Tesla's HQ in Texas Credit: AFP

After Tesla officially announced that it will build a Gigafactory in Nuevo Leon, Mexico, the Mexican government said it has also suggested Tesla build a battery plant in Mexico, according to Reuters.

While Tesla's interest in building a battery plant in Mexico is not confirmed, local officials said Tesla has scouted a few sites in the central states of Hidalgo, Queretaro, and Puebla, according to Reuters. However, Mexico would not be able to offer incentives comparable to the US's IRA incentives, said Mexico's finance minister Rogelio Ramirez de la O last week.

Located in the city of Santa Catarina in Nuevo Leon State, Tesla's Mexico Gigafactory is expected to be the company's sixth Gigafactory around the world, along with those in Texas, New York, Nevada, Shanghai, and Berlin.

The new factory is scheduled to start running at the end of 2023 or early 2024, according to Mexican officials.

CNBC reported that the Tesla factory "will be built on a site spanning nearly 4,200 acres, almost twice the size of its factory site in Texas."

In an interview with Forbes Mexico, Samuel Garcia, governor of Nuevo Leon, said the initial investment of the Gigafactory will be US$5 billion. He added that the construction will have three phases, and "the one we now know is the first phase."

Garcia said it will take about one to one and half months for the factory to receive all the federal permits from the Ministry of Environment and Natural Resources before kicking off construction.

Neuvo Leon is one of the northern states in Mexico sharing a border with the US. Garcia stressed that the economic benefits brought by the Gigafactory will spill over to neighboring states Coahuila and Tamaulipas, particularly the Monterrey-Saltillo corridor connecting Nuevo Leon and Coahuila.

Since Tesla made the announcement, Garcia said suppliers are already seeking to settle into the region. He added that Tesla is not the only big company that is investing in the state; two more big companies are waiting to make their announcements.

In an announcement video posted online, Garcia said he made multiple business trips to Texas during the second half of 2021 and was given a tour of the Texas Gigafactory. At that time, Tesla already relied on the supply chain in Nuevo Leon, from which the carmaker acquires aluminum and other metals, components, and even automotive computers.

With Tesla, Nuevo Leon expects exports to triple. The state also expects to welcome more ecosystems related to electromobility, aerospace, and telecommunications, transforming the state's economy into one of green industry.

"Nuevo Leon needed Tesla like Tesla now needs Nuevo Leon," Garcia said in the video.