Mexican President Andres Manuel Lopez Obrador announces that Tesla is going to set up its next plant in Mexico. It will boost Mexico, which is attempting to establish itself as hub for its nearshoring of investment-capitalizing on geopolitical tensions and supply chain disruptions caused by the COVID-19 pandemic. In the attempt, it is blurring manufacturing capacity to North America and away from Asia.
Lopez Obrador said the two sides had reached an agreement after a call with Tesla Chief Executive Elon Musk on Monday, following a separate conversation he said the two held late last week. “This will represent a considerable investment and many, many jobs,” Lopez Obrador told reporters, saying Musk had been receptive to Mexico’s concerns and accepted its proposals. Speaking at a news conference, Lopez Obrador said Tesla would likely give more details of its plans on Wednesday.
Musk is due to hold an “Investor Day” on Wednesday, during which he will outline his “Master Plan Part Three.” The call between the two took place after Lopez Obrador had on Friday stirred fears that he could block the investment in Monterrey if water was scarce in the arid region.
Tesla plant
The president said Musk had understood the challenge posed by water scarcity, and that the company would be making a series of commitments as part of the deal. The discussions around Tesla have been a major test of how investors responded to Lopez Obrador’s resource nationalism, which has persistently stirred misgivings among business groups. “Santa Catarina will have the eyes of the world,” he said on Instagram. In another video, captioned “10 billion dollars” in bright red, Nava said Tesla’s investment would be five times the private investment in the municipality over the past decade. Mexican Foreign Minister Marcelo Ebrard hailed the news on Twitter, calling it the result of 14 months of “patient labor.”
Speculation about the prospect of Tesla going to Mexico has circulated for months, and the plant is set to become one of the major investments of the Lopez Obrador administration. Mexico received its highest foreign direct investment inflows for years in 2022, official data showed, as businesses took advantage of a lower-cost and skilled workforce that has made the country a global center of the car industry. However, overall investment has been held back by companies unsettled by Lopez Obrador’s efforts to strengthen state control of the energy market at the expense of private capital.
