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Several Mexican states compete to become the headquarters of a Tesla facility

2023-02-25T19:33:05.679Z


Everyone wants to win the fight to be the headquarters of one of the electric vehicle factories, Tesla, despite the fact that the company has not yet confirmed its intentions to establish itself in the country.


By Mark Stevenson -

The Associated Press

Several Mexican states are immersed in an intense competition to become the headquarters of some facilities of the manufacturer of electric vehicles, Tesla, a struggle that evokes what happens in cities and entities of the United States that try to be chosen by technology companies willing to invest .

The governors of those states of Mexico – such as Veracruz, Michoacán or Nuevo León – have resorted to extreme measures, including hiring highway advertisements, creating special lanes for vehicles or developing Tesla advertisement drafts for their states.

And there are no guarantees that the company will build a factory.

Nothing has been announced.

The frenzy is mainly based on the fact that Mexican authorities have said that its CEO, Elon Musk, will soon speak by phone with the president, Andrés Manuel López Obrador.

[Tesla recalls over 360,000 vehicles over safety concerns with "full autonomous driving" feature]

The northern industrial state of Nuevo León appeared to have an early lead in the contest.

Last summer he painted the Tesla logo on a lane at the Colombia border crossing into Texas, and in December he put up signs in Monterrey, the state capital, reading “Welcome Tesla” in English.

The governor's wife, Mariana Rodríguez, even appeared in leaked photos in a meeting with Musk.

However, López Obrador appeared to exclude the semi-desert state on Monday, saying he will not allow what is often high water use by factories, risking shortages there.

The Tesla company logo is displayed outside a store in Denver, Colorado. David Zalubowski / AP

That sparked intense competition between other states in Mexico,

similar to what happens when feeding piranhas in a water tank.

Among the offers of the governors there were some very well elaborated proposals and others with a certain comic air.

“The only state that has excess gas is Veracruz,” declared Cuitláhuac García, governor of that state with a coastline on the Gulf of Mexico, and quickly added: “For industrial use, for industrial use.”

García arrived late to the bid, and had to make a greater effort: he pointed out that the only nuclear power plant in Mexico is located in Veracruz.

In addition, he asserted that the state has 30% of the country's drinking water, although the National Water Commission says that figure is actually 11%.

Apparently in Mexico the availability of water is a crucial point to take into account.

[Crisis or strategy?

Two theories around the fall in the prices of Tesla cars]

For his part, the governor of the western state of Michoacán, Alfredo Ramírez Bedolla, did not want to be left out of the race.

He quickly published a sketch of a Tesla ad in which a Tesla vehicle appears next to an avocado the size of a car, the most internationally recognized product of the state, accompanied by the phrase: “Michoacán, the best option for Tesla”.

“We have enough water,” Ramírez Bedolla said in a television interview he gave between meetings with figures from the automotive industry and international business representatives.

Crisis or strategy?

Two theories around the fall in the prices of Tesla cars

Jan 23, 202300:33

Michoacán also has a thorny problem of violence generated by drug cartels.

However, the neighboring state of Guanajuato suffers from the same situation, and this has not stopped several leading international car manufacturers from setting up plants there.

Samuel García, governor of Nuevo León, had to think fast to avoid being left out of the bidding completely, and he came up with a novel strategy.

[Tesla's price cut affects the automotive market]

Garcia contacted the western state of Jalisco, whose governor, Enrique Alfaro, also belongs to the small Movimiento Ciudadano party.

Both raised an "alliance" on Thursday that would allow trucks from Jalisco to make preferential use of the Nuevo León border crossing, the same one where a 'Tesla' lane was established last year.

Jalisco already has a healthy foreign technology sector, and even more important, it has more water than Nuevo León.

The two seemed to have a cooperative attitude.

"We are two states that do not have to compete and cannibalize each other (...) cannibalizing in the fight for investment is a mistake," Alfaro declared.

"A dangerous game"

López Obrador's focus on water could be more of a political issue than related to the drought, said Gabriela Siller, chief economist at Nuevo León-based Banco Base.

She pointed out that the president appears to be trying to guide Tesla's investments to a state governed by his Morena party, such as Michoacán or Veracruz.

That could be a dangerous game, Siller warned.

"Tesla can say that he is not a doll that they take him anywhere, but that he decides, and he can decide not to go to Mexico," he said.

Tesla's price cut affects the automotive market

Jan 23, 202300:32

Sam Abuelsamid, a research analyst at US-based Guidehouse Insights, said pitting one state against another has been common practice in the United States.

“A few years ago, Amazon talked about building their headquarters, and like every state and city in the country was bidding, trying to get Amazon there,” Abuelsamid noted.

There are doubts that whatever Musk eventually announces will be a vehicle assembly plant.

The Secretary of Foreign Relations of Mexico, Marcelo Ebrard, reported that as far as he knows it will not be a factory, but rather an "ecosystem" of suppliers.

[Elon Musk sells $3.6 billion in Tesla shares without disclosing where the money will go]

Musk has made promises in the past that either don't materialize

, or come years after he said they would.

For example, in 2019 he promised that a fleet of fully autonomous robotaxis would hit the road starting sometime in 2020. Nearly three years later, Tesla still hasn't sold any autonomous vehicles.

Although little has been said in Mexico so far about subsidies, many car companies have received significant incentives to build plants in the country.

Those kinds of attempts to secure your arrival can be costly.

“It is questionable if it is really economically beneficial for the localities

, or to provide those subsidies”, explained Abuelsamid.

"Sometimes they are spending millions of dollars on tax breaks to entice a company to stay there."

First it was the give and take between Biden and AMLO.

Then a behind the scenes showed cordiality

Jan 10, 202304:20

Musk has occasionally floated the idea of ​​building a $25,000 electric vehicle that would cost about $20,000 less than the Model 3, Tesla's least expensive car today.

Many vehicle manufacturers build affordable models in Mexico

to save on labor costs and protect their profit margins.

A Tesla investment in Mexico could be part of "nearshoring"

by

US companies that used to manufacture in China but are now wary of logistical and political problems there.

The fact that these companies set their sights on the Latin American country represents the best hope for attracting foreign investment.

“The fight to bring in the investments that this

nearshoring

phenomenon will generate is going to be tough, complex between states,” Alfaro said.

Ramírez Bedolla summed up what is at stake: "Where Tesla settles would be great news."

Source: telemundo

All news articles on 2023-02-25

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