Why did Musk decide to install a new Tesla plant in Mexico?
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(CNN Spanish) –
Three reasons led Elon Musk to choose Mexico for the installation of his next Tesla plant – which could build close to a million compact electric vehicles a year – according to the Ministry of Foreign Affairs of the Latin American country.
Musk, the company's CEO, said this week that they are "very excited" about the decision on their upcoming vehicle assembly plant to be built near Monterrey, in the state of Nuevo León.
Reuters reported that Mexican officials said it could cost $1 billion.
These are the arguments behind the decision, according to the Government of Andrés Manuel López Obrador.
1. Mexico's free trade agreements
One of the advantages for Tesla is the set of free trade agreements that Mexico has, Martha Delgado, Undersecretary of Foreign Relations, told CNN en Español.
"Since they are going to export their vehicles to Europe and Latin America, a country that has this range of treaties is very helpful," she explained.
Added to this is the fact that Mexico has zero tariffs for various inputs imported from China that are important for manufacturing, something that the United States does not offer.
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2. The proximity to the Austin plant
Tesla currently has the capacity to make about two million cars a year at four factories: in Fremont, California;
Shanghai, China;
Austin, Texas, and Berlin, Germany.
Another of the reasons that led Musk to choose the site for the new plant is precisely its proximity to the Austin facility, which according to Delgado is six hours away.
"This gives their value chain a dynamism that they would not have anywhere else in the world, even in another state of Mexico," he said in this regard.
AMLO announces that Elon Musk confirmed that Tesla is arriving in Mexico and the plant will be in Monterrey 4:03
3. The training
A third argument in favor of Mexico, according to the hierarch, is the "professional offer of high-quality Engineering."
According to the numbers he manages, almost half of the engineers who work in the company around the world have been trained in the Latin American country.
José Zozaya, president of the Mexican Association of the Automotive Industry (AMIA), told CNN en Español that the decision shows the confidence that exists in the "quality of labor" in the country, which is currently recognized by multiple brands.
In this regard, he explained that there are already qualified personnel in the manufacture of electric cars and labor that can be trained immediately.
Analysis |
Mexico is on the right track in the path of electromobility 4:26
More future plans with Tesla
Tesla has set a goal of eventually building 20 million cars a year.
The company delivered just over 1.3 million cars in 2022. The world's largest automaker by production volume, Toyota, delivered just over 10 million cars worldwide in 2022.
The Undersecretary of the Foreign Ministry affirmed that this plant is the first part of an investment plan that Musk could develop in the country, and outlined where the agreements could continue: "The portfolio of proposals that we have with Tesla from the Ministry of Foreign Affairs It is broader. It includes, for example, the possibility of jointly considering the development of an industrial park for the installation of electric battery factories".
Delgado said that Musk's company, who spoke twice with López Obrador, according to the president, has shown "much enthusiasm" for the areas of Hidalgo, Puebla, and the State of Mexico, since they are close to "automobile factories that go to mutate little by little towards electromobility".
With information from Belén Zapata and Chris Isidore.
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