Mexican president says Tesla will build factory in Mexico

MEXICO CITY — Mexico’s president announced Tuesday that electric-car company Tesla has committed to building a massive factory in Monterrey, the industrial hub of northern Mexico.

President Andrés Manuel López Obrador said he had phone calls with Tesla boss Elon Musk on Friday and Monday. This will be his third Tesla factory outside the United States, after one near Shanghai and Berlin.

Lopez Obrador had previously ruled out building such a plant in the arid northern Nuevo Leon state, where Monterrey is the capital. He said he promised to deal with it.

“We have one promise: all water used in the production of electric vehicles will be recycled water,” Lopez Obrador said.

The president said it would be a large investment without divulging the amount, and declined to say what the factory would produce. He said it was unclear if Mexico would produce batteries, an industry it desperately wants, despite having no domestic supply of lithium.

Lopez Obrador said the company plans to announce details on Wednesday.

“This will mean a lot of investment and a lot of hiring,” said Lopez Obrador.

Monterrey is highly industrialized, close to the U.S. border, and has long been considered a prime candidate for a Tesla investment.

However, the city will experience severe water shortages in 2022, with many homes experiencing intermittent or no water for weeks. The government is building 60 miles (100 kilometers) of pipelines to draw more water from the dam.

The governor of Nuevo Leon, which had a “Welcome to Tesla” sign last year, roared about Tuesday’s announcement.

“Mexico won, Nuevo Leon (NL) won, we all won!” Governor Samuel Garcia wrote on his Twitter account.

Referring to US incentives under the 2022 Inflation Reduction Act, López Obrador said Mexico has no match for US subsidies to acquire a Tesla factory.

“Such subsidies, such subsidies cannot be given,” the president said, adding, “Mr. Musk was very caring and respectful of Mexico’s position.

Tesla plans to unveil plans for its “Gen 3” vehicle platform at its annual investor day at its factory near Austin, Texas, on Wednesday.

Musk previously floated the idea of ​​building a $25,000 electric car, which would cost about $20,000 less than the current Model 3 and is currently Tesla’s cheapest car. Many automakers build low-cost models in Mexico to save labor costs and secure profit margins.

Musk will also show off the company’s production line at its Austin factory and discuss long-term expansion plans, how it will spend its capital spending dollars, and more.