Tesla to build new Gigafactory in Monterrey, Mexico

28 February 2023

Elon Musk is probably fuming at this very moment but the cat is well out of the bag - the president of Mexico just ruined the surprise announcement Musk was hoping to make tomorrow at the Investor Day. President Manuel López Obrador couldn’t wait and celebrated the future Gigafactory in Monterrey, northern Mexico.

We are hearing left and right that Tesla is going to make a major announcement tomorrow. This morning Elon Musk was reportedly on the phone with the President of Mexico. It didn’t take long though, López Obrador made an official statement and confirmed that Tesla is indeed going to build a Gigafactory in Monterrey.

It goes against earlier comments made by the Mexican president, who claimed there was no way for Tesla to bring its manufacturing to Nuevo Leon state in northern Mexico due to local water shortages. He explicitly assured locals that no water-hungry factories will be allowed in the state.

That phone call this morning was apparently all the President needed to change his mind. Elon Musk, according to the President himself, assured the factory will only use recycled water and offered undisclosed help in addressing the water issues.

At this stage it is too early to say what the Gigafactory will produce but the rumors are rife. It can be any of the Tesla electric cars but what makes the most sense is the upcoming Model 2. If Tesla really wants to sell it for less than $30,000 it will have to keep its costs as low as possible and the Mexico plant can be the perfect solution.

Understandably, Mexico and Monerrey specifically, have great reasons to celebrate. Gigafactory will mean jobs, it will mean more development in already industrialized Monterrey. The Mexican government is already building a new pipeline to bring the water directly from a dam 100 km away (60 miles) which should prevent a repeat of last summer when homes in the area went without water for weeks.

Estimated at $10 billion investment in Monterrey means Tesla will have its third factory outside the US. Monterrey is only 383 miles from Giga Texas which makes the logistics extremely easy. The Mexican government already confirmed it will match any incentives offered to Tesla in the US for building an EV factory. It all looks like a win-win situation and we are sure to hear more details tomorrow.

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