Musk halts plant in Nuevo Leon

Mexico City. Construction of Tesla’s $5 billion gigafactory in Santa Catarina, Nuevo Leon, has been put on hold until after the U.S. presidential election in November, said Elon Musk, co-founder and CEO of the automotive firm.

I think we need to see how things are after the elections.the billionaire said during a call with analysts to present the firm’s results for the second quarter of 2024.

The owner of Space X and the social network X, formerly Twitter, recalled that the Republican candidate and former president of the United States, Donald Trump, promised in his campaign to return to the White House that if he wins the elections he will impose tariffs on vehicles produced in Mexican territory.

There is no point in investing a lot in Mexico if that is going to be the case.added the South African-born tycoon, who also assured that the firm is increasing its capacity to produce batteries.

The measure announced by Trump and mentioned yesterday by Musk would consist, in the event that the Republican wins the presidency of his country, in imposing tariffs of 200 percent on vehicles produced by Chinese manufacturers that could be installed in Mexican territory and exported to the United States. So far there is no factory of Chinese origin in Mexico, although BYD has expressed its intention to build a plant that produces only for the domestic market.

In reports corresponding to the first quarter of 2024, sent to the United States Securities and Exchange Commission (SEC), Tesla did not report anything about the progress of the construction of the gigafactory that would be located in Santa Catarina, as reported at the time. The Day (https://shorturl.at/eoZJ2).

Tesla has only noted that its expansion is currently focused on increasing car production, including new models, which involves expanding the production capacity installed in factories located in Fremont, Texas and Nevada, in the United States, as well as Shanghai, China, and Berlin-Brandenburg, Germany.

Last June, sources close to the industry told The Day that the Mexican Automotive Industry Association (AMIA) had no information on the construction of the gigafactory, but noted that Tesla was possibly looking for more incentives to arrive.

The firm has been known to set up operations in places where it receives tax incentives or other types of stimuli from governments.

Iván Rivas, Secretary of Economy of Nuevo León, assured in May that the installation of the plant was still on track, as there were no signs of change in the company’s plans.

The Federal Electricity Commission (CFE) even helped Tesla complete the paperwork required to establish itself.

In the context of his statements about possible tariffs on cars produced in Mexico, Trump recently said in an interview that he would seek to reduce corporate taxes, which was considered by various analysts as a threat to the arrival of new investments in Mexico in the context of the relocation of companies.

In addition, Mexican businesswoman Teresa Gutiérrez was appointed general director of Tesla Mexico last March.

The announcement of the $5 billion investment was made on March 1, 2023 by Musk himself, after he spoke by phone with President Andrés Manuel López Obrador about the subject a few days earlier, since at the time it was uncertain whether it would reach national territory and where it would be installed, due to the water crisis that Nuevo León was experiencing at that time.

Mexico remains attractive: Concamin

Mexico remains attractive for Tesla despite the automaker’s decision to pause construction of the gigafactory in Santa Catarina, Nuevo Leon, the Confederation of Industrial Chambers (Concamin) said. It considered that the decision to postpone its future until after the US presidential elections is a product of the political and economic uncertainty that usually accompanies electoral periods in any country.

While we regret this delay, it highlights the confidence that Tesla has placed in Mexico as a strategic location for its operations.He reiterated that the country offers numerous competitive advantages, such as its privileged geographical location, qualified workforce and a solid legal framework for investment protection.