López Obrador Says Tesla Will Build Plant in Mexico

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Facts

  • Mexican President Andrés Manuel López Obrador announced Tuesday that car manufacturer Tesla will build a new factory in the northern city of Monterrey.1
  • The development of the facility, to become Tesla's third factory outside of the US following plants in China and Germany, had raised concerns over the factory's water demands affecting the region.2
  • After López Obrador claimed last week that selecting the region was the wrong option due to water shortages and severe drought, the president revealed that he and Elon Musk had spoken on two occasions virtually since then, with the Tesla owner 'receptive' to those concerns.3
  • López Obrador did not offer specifics on the size or scope of the factory but did say the plant would be a 'considerable investment' providing more jobs. This comes after Tesla announced 3K new jobs at its factory in Nevada last month.4
  • Mexican deputy foreign minister Martha Delgado has claimed that Musk will invest approximately $5B in the new plant, making it the 'largest electric vehicle plant in the world.' Foreign investment reached a new high in Mexico last year due to the combination of lower wages and a skilled workforce.5
  • Mexico has also seen investor growth due to geopolitical supply chain disruptions, tensions between the US and China, and the COVID pandemic. Delgado stated that the new factory would produce approximately 1M vehicles a year; Tesla currently has an annual combined production capacity of over 1.9M vehicles.6

Sources: 1Ft, 2BBC News, 3Mexico news daily, 4Forbes, 5Dw and 6Reuters.

Narratives

  • Narrative A, as provided by El universal. The deal between Tesla and Mexico allows Elon Musk's company to utilize the lack of export tariffs to over 40 countries that production in the US cannot provide. Meanwhile, Tesla's venture into the Mexican manufacturing economy will generate further business and employment. This is a true win-win opportunity.
  • Narrative B, as provided by Rest of world. Mexico and Latin America as a whole have become overly fond of incoming foreign tech investment — believing a tech boom will naturally follow. In fact, Mexico simply expects Musk's venture to be a success rather than doing the hard work to make this a reality. While the opportunity may be too good to say no, such a move could actually be a hindrance to Mexico's longer-term development.

Predictions