Tesla is preparing business grounds for its upcoming Giga Mexico factory, and is trying to convince automotive suppliers to invest in the area.

According to local Chinese media outlet 36kr (via CnEVPost), Tesla is asking Chinese suppliers to build manufacturing plants in Mexico.

The reason for that is an intention to replicate the fruitful and successful partnership at the Tesla Giga Shanghai plant.

We can't verify the news, but it would not surprise us if Tesla would like to attract Chinese suppliers to Mexico. Actually, we already heard rumors that CATL - Tesla's battery supplier - is considering the possibility of building a plant in Mexico.

Interestingly, Tesla is in a hurry, and the entire topic might be related to the recent Elon Musk's visit to China:

"Tesla's pace is urgent and suppliers could lose orders amounting to hundreds of millions of yuan if they don't respond in time, the report said, citing a person familiar with the matter."

The Tesla Giga Mexico is expected to start production a few years from now, with a goal to reach 1+ million units of next-generation electric cars per year.

Cost reduction is key. This is why we believe Chinese ultra-high efficiency and Mexican lower labor costs are crucial. On top of that, Mexico is in North America, which means full eligibility for the $7,500 federal tax credit for the new EV models.

Some of the Chinese suppliers have already signed up for the investment - the Chinese media report that the Ningbo Xusheng Group announced a $276 million plant in March.

On the other hand, there is always some political risk, which might make Chinese companies reluctant.

Tesla Giga Mexico in brief:

  • announced on March 1, 2023
  • location: in the Santa Catarina municipality near Monterrey (Nuevo Leon)
  • construction to start within about three months (Summer 2023)
  • purpose: next-generation EVs
  • info from Mexico's government:
    nearly 4,200 acres
    initially: $5 billion investment and 5,000 people
    ultimately: $10 billion investment and 10,000 people
    production output of 1 million vehicles annually
Got a tip for us? Email: tips@insideevs.com