Musk’s recent announcement detailed that his electric and autonomous car manufacturer will have a new production plant in Mexico, more specifically, in Nuevo León. The automotive industry is one of the backbones in terms of the generation of wealth in Mexico. If there is investment, wealth is generated, jobs are triggered, and in this industry the subsectors also benefit greatly because several production chains are required. Of course, Mexico has many comparative and competitive advantages. To begin with, it is part of a trilateral agreement with the United States and Canada; and it has many synergies with the rest of Central America and South America. Plus, Mexico not only becomes a strategic point in terms of trade but also because of its lithium reserves.
Opportunity of Mexico
For Mexico, it is good news in numerous ways. First, due to the investment, which will initially exceed one billion dollars; second, due to the number of qualified jobs that it will generate and the economic impact that it will detonate in the northern region, thus the state will not be the only one to benefit; and third, because despite the ongoing security and political controversies happening in Mexico, it continues to be an important economy for the United States.
Controversy
Despite the fact that the new Tesla plant is good news for the economic development of the country, it is not without controversy. The federal government affirms that in the State of Nuevo León “there is no water” which would cause inconveniences both in the plant and in the population. And it is that in that area, the summer months are usually dry and the installation of a plant of the characteristics such as Tesla’s would negatively affect water resources, having repercussions on the population. But, as President Obrador recently said during his press conference, “the plant is going to be established with a series of commitments to face the problem of water scarcity”.
Gigafactory Mexico
Musk elaborated that Gigafactory Mexico will focus on building the company’s next-gen vehicle. In addition to that, gigafactories produce car batteries and components are recycled to reduce the environmental impact of their assembly or to give them a second life, as well as to reduce the operating costs of their assembly.
Supply Chain
Suppliers are lining up to see who will be the benefactors of this opportunity. We’ll have to wait to find out if Tesla will stick to its current suppliers or will take a chance on some regional companies. It will be most interesting to see how they build this new supply chain south of the border. What we know for sure is the geographical and economic potential of Mexico, will Musk take full advantage of it?
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