Tesla Is Closing in on Mexico

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Tesla is considering construction of an assembly plant north of Mexico City, just a couple of miles away from the capital’s newest airport. The new Tesla plant could be a major export hub for the American EV maker, whose Model 3 and Model Y top the list of domestically-produced vehicles in the U.S.

These latest plans point to yet another location for Tesla, as Reuters notes. In Mexico, the company can set up shop and save on production costs while making sure its EVs qualify for federal EV tax credits under the Inflation Reduction Act.

Previously, Elon Musk met with officials in Nuevo León last year to talk about Tesla coming to the city of Monterrey, located just over 100 miles from the Texas-Mexico border. Not long afterward, Tesla was expected to announce an investment of up to $1 billion to build a new plant there, but the announcement is pending.

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Tesla is now reportedly scouting a location near Mexico City, and officials claim that the development of an industrial park is underway where Tesla could put the new plant three kilometers (two miles) from the newly-constructed Felipe Ángeles International Airport — the notorious pet project of President Andrés Manuel López Obrador.

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AMLO’s airport was supposed to relieve congestion at Mexico City International Airport, but it’s become something of a running joke in the country. People have mostly shunned the new airport: when it opened, there was only one flight operating there. The airport could finally take off now that officials plan build a huge trade zone around it, dubbed T-Mex Park, and Tesla might be in on the ground floor. A presidential spokesman told local outlets that Tesla “will invest there” and that an assembly plant is likely, according to Reuters:

Tesla is looking at investing in that area to take advantage of AIFA,” Ramirez told Reuters late on Monday, noting the site could serve as a base for the firm to export by air.

The question now is whether Tesla plans to build in Monterrey or Mexico, or both. Tesla already has a network of suppliers in Nuevo León and the U.S. is a short drive away, making land export easy. Then again, Mexico City is a short flight away, and air export channels could easily connect a plant there with the Port of Brownsville — where Elon Musk and SpaceX have gained foothold.

Regardless, it looks like Tesla wants to build cars in Mexico. It would be late to the party since Ford, General Motors, Volkswagen, BMW, and Nissan have long had a presence in the country. Legacy automakers are just beginning to switch their Mexican production lines from ICE-equipped cars to EVs, so Tesla could still catch up. Really, it’s Chinese EVs that pose an imminent threat to Tesla in Mexico, where BYD and MG are gaining ground. If Tesla plans to rival the Chinese with any success in Latin America, an assembly plant in Mexico (or two) would be a great start.

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