FYI: Tesla’s plans to establish a Gigafactory in Mexico are currently on hold, as the company has yet to register the necessary investment applications, and concerns about economic and political conditions persist.

Mexico Reports Tesla Hasn’t Registered Investment Application for Gigafactory

Tesla’s highly anticipated Gigafactory in Mexico has hit yet another roadblock. Despite prior announcements, Mexico reports that Tesla has not filed the necessary investment applications for the new facility. This delay is compounded by Elon Musk’s concerns over uncertain economic conditions and political climates.

Tesla’s Initial Announcement and Subsequent Delays

Last year, Tesla revealed ambitious plans to build a new Gigafactory in Nuevo Leon, Mexico. This facility, dubbed Gigafactory Mexico, was intended to ramp up the production of Tesla’s electric vehicles. However, a series of setbacks, including fluctuating economic conditions and political uncertainties, have hindered progress.

In October 2023, Tesla’s CEO Elon Musk expressed his reservations about starting construction due to the current high-interest rate environment:

"I’m worried about the high-interest rate environment that we’re in. I just can’t emphasize this enough that the vast majority of people buying a car is about the monthly payment…If you can tell me what the interest rates are, I can tell you when we should build the factory."

Musk’s hesitations stem from concerns that consumer demand may not support the expansion under these economic conditions. Further complicating matters, he recently voiced additional concerns about the political landscape during Tesla’s last Earnings Call:

"We’re currently on pause on Giga Mexico. I think we need to see just where things stand after the election…Trump has said that he will put heavy tariffs on vehicles produced in Mexico, so it doesn’t make sense to invest a lot in Mexico if that is going to be the case. So we will kind of need to see how things play out politically."

Lack of Investment Application

Despite these public statements, a recent report from Mexico Now has revealed a significant procedural oversight. Mexican government officials stated that Tesla has not registered a Foreign Direct Investment (FDI) application, a standard process for any foreign company planning operations in the country.

Raquel Buenrostro, the Secretary of the Economy, firmly stated:

"We have no record of Tesla’s investment…They have made announcements in the media, but they have not made any official, institutional arrangements, in accordance with the Law of Foreign Direct Investment in Mexico."

Buenrostro also emphasized that other companies have not mirrored Tesla’s pause in investments due to potential political changes, highlighting robust foreign investment figures:

"You have seen that it doesn’t; we have announcements, historic announcements, and also the records have been historic: in the first quarter, we had $20 billion in FDI, which is 50 percent more than what we had last year. Investment is going very well."

Future Prospects

While Tesla has not canceled the Gigafactory Mexico plan outright, it is evident that the project will remain on hold for the foreseeable future. The coming U.S. presidential election could further influence the factory’s fate, especially if policies shift dramatically.

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William Kouch
Editor, Automotive.fyi