Mexico says Tesla never registered a crucial investment application for its planned Gigafactory.
Tesla originally announced its plans to open a new Gigafactory that would produce its electric vehicles in Mexico last year. However, various things, including tumultuous economic conditions and political uncertainty, delayed the construction of the factory, which was coined Gigafactory Mexico and was set to be built in Nuevo Leon.
In October 2023, CEO Elon Musk raised concerns about economic conditions as it planned to build the factory:
“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 did not feel that demand would be high enough to justify the new factory at that time, but things are not really changing, as he highlighted more concern about the political climate during last week’s 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.”
Tesla’s next North American Gigafactory ‘paused’ as U.S. election nears
However, a new report from Mexico Now states that Mexican government officials said Tesla never registered a Foreign Direct Investment (FDI), which would be typical for a foreign company planning to build a presence in the country.
Raquel Buenrostro, the Secretary of the Economy, said:
“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.”
She went on to confirm that Tesla’s “pause” in investment has not been matched by other companies just because of a potential Trump presidency:
“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.”
Tesla did not cancel the plans for Giga Mexico, but it seems the construction will be on pause for a considerable amount of time. If Trump wins the presidency, we could see the entire project take a major turn.
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