Tesla announces to invest at least five billion dollars to build a huge factory in northern Mexico. The announcement is extremely well received in the country.
Elon Musk, the boss of Tesla has confirmed it: the manufacturer of electric vehicles will open a “giga-factory”, a mega-factory in northern Mexico, in Monterrey. The total investment is expected to be between five and ten billion dollars. The selected site has the advantage of being close to the United States and the plant should produce one million vehicles per year.
In Mexico, it is believed that Tesla’s decision is part of the trend of “nearshoring”, which consists of bringing production centers closer to consumer markets, in this case, for Tesla, bringing its factories closer to the United States. The announcement of this installation galvanized economic circles, boosted the national currency, electrified the media and put the political world in all its states.
A trend towards local relocation
Valeria Moy, director of the Mexican Institute for Competitiveness, an independent research center, believes that Elon Musk’s announcement could restore the image of “made in Mexico”, when the country is already in the top 5 of automotive exporters. “The arrival of Tesla gives Mexico a special appeal, more than any other automotive company that has recently invested in our country”, she assures.
“The attention and excitement generated by Tesla’s announcement is second to none.”
Valeria Moy, director of the Mexican Institute for Competitivenessat franceinfo
This trend towards local relocation greatly benefits Mexico, especially in the current context, according to Luis Miguel González, director of the daily El Economista. “Based on the new free trade agreement between Mexico, the United States and Canada, he explains, and especially from the deterioration of relations between Washington and China, it is much more advantageous for American companies to open factories in nearby regions, such as in Mexico.
Skilled labor on site
To convince Tesla, human capital also played, according to Valeria Moy. Over the past 30 years, a host of car manufacturers have opened factories in Mexico, particularly in the north of the country, where workers have specialized. “This allows automakers to speed up their operations, taking advantage of a skilled workforce that already exists on-site.”
But an obstacle stands in the way of Tesla: the chronic lack of water from which this region suffers, according to Luis Miguel González. “Northern Mexico does not have the natural resources, especially water, to guarantee long-term industrial development”, he said. According to economists, large-scale public policies are needed so that “made in Mexico” still has a bright future ahead of it.