Tesla CEO Elon Musk said Tuesday that the electric vehicle manufacturer’s planned “gigafactory” project in Nuevo León is currently “paused” because of the possibility that Donald Trump will impose tariffs on vehicles made in Mexico if he wins the Nov. 5 presidential election in the United States.
During Tesla’s Q2 earnings call, Musk was asked for an “updated timeline for Giga Mexico,” which the company first announced in March 2023.
“We currently are paused on Giga Mexico. I think we need to see where things stand after the election. Trump has said he’ll put heavy tariffs on vehicles produced in Mexico,” he said.
“So it doesn’t make sense to invest a lot in Mexico if that is going to be the case. So we kind of need to see the way things play out politically. But we are increasing capacity at our existing factories quite significantly,” said Musk, who endorsed Trump after the assassination attempt on the former U.S president earlier this month.
Trump has threatened to impose 100% tariffs on cars manufactured in Mexico by Chinese companies, but he hasn’t publicly announced any plan that would adversely affect vehicles made here by Tesla, a U.S. company based in Austin, Texas. United States Trade Representative Katherine Tai indicated in May that U.S. authorities could impose protective measures targeting vehicles and other products made in Mexico by Chinese companies.
As things stand, vehicles made in Mexico can be exported tariff-free to the United States provided they meet regional content rules.
Musk said last October that Tesla was preparing to build a new factory in Nuevo León, but indicated that he was hesitant to “go full tilt” on the project due to prevailing global economic conditions and uncertainty. In May, Nuevo León Nuevo León Economy Minister Iván Rivas insisted that Tesla was still planning to build its highly-anticipated gigafactory in the municipality of Santa Catarina near Monterrey, despite the project being slow to start.
If the Mexico gigafactory doesn’t materialize, it will be a major blow for Nuevo León and the state government led by Governor Samuel García, who has been an outspoken champion of the project. His government agreed to provide a range of investments to facilitate the establishment of the plant.
According to the federal Economy Ministry, construction of the proposed gigafactory would involve an investment of more than US $10 billion. García said last September that Tesla and its suppliers would invest $15 billion in the state.
In February, Bloomberg reported that Musk had “invited Chinese suppliers to Mexico to replicate the local supply chain at Tesla’s Shanghai plant.”
The news agency said that “Chinese auto-parts makers are rapidly setting up plants” on the outskirts of Monterrey to supply the Tesla gigafactory.
BYD, a Chinese EV company and major competitor of Tesla, has also announced plans to build a plant in Mexico, but it hasn’t revealed a location or how much it intends to invest in it.
Mexico News Daily
