The Mexican automotive industry is taking in stride the news that investment in Tesla’s planned factory in northern Mexico has been paused until after the U.S. presidential election.
During an earnings call on Tuesday, Tesla CEO Elon Musk said the electric vehicle manufacturer had “paused” its project in the state of Nuevo León. Construction of the gigafactory and investments from suppliers would have brought in more than US $15 billion, according to Governor Samuel García.
The National Auto Parts Industry (INA) and the Mexican Auto Dealers Association (AMDA) played down any idea of a crisis, asserting that the Mexican automotive sector is strong. Mexico is the world’s No. 4 auto parts producer and the No. 1 supplier of auto parts to the United States.
“The North American industry supply chain is not based on the eventuality of certain things happening,” INA said in a press release. “Mexico is just as fundamental for U.S. competitiveness as is the United States for us.”
INA reiterated its forecast for historic production levels this year, projecting annual production to exceed US $126 billion. U.S. government data shows that the value of exports of Mexican-made auto parts to the United States increased 9.4% annually in the first four months of 2024, reaching a record high of US $28.37 billion.
Regarding the electric vehicle sector, Mexico boasts more than 100 suppliers which export parts to companies including Tesla in California, Lucid Motors in Arizona and Rivian in Illinois.
AMDA president Guillermo Rosales was equally nonplussed, saying Mexico has no reason for alarm over the “pause” in the planned Tesla factory.
“This has more to do with the global electric vehicles market falling below projections made three years ago,” Rosales said. “In addition, with all the competition beginning to emerge from traditional auto manufactures and start-ups as well as Chinese firms, Tesla is seeing its market shrink.”
Rosales noted that there had been no investment beyond surveying and property acquisition on the part of Tesla and a few infrastructure projects completed by the state of Nuevo León.
“How can this be a setback if it didn’t even exist yet?” he said.
INA president Francisco González seconded Rosales’ observation. “The Tesla plant still is just that, a project,” adding that “companies based in North America — and in many other parts of the world — know Mexico is an auto parts supplier. And we continue to supply the domestic sector, too.”
President Andrés Manuel López Obrador dismissed Tesla’s decision as little more than politics and speculation. “This is not serious,” he said Wednesday, citing the U.S. presidential campaign and speculation that former U.S. President Donald Trump would impose tariffs on auto imports from Mexico if he wins in November.
López Obrador said such a move would be impractical since building automobiles entirely in the United States would result in vehicles that are too expensive for U.S. consumers.
“Let’s remember that [Trump] made these statements while campaigning, which usually means it’s just rhetoric,” he said. “But I’m sure Mr. Musk is very familiar with campaign speeches.”
“[Tesla] probably has another business plan,” he added. “Oftentimes these companies play the market. They make a public statement to boost their share price and then move forward with production plans.”
With reports from Fortuna, Forbes México, El Universal and Sin Embargo
