Lithium, electrification projects come to fore post Tesla announcement.
Mexico sealed the deal for world leading electric vehicle (EV) maker Tesla to select Santa Catarina on the outskirts of Monterrey, Nuevo León state, for placement of its fifth “Gigafactory”.
This after talks nearly collapsed with Mexican President Andrés Manuel López Obrador (AMLO) insisting on a more central or southern location. But 14 months of close communication and a flurry of last-minute maneuvers Mexico’s foreign ministry led by chancellor Marcelo Ebrard, as well as Nuevo León Governor Samuel García, apparently paid off in the end.
They convinced AMLO to back off and allow the deal to go through coming with a gamut of Tesla concessions, such as commitments to invest in long-term water supply projects in the state..
But the rare retreat by AMLO was also a coup for Monterrey, a stronghold of wealth, industry and opposition to his government. But it also plays into the president’s vision of building out an EV battery supply chain that starts with state-owned lithium company LitioMx at the top.
AMLO’s “Plan Sonora”, for example, centers on developing the massive lithium deposits located in the northwestern state bordering Arizona to be powered by solar energy with strong support from the Biden administration in the US and potential billions in financial backing in exchange for Mexico’s redoubled climate change efforts.
Details on the Monterrey plant are still scant, with CEO Elon Musk burying the announcement in hour three of Tesla’s 2023 Investor Day presentation March 1 that included no new details apart from an artist’s rendition of the facility and confirmation that the project would move forward.
On the Mexico side, foreign relations ministry deputy director Martha Delgado has been active with the press this week to signal the Gigafactory represents a ballpark investment of around US$5 billion.
The Tesla plant also means around 6,000 direct jobs, says Delgado, and this is parallel to the heaps of capex and tens of thousands of jobs on deck in Nuevo León and nearby as the already world-class auto manufacturing ecosystem in place in Mexico’s north revs up to supply parts and services to Tesla.
Mexico has already around 600 Tier 1 original equipment manufacturing (OEM) companies in place, with about 2,500 OEMs at all levels up and running – a market valued over US$70 billion, and one keen to adapt to the EV market along with the state’s lithium-battery development programs just now getting off the ground.
It also puts the new plant just a hop, skip and jump (about 570 kilometers) from Tesla’s Austin plant, and the state leadership rolled out the red carpet in bringing Tesla to Nuevo León, already opening, for example, one lane exclusively for Tesla traffic on the Nuevo León’s little-used border crossing (N. León has a tiny 14 km border with Texas).
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