Will Tesla’s Next Gigafactory Be in Mexico?

Buzz regarding Tesla’s next gigafactory hits fever pitch as imminent announcement by Elon Musk is expected.

new tesla gigafactory to officially open tomorrow
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  • Elon Musk is widely expected to announce location of Tesla's next gigafactory by the end of 2022, with Canada and Mexico in the running.
  • But over the last two months, speculation has shifted heavily toward the state of Nuevo Leon in Mexico, just southwest of the Texas border.
  • In 2022 alone, Tesla has opened new plants in Austin, Texas, and Berlin-Brandenburg, Germany.

    Earlier this year Tesla CEO Elon Musk indicated that plans for yet another gigafactory were in the works, and that it would be located in North America.

    One of the potential sites, as we've reported in recent months, was the Canadian province of Quebec, which was believed to be one of the two finalists.

    Musk was known to have visited Ontario and Quebec and had met with Canadian government officials. A possible Gigafactory in Quebec or Ontario was believed to be likely due to their proximity to processors of raw materials for batteries in the two provinces, as well as proximity to Canada's auto suppliers, mostly concentrated in southern Ontario.

    But plans for a Gigafactory in Canada were far from a done deal, despite industry watchers flagging some apparent exploratory work by Tesla staff.

    Now, the focus of the Tesla rumor mill is actually on Mexico, specifically the state of Nuevo Leon and the city of Monterrey. Musk was reported to have met with officials in Nuevo Leon, which shares a border with Texas and is just west of the state of Tamaulipas, which sits on the Gulf of Mexico.

    Why would this location be preferable to Tesla over Canada?

    tesla shanghai gigafactory
    A factory in Mexico would be Tesla's third outside the US, adding to Shanghai, China (seen here), and Berlin, Germany.
    Xiaolu ChuGetty Images

    Aside from the very obvious advantage of lower auto worker wages in Mexico, Gigafactory Mexico would be just hours from Gigafactory Austin, and could easily share components from suppliers when needed, or produce parts for assembly in Austin. A Gigafactory location in Mexico also brings the advantage of lower operating costs compared to Canada, including for things like internal heating for the plant, in addition to abundant sunshine for Tesla's solar cells.

    But a new Gigafactory, whether in Canada or Mexico, ultimately overlooks some other issues at the automaker, including an aging lineup, an investigation into Autopilot crashes into first responder vehicles, and the availability of its so-called Full Self-Driving technology as merely a Level 2 system.

    Rumors of a Gigafactory in Mexico are also happening against the backdrop of Tesla's stock drop in the wake of Musk's purchase of Twitter, which produced no shortage of drama on the social media network for weeks, with the possibility of Musk stepping down as CEO of Twitter in the next few days due to pressure from major Tesla investors.

    Still, a drop in stock price of over 60% since the start of the year is giving plenty of Tesla investors jitters, even though the automaker is believed to be on track to exceed last year's deliveries by the time the four quarters of 2022 are tallied up.

    The automaker is finishing the year with the first deliveries of the long-awaited heavy-duty Semi, and Tesla's next vehicle, the Cybertruck, is now expected to enter production in Austin at the end of 2023 at the earliest.

    Should Tesla pick Mexico or Canada for the site of its next gigafactory? Let us know your thoughts.

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