Mexico and Tesla: Elon Musk wins dispute for Gigafactory
It was a minor highlight in what was, for many, a rather disappointing investor day for electric car maker Tesla on Wednesday at the company’s headquarters in Austin, Texas.
Tesla CEO Elon Musk has unveiled a model of a planned Gigafactory in Mexico following an announcement the day before by Mexican President Andres Manuel Lopez Obrador.
During a three-and-a-half-hour presentation, Musk outlined how Tesla plans to grow in the face of increased competition. But the event revealed little about Tesla’s new products. Many investors had hoped to catch a glimpse of the next generation of Tesla vehicles, but they were disappointed.
“We are excited to announce that we will be building a new Gigafactory in Mexico,” Musk said at the event about the facility that will produce the company’s next-generation vehicles. These models will likely be smaller than the current one to bring down prices.
Tesla’s new Gigafactory will be built in the state of Nuevo Leon, in Santa Catarina, a city with just over 300,000 inhabitants and just a few hundred kilometers from Austin, where Tesla opened its last Gigafactory last April. The company also has factories in California, Shanghai and Grünheide near Berlin. Details on the investment volume were sketchy, but it is believed to be around $5 billion (€4.7 billion).
The location near Monterrey emerged as the best option due to its proximity to Texas and the readily available infrastructure and manpower. In addition, one of the companies there is Tesla’s largest aluminum supplier, which would facilitate logistics.
Water scarcity as a point of contention
Last week, Mexico’s president threatened to put a wrench in the works and basically vetoed the plant, citing the lack of water in the region. “If there is no water, permits will not be issued. It is not feasible,” he said.
It would not be the first time. The current government had already canceled licenses granted by its predecessors to beverage maker Constellation Brands for a new brewery in Mexicali, northern Mexico, because of water shortages. Nuevo Leon experienced an acute water shortage last year, which led to rationing and restrictions on water-intensive industries. There was also a dispute over water at the Grünheide plant in Brandenburg. The head of the local water council warned about restrictions on drinking water.
political background noise
López Obrador emphasized that “it’s not just about water for the plants, that’s not a problem, because treated water can be used. The problem is that any big investment brings more population, more services, more water, roads, sewers and public transportation .”
Nuevo Leon Governor Samuel García, on the other hand, said his state had enough water for Tesla. He said they will work “hand in hand” with Tesla “so that they can clarify and prove that they do not use water for human consumption and that the water they use is treated and minimal”.
López Obrador’s focus on water may be more politically oriented than drought-related, believes Gabriela Siller, chief economist at Banco Base, a financial group based in Nuevo Leon. The president has apparently tried to direct Tesla’s investments to a state governed by his leftist Morena party, such as Michoacan or Veracruz, she told the Spanish newspaper. El Pais.
The adviser to the Ministry of Foreign Affairs of Mexico told the Bloomberg news agency that the negotiations lasted 14 months and that Musk offered several solutions to the problem of water scarcity in Nuevo Leon. According to the statement, Tesla plans to use treated water to cool its towers, use a reverse osmosis system to treat water for painting vehicles where water demand is greater, and collect rainwater, among other initiatives.
Source: DW
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