The American company Tesla, from the tycoon Elon Muskwill install an electric car factory in the city of Monterrey (north), with an investment of about $ 5 billion, the Mexican government announced on Tuesday.

The company’s arrival in Mexico was confirmed early Tuesday by President Andrés Manuel López Obrador, who said in a phone call Monday that he had sealed the deal with Musk.

“We brought an investment of about $5,000 million to Mexico to install the largest electric vehicle plant in the world,” Martha Delgado, Vice Chancellor for Multilateral Affairs and Human Rights, later explained.

The vice chancellor traveled to Austin, Texas, to attend Musk’s announcement of his 2023 investment plan.

Tesla will be installed in the metropolitan area of ​​Monterrey, the capital of the state of Nuevo León, which is constantly hit by water shortages, but the company promised to consider this problem, the leftist president assured.

“This is going to mean a significant investment and a lot of jobs,” López Obrador stressed during his morning press conference.

The capital Tesla will inject will be one of the largest recorded in recent years in the country, totaling $35,292 million in foreign direct investment by 2022, according to preliminary estimates from Mexico’s foreign ministry.

Lack of water

The president spoke emphatically about the issue of water, a chronic problem in several states in the north of the country. In 2022, Nuevo León authorities were forced to ration supplies due to a prolonged drought.

Musk “recognized the importance of addressing the problem of water scarcity (…) with the use of recycled water, water treatment even for car paint,” he said.

Tesla, Elon Musk’s electric car manufacturer, is opening a factory in northern Mexico, making a significant investment in the Latin American country, Mexican President Andrés Manuel López Obrador announced on Tuesday. Photo: — ALLISON DINER

López Obrador, who revealed that he had already had an initial meeting with the magnate last Friday, had publicly raised the possibility of the plant being located in another region of the country with greater availability of the raw material.

The Mexican government’s concern is based on the population growth that these investments could bring.

industrial pole

Tesla, which sold a record 1.31 million cars in 2022, is the last large car company settles in Mexico, where manufacturers such as Ford, General Motors, Volkswagen or BMW are already active, which mainly produce vehicles for the United States.

Companies seek access to the US market and the benefits of the USMCA free trade agreement between Mexico, the United States and Canada.

For this reason, many of them are located in areas close to the border, such as Nuevo León, a state with a strong industrial vocation that it also houses a South Korean Kia factory.

To alleviate the problem of lack of water, exacerbated by increasingly extreme temperatures, the Mexican government is building a new aqueduct and repairing wells to extract the liquid.

Agreements have also been made with companies that have concessions to supply part of the water they use.

The plant you will build Tesla joins the 39 the automotive sector already has in the country, including car, engine and transmission plants.

According to official figures, car manufacturers produced 3.3 million vehicles in 2022 and exported 2.8 million units.

lithium for batteries

Announcing Tesla’s investment, López Obrador said that “the battery issue was under consideration”, although he said he was pleased “with what has been achieved”.

“We talked about how, in the case of batteries, semiconductors, we couldn’t give the subsidies that the US government gives (…). He (Musk) understood it perfectly,” he said.

The Electric cars such as those produced by Tesla and other companies primarily use lithium in their batteries.

The presence of this mineral has been discovered in only 23 countries and it is estimated that Mexico occupies the tenth position in reserves, said the Department of Energy. Exactly on February 20, the government formalized the nationalization of lithium.

This input is mainly exploited in South America and Australia, with China dominating the supply chain. Mexico has important deposits in the northern state of Sonora, on the border with the United States.

The situation seems unbeatable as car manufacturers are changing their production lines to focus on electric cars, in line with the United States’ goal of having 50% of cars sold in that country by 2030 of this type.