Nuevo Leon to Provide Entire Tesla’s Manufacturing Ecosystem

High-tech glass company AGP Glass is investing US$800 million to expand its operations in Nuevo Leon to supply Tesla’s demand in the US. This plant will create over 700 new jobs in the region and is set to start production in July of this year. After analyzing several locations, Tesla chose to build its Gigafactory in Nuevo Leon.

AGP Glass’ plant in Nuevo Leon is one of the largest in the region, according to Sergio Reséndiz, Director, Colliers, the real-estate company supporting this investment plan. “The AGP plant is one of the largest roofed buildings in Monterrey; we are talking about 100,000m2, 10 hectares of roofed land. It's a monster in Santa Catarina!” says Reséndiz, according to El CEO.

Among other clients, AGP Glass supplies to Tesla and this new plant would allow the glass manufacturer to serve its northern clients better. After studying several locations in Mexico, Tesla chose Nuevo Leon for its new Gigafactory. Before the decision was finalized, Mexican President Andrés Manuel López Obrador had stated that Nuevo Leon would not be an ideal location for Tesla due to the region’s water scarcity. López Obrador highlighted that the country should not continue with the same policy of granting permits in areas where there are water shortages, as it is simply “not feasible.”

“The point is that any investment, if it is large, implies more population, more services, more water, streets, drainage and public transportation; therefore, it is not growth for growth's sake, but sustainable development, growth with well-being,” says López Obrador. However, he later met Tesla’s CEO Elon Musk to discuss the plant’s location and after the meeting López Obrador confirmed that Tesla would invest US$5 billion to build the plant in Nuevo Leon, as reported by MBN. “We talked with Elon Musk. He is going to dedicate the investment and settle in Monterrey, with a series of commitments to help with water scarcity,” he said. 

López Obrador praised the respectful meeting and noted that Musk committed to using recycled water and water treatment throughout the electric car manufacturing process due to the region's prolonged droughts. 

Although other states, such as Veracruz, Michoacan, Puebla, San Luis Potosi, Hidalgo, and Jalisco, had expressed interest in the project and offered various benefits, Nuevo Leon's proximity to Texas, where Tesla already has a Gigafactory and strong manufacturing capabilities, provided a significant advantage.

Nuevo Leon is one of the most important manufacturing hubs in the country and the arrival of Tesla would be another boon for the region, highlighting its manufacturing ecosystem. “The message that Tesla is sending is very positive about the quality of the ecosystem for advanced manufacturing in Mexico. For us it is a message of geography, demography, regional economy under the USMCA, that a company of Tesla's quality wants to put a plant like this in Mexico,” says David Eaton, President, American Chamber of Commerce of Mexico (AMCHAM), according to El Economista.

Last year, the USMCA rules of origin dispute panel ruling helped Mexico secure investments that amounted to US$15 billion. The ruling provides certainty and security for companies seeking to take advantage of  Mexico’s nearshoring capabilities and relocate closer to the North American market, as reported by MBN.

Correction 08/06/2023: This note was updated to reflect Tesla’s decision to build the plant in Nuevo Leon.