Tesla May Announce New Investment in Mexico
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Tesla May Announce New Investment in Mexico

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Paloma Duran By Paloma Duran | Journalist and Industry Analyst - Tue, 01/03/2023 - 18:13

Global electric car manufacturer Tesla chose Nuevo Leon to build its Gigafactory, which will have an initial investment of between US$800 million and US$1 billion. With the new investment, Mexico is moving closer to its goal of developing a strong and attractive lithium value chain.

According to Reforma, the Gigafactory will produce components for the company's current vehicle models. However, it could later develop new models at a lower cost compared to other car factories. Tesla is expected to unveil its new investment on Friday. If this is not the case, it will be announced in early January.

Previously, Foreign Affairs Minister Marcelo Ebrard said that CEO Elon Musk visited three Mexican states intending to find the best location to build a new factory. Reuters reported that in October, Musk visited Nuevo Leon and met with Governor Samuel García and US Ambassador to Mexico Ken Salazar to discuss the plans and prospects.

What Are Mexico's Opportunities With Electric Cars?

For years, the global market share of electric cars (EVs) has been growing. This trend can be linked to regulations that promote ambitious electrification targets. For instance, creating a zero-emissions future is a top objective for both car industry participants and governments since it will lessen the environmental footprint, improve health and stimulate innovation.

Many states are collaborating in the transition to e-mobility, yet this is also increasing competition for lithium, a crucial resource in the production of EVs. The biggest lithium reserves are located in Latin America. According to the 2021 USGS Mineral Commodity Summary, the lithium triangle of Chile, Argentina and Bolivia holds around 58 percent of the world's lithium deposits. Mexico also has potential for the lithium market, as it ranks tenth regarding the largest lithium deposits.

Experts believe Mexico could take advantage of the electromobility transition as it has supported the manufacturing of EVs for the US market since the beginning of this trend. According to President López Obrador, half of the total vehicles manufactured in Mexico will be electric or hybrid by 2030.

However, industry experts have highlighted that the green transition can be hampered without the right government incentives, as well as if both the public and private sectors do not invest in infrastructure and research. In addition, another challenge is that Mexico's lithium reserves are in clay deposits, which makes them economically unviable, as lithium extraction from clay is an underdeveloped and unproven method.

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