Mexico's Lithium Industry Celebrates Tesla Investment
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Mexico's Lithium Industry Celebrates Tesla Investment

Photo by:   Paul Steuber
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Paloma Duran By Paloma Duran | Journalist and Industry Analyst - Fri, 03/03/2023 - 16:59

Global electric car manufacturer Tesla chose Nuevo Leon to build its new factory. With the new investment, Mexico is moving closer to its goal of developing a strong and attractive lithium value chain.

For months, several states voiced their desire to host Tesla's new electric car assembly plant.  The governments of Nuevo Leon, Jalisco, Hidalgo, State of Mexico, Puebla and Veracruz offered skilled labor and unique benefits. However, Nuevo Leon was chosen as Tesla’s new investment destination. López Obrador emphasized that even though he initially did not want the plant to be in Monterrey, he accepted the proposal since Tesla agreed to be highly responsible with its water use.

"Things are going well. We talked yesterday with Mr. Elon Musk. There is an understanding; they are going to invest in Mexico and the plant is going to be established in Monterrey with a series of commitments to face the problem of water shortage. They are going to help," he said.

Previously, it was stated that 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. López Obrador explained that Musk requested a subsidy from the Mexican government to manufacture lithium batteries in Mexico. However, this request was denied by the Mexican government.

Mexico’s Position in the Lithium Race

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 to develop a lithium market, as it ranks 10th regarding the largest lithium deposits.

Experts believe that Mexico could take advantage of the electromobility transition since its location and resources make it a good competitor worldwide. However, industry experts have highlighted that opportunities may be hampered due to state intervention and a lack of infrastructure and research. Another challenge is that Mexico's lithium reserves are in clay deposits, making them economically unviable, as extracting lithium from clay is an underdeveloped and unproven method.

Photo by:   Paul Steuber

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