Tesla to construct subsequent plant in Mexico

New York

Tesla’s subsequent automobile meeting plant will likely be in Mexico close to Monterrey, CEO Elon Musk introduced Wednesday.

“We’re super excited about it,” Musk stated throughout an investor day for the corporate. “We’ll continue to expand production at all of our existing factories. So this is not moving output to anywhere, from anywhere. This is supplemental production.”

The firm presently has capability to construct about 2 million automobiles a yr at 4 factories, in Fremont, California; Shanghai, China; Austin, Texas; and Berlin, Germany. It has set a objective of finally constructing 20 million automobiles a yr. The firm delivered simply over 1.3 million automobiles in 2022. The largest automaker on this planet by manufacturing quantity, Toyota, delivered simply over 10 million automobiles globally in 2022.

Tesla didn’t touch upon the price of the brand new plant. The information was a affirmation of plans introduced Tuesday by Mexican President Andres Manuel Lopez Obrador for Tesla to construct its subsequent manufacturing unit within the nation. Reuters reported that Mexican officers stated the plant may price $1 billion.

The firm estimates to construct the extra crops wanted to achieve 20 million automobiles will price a complete of $150 billion to $175 billion, together with the $28 billion in funding that it has already made in its historical past.

“Maybe this total investment looks large,” stated CFO Zachary Kirkhorn. “I think its quite small relative to our ambitions.”

The firm additionally introduced that earlier Wednesday it constructed 4 million automobiles in its historical past.

Shares of Tesla

(TSLA) slipped greater than 5% in after-hours buying and selling Wednesday, though that was up a bit from a bigger decline earlier than Musk’s announcement greater than three hours into the presentation. There had been hope by some buyers that Tesla

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(TSLA) would announce particulars a couple of subsequent technology of automobiles. Musk declined to reply a query concerning the subsequent technology automobile.

“We will have a proper sort of product event,” Musk stated. “We’d be jumping the gun if we were to answer that question.”

In response to a different query from an analyst, Musk stated he doesn’t anticipate Tesla ever having greater than 10 completely different automobiles in its product lineup. He derided the broad choices of competing automakers as merely a “shuffling” of many comparable fashions.

The Inflation Reduction Act handed final yr restored tax credit of as much as $7,500 to consumers of the inexpensive Tesla automobiles, the Model 3 and Model Y, so long as their checklist value is beneath $55,000. To qualify for the tax credit score, the automobiles have to be assembled in North America, so the eventual output from the plant in Mexico ought to qualify.

Most of the worldwide automakers have already got meeting crops in Mexico. According to Reuters, there are 20 auto meeting crops within the nation. General Motors has three, Ford has two, together with one which make its Mustang Mach-E, the EV SUV that could be a competitor to Tesla. Stellantis — which builds automobiles beneath the Chrysler, Dodge, Ram and Jeep manufacturers — has three.

In addition Toyota, Honda, Nissan, Volkswagen, Audi, Mazda, Mercedes, Kia and BMW all have crops in Mexico.

According to statistics from the US Trade Administration, part of the Commerce Department, Mexican crops have been producing slightly below 4 million automobiles a yr within the years earlier than the pandemic lowered the availability of auto components, significantly laptop chips, and auto manufacturing worldwide. They produced about 3.5 million automobiles final yr. That makes it the seventh largest nation when it comes to auto manufacturing.

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But 90% of the automobiles it builds are exported, with 76% destined for the United States.