Tesla pauses Mexico gigafactory until after US election

Plans for the gigafactory near Monterrey in Nuevo Leon were first announced in March last year, and it was originally expected to be operating by the first quarter of 2025. But the project has been plagued by stop-starts and uncertainty.

By September 2023, some Tesla suppliers started to delay their own plans to build new facilities in the country as apprehension about meeting the completion date grew. In October, Tesla confirmed it was pausing the project amid economic concerns.

Elon Musk, CEO, Tesla said in the carmaker’s financial update for the first half of the year that uncertainty surrounding the tariffs would make it impractical to invest heavily in the plant, but Mexican government officials have stated that the OEM has received $135m in incentives to build the factory.

In the update, Tesla said it will ramp up production at its existing plants in Fremont, California and Austin, Texas. The documents added that the south extension of the Texas Gigafactory is nearing completion.

Mexico has been a hotspot for the EV and battery supply chain in recent years, with OEMs such as BMW localising battery supply chains in the country. Other firms made investments during the back end of 2022, with Pirelli announcing an additional €114m ($114m) investment in its Silao plant, in the Puerto Interior industrial hub in Guanajuato state in November. In the same month, logistics provider RPM launched operations in Mexico, providing strategic planning, network design, capacity planning, information technology and transport through its cross-border logistics service.

In March, Tesla’s gigafactory in Grünheide, in Berlin, Germany was shuttered for a week when an arson attack on a nearby Steinfurt power station set an electricity pylon close to the Tesla site on fire. The halt in production cost the OEM estimated losses of hundres of millions of euros.