Tesla will build a new assembly plant in northern Mexico, the country’s president announced on Tuesday. This comes as the car manufacturer tries to broaden its operations outside of the U.S in a deal that is reportedly worth $5 billion.
President Andres Manuel Lopez Obrador said “the whole Tesla company” was coming to Mexico to build a “very big” automotive plant, noting that potential investment in batteries was still pending. He did not reveal what models it would produce.
Lopez Obrador’s announcement of the plant in the Monterrey metropolitan area caused recent concern that he could upend the investment by imposing conditions on the company due to problems over a lack of water in the arid border region.
“This will represent a considerable investment and many, many jobs,” Lopez Obrador told reporters, saying Chief Executive Elon Musk had been receptive to Mexico’s concerns and made commitments on how to address the shortage of water.
With all of Tesla’s factories combined, Tesla has a combined annual production capacity of more than 1.9 million cars at other factories. The company already has car factories in the U.S states of California and Texas as well as Berlin and Shanghai.
The new plant will be built in Santa Catarina in the greater Monterrey area, said the municipality’s mayor.
Mexican-made electric cars shipped to the United States qualify for subsidies provided by the Biden administration to boost EV adoption, according to industry officials.