A sign bearing the Tesla company logo is displayed outside a Tesla store in Cherry Creek Mall in Denver, Colorado, Feb. 9, 2019. Mexico is undergoing competition among several states in 2023 to attract a possible Tesla facility.
(AP Photo/David Zalubowski, File)
MARK STEVENSON
Fri, February 24, 2023
MEXICO CITY (AP) — Mexico is undergoing a fevered competition among states to win a potential Tesla facility in jostling reminiscent of what happens among U.S. cities and states vying to win investments from tech companies.
Mexican governors have gone to loopy extremes, like putting up billboards, creating special car lanes or creating mock-ups of Tesla ads for their states.
And there’s no guarantee Tesla will build a full-fledged factory. Nothing is announced, and the frenzy is based mainly on Mexican officials saying Tesla boss Elon Musk will have an upcoming phone call with Mexican President Andrés Manuel López Obrador.
The northern industrial state of Nuevo Leon seemed to have an early edge in the race.
It painted the Tesla logo on a lane at the little-used Columbia border crossing into Texas last summer, and erecting billboards in December in the state capital, Monterrey, that read “Welcome Tesla.”
The state governor’s influencer wife, Mariana Rodriguez, was even shown in leaked photos at a get-together with Musk.
However, López Obrador appeared to exclude the semi-desert state from consideration Monday, arguing he wouldn’t allow the typically high water use of factories to risk prompting shortages there.
That set off a competitive scramble among other Mexican states, like feeding time at a piranha tank. The governors’ offers ranged from crafty proposals to near-comic ones.
“Veracruz is the only state with an excess of gas,” quipped Gov. Cuitláhuac Garcia of the Gulf coast state of Veracruz, before quickly adding “gas … for industrial use, for industrial use!”
A late-comer to the race, Garcia had to try harder: He noted Veracruz was home to Mexico’s only nuclear power plant. And he claimed Veracruz had 30% of Mexico’s water, though the National Water Commission puts the state’s share at around 11%. Water, it turns out, is thicker than blood.
The governor of the western state of Michoacan wasn’t going to be left out. Gov. Alfredo Ramírez Bedolla quickly posted a mocked-up ad for a Tesla car standing next to a huge, car-sized avocado — Michoacan’s most recognizable product — with the slogan “Michoacan — The Best Choice for Tesla.”
“We have enough water,” Ramírez Bedolla said in a television interview he did between a round of meetings with auto industry figures and international business representatives.
Michoacan also has an intractable problem of drug cartel violence. But similar violence in neighboring Guanajuato state hasn’t stopped seven major international automakers from setting up plants in Guanajuato.
Nuevo Leon Gov. Samuel Garcia had to think fast to avoid being shut out entirely, and came up with a novel strategy.
Garcia reached out to the western state of Jalisco, whose governor, Enrique Alfaro, belongs to the same small Citizen’s Movement party. Together, the two came up with an “alliance” Thursday that would allow trucks from Jalisco preferential use of Nuevo Leon’s border crossing, the same one where a “Tesla” lane appeared last year.
Jalisco has an already healthy foreign tech sector, but most importantly, it has more water than Nuevo Leon.
The two appeared intent on playing nice. “We are two states that do not have to compete and cannibalize each other … cannibalization for investment is a mistake,” Alfaro said.
López Obrador’s focus on water might be more about politics than about droughts, said Gabriela Siller, chief economist at Nuevo Leon-based Banco Base. She said the president appeared to be trying to steer Tesla investment to a state governed by his own Morena party, like Michoacan or Veracruz.
That could be a dangerous game, Siller said.
“Tesla could say it’s not somebody’s toy to be moved around anywhere, and it could decide not to come to Mexico,” she said.
Sam Abuelsamid, a principal research analyst at U.S.-based Guidehouse Insights, said playing one state off against another has been common practice in the U.S.
“You remember a few years back, Amazon talked about building their headquarters, like every state, city in the country was putting in bids, trying to lure Amazon there,” Abuelsamid said.
There are doubts that whatever Musk eventually does announce will be an auto assembly plant. Foreign Relations Secretary Marcelo Ebrard said his understanding is that it won’t be a plant, but rather an “ecosystem” of suppliers.
Musk previously has made promises that don’t come true, or happen years after he says they will. For instance, in 2019 he promised a fleet of fully autonomous robotaxis on the roads sometime in 2020. Nearly three years later, Tesla has yet to sell any autonomous vehicles.
While there has been little talk in Mexico so far of subsidies, many auto companies have gotten significant incentives to build plants in Mexico. That kind of race can be costly.
“It’s questionable whether it’s actually that economically beneficial to localities or providing those subsidies,” said Abuelsamid. “They’re sometimes spending billions of dollars in tax breaks to lure a company in there.”
Musk at times has floated the idea of building a $25,000 electric vehicle that would cost about $20,000 less than the current Model 3, now Tesla’s least-expensive car. Many automakers build lower-cost models in Mexico to save on labor costs and protect profit margins.
A Tesla investment could be part of “near shoring” by U.S. companies that once manufactured in China but now are leery of logistical and political problems there. That those companies will now turn to Mexico represents the Latin American country’s biggest foreign investment hope.
“The fight among states to attract investments from this nearshoring phenomenon is going to be tough, complicated,” Alfaro said.
As Ramírez Bedolla put it, “wherever Tesla sets up, it is going to be big news in Mexico.”
Mexican States Woo Tesla as AMLO Makes His Own Pitch
Maya Averbuch and Sean O'Kane
Fri, February 24, 2023
(Bloomberg) -- Ever since Elon Musk flew to Mexico to visit the northern state of Nuevo Leon in October, rumors have swirled about where Tesla Inc. will end up building its plant — and whether another state might snatch away the investment.
President Andres Manuel Lopez Obrador weighed in on the issue this week and didn’t have anything positive to say about Tesla settling in Nuevo Leon. The state near the US border is already filled with industry and lacks water, said AMLO, as the president is known. Instead, he highlighted abundant resources in the country’s southeast and the appeal of moving close to a new airport in the State of Mexico that’s one of his major infrastructure projects.
On Friday, he reinforced the message by saying the company would not receive permits if there was not enough water in northern Mexico.
“If there is no water, no, there would be no possibilities,” AMLO said. “The permits are simply not issued for that, I mean it is not feasible.”
Meanwhile, the governor of the farming state of Michoacan, which is famous for its avocado production, posted an image on Twitter featuring a gleaming car with the popular fruit, sliced in half, sitting in front of it. “The best option for Tesla,” the image reads.
For his part, Nuevo Leon’s governor appeared in a video gifting one of the company’s vehicles to his wife for Valentine’s Day.
Tesla, the US market leader for electric cars, has been expected to announce plans for an assembly plant in Mexico since last year. The factory would be Tesla’s first south of the US border and part of Chief Executive Officer Musk’s promise to build international plants.
Tesla suppliers already have a dedicated lane at a border crossing a few miles from Laredo, Texas, which shares a border with the Mexican state of Nuevo Leon. But AMLO has argued that Mexico’s north has shortcomings for the plant and said he’d raise those in an upcoming conversation with company executives. Originally from the southern state of Tabasco, AMLO has called for greater development in Mexico’s south for decades.
“Mexico as a country does not have a unified foreign direct investment strategy. Each state is independently aiming to attract companies,” said Alberto Villarreal, the founder of Chicago-based Nepanoa, a business advisory firm. “Different states are fighting to have Tesla in their territory.”
The Latin American country, which is one of the world’s largest vehicle manufacturers, has recently seen electric-vehicle investments from BMW and General Motors. It has promised to splurge on solar energy plants in the state of Sonora to supply clean energy to the region. Nuevo Leon is among the top destinations for direct foreign investment in Mexico, drawing in $4.4 billion last year, or almost 13% of the country’s total, according to a Banco Base analysis. But a severe drought in 2022 — that at times left residents without water — raised questions about the state’s limits.
“We celebrate that Mexico has become a place for these auto industry investments. The only thing we want to talk about with the executives is a way of ordering growth,” AMLO said earlier this week at the press briefing. “There are places in the country where there isn’t enough water and we have to save it for domestic consumption.”
Playing Each Other
Tesla has a long history of playing different cities and states against each other for its business. It courted states like Texas, Arizona, and New Mexico when it was searching for a home for its first so-called “Gigafactory” in 2014 before ultimately settling on Nevada, which offered $1.3 billion in tax incentives for the project.
That competition was so successful that Jeff Bezos tried to replicate it when searching for a location for Amazon’s second headquarters, Bloomberg News previously reported. Musk ran an accelerated version of the competition in 2020 after he announced he was scouting locations for a new factory to build Tesla’s Cybertruck, before ultimately settling on Texas.
More recently, Tesla told Texas officials in September 2022 that tax breaks would be crucial to the company choosing a location on the state’s gulf coast for a new lithium refinery. In that same application, Tesla said it was also considering a site in Louisiana. The company didn’t immediately respond to a request for comment on its future Mexico location.
With nothing set in stone, an open fight in Mexico could be risky for the country, potentially leading Tesla to call off the investment, said Jesus Carrillo, the sustainable economics director at the Mexican Institute for Competitiveness, a Mexico City-based think tank.
“I don’t think this debate will change the location, even though there’s an effort by the government to coerce companies where it wants. But the final decision could be to cancel, if there are too many barriers,” Carrillo said.
--With assistance from Carolina Gonzalez.
Tesla can't build in northern Mexico if water is scarce, president says
Mexico's President Andres Manuel Lopez Obrador holds a news conference in Mexico City
Fri, February 24, 2023
MEXICO CITY (Reuters) - Tesla Inc. would be denied permits to build a plant in the northern Mexican state of Nuevo Leon, where it has eyed investing, if water is scarce, Mexican President Andres Manuel Lopez Obrador said on Friday.
His comments mark the strongest sign yet that his concerns over water supply could become a deal-breaker for Tesla's plans near the U.S.-Mexico border, underscoring critiques from analysts and investors that interference from Lopez Obrador's government is undercutting Mexico's potential as a nearshoring destination serving the U.S. market.
"If there's no water, no," Lopez Obrador told reporters, when asked if he would allow the electric vehicle maker led by billionaire Elon Musk to open a plant in Nuevo Leon, a major industrial hub considered a top contender to land the investment.
"Simply put, we don't give out permits for that. It's not feasible."
Tesla did not immediately respond to a request for comment.
Lopez Obrador called out arid Nuevo Leon for its water scarcity earlier this week, instead touting the benefits of Mexico's poorer southern region where he has sought to increase development.
In 2020, he said he would withhold permits for a Constellation Brands brewery in the northern state of Baja California after criticizing the project for consuming too much water in a dry zone. On Friday, the leftist leader praised Constellation for choosing to relocate to a state in southeastern Mexico.
"They understood very well," Lopez Obrador said. "They are now building their plant in Veracruz."
(Reporting by Daina Beth Solomon and Raul Cortes; Editing by Alistair Bell)
Mexico Has Conflicting Yet Interesting Ideas for Tesla’s Future
José Rodríguez Jr.
Fri, February 24, 2023
Image: State of Michoacán
Elon Musk is headed to Mexico soon to speak with the president about Tesla building a production plant in the country. Rumors of Tesla’s big move south have been ongoing for months, but Musk hasn’t confirmed where, exactly, Tesla plans to build its latest Gigafactory — or whether it will be built in Mexico at all.
President Andrés Manuel López Obrador, or AMLO, is scheduled to meet with Elon Musk to discuss Tesla’s future, according to Bloomberg. And, of course, AMLO will pitch his own ideas regarding where Tesla should settle in Mexico.
For now, the front-runners in the race for the coveted Tesla Mexico plant are the northern state of Nuevo León and the State of Mexico proper, where AMLO’s new airport is trying to attract foreign companies in order to build a major trade zone in the heart of the country. Nuevo León already hosts many of Tesla’s suppliers, and has even granted Tesla its own dedicated lane on the U.S.-Mexico border. Both of these locations would make sense.
But we can add the southern state of Michoacán to the list. Not because the state boasts a major port catering to the auto industry, but because the state governor has made a compelling argument through avocados. It seems that Michoacán’s governor, Alfredo Ramírez Bedolla, knows the way to anybody’s heart is through the stomach:
Avocados are the most famous and lucrative export of the state, but the governor goes on to say that, “Michoacán is the best option for Tesla and other global brands looking to invest and build on Mexican soil.”
Now that politicians in Mexico are vying for Musk’s attention — and getting weirder with their efforts to woo Tesla — the governor of Michoacán convinced some intern to mock up an EV with absolutely zero sidewall and little resemblance to any model that Tesla makes. Still, I admire the unhinged effort as well as the fact that the governor believes Tesla would ever build a two-door vehicle.
At the very least, it’s more creative than efforts from Nuevo León’s governor, who publicly gifted a Tesla to his wife for Valentine’s Day (link in Spanish.) But the Mexican president might take a different tack than his fellow politicians by threatening to withhold permits if Tesla decides to build in the North. It’s a risky move on AMLO’s part, but not altogether unfounded.
As Bloomberg reports, water has been scarce in northern states and that could impact the industry:
President Andres Manuel Lopez Obrador weighed in on the issue this week and didn’t have anything positive to say about Tesla settling in Nuevo Leon. The state near the US border is already filled with industry and lacks water, said AMLO, as the president is known. Instead, he highlighted abundant resources in the country’s southeast and the appeal of moving close to a new airport in the State of Mexico that’s one of his major infrastructure projects.
On Friday, he reinforced the message by saying the company would not receive permits if there was not enough water in northern Mexico.
“If there is no water, no, there would be no possibilities,” AMLO said. “The permits are simply not issued for that, I mean it is not feasible.”
[...]
“There are places in the country where there isn’t enough water and we have to save it for domestic consumption.”
As if that weren’t enough, the Mexican military has slowly been establishing a stronger presence in the North as the country struggles to contain cartel violence, which has been historically concentrated in Mexico’s border states.
The president makes no mention of cartel violence in his remarks, but the concern is always valid. A kind of background condition that many in the country have accepted. The point is that AMLO will try to convince Musk that building a plant away from the Mexican capital could be a risk.
AMLO is from the South, however, so his pitch is somewhat biased. And one of the major promises during his presidential campaign was that he’d help bring more money to southern Mexico via development.
In the end all this competition could put off Musk and Tesla from actually making any major investments, as Bloomberg notes. While that is a possibility, it seems unlikely. A sibling rivalry between Mexican states is hardly enough to shoo Musk away when so many of Tesla’s competitors run production plants in the country.
Chinese automakers are also gaining ground there, and most likely playing the long game with EV production in the West — attempting to gain a foothold via Latin America. So, it looks like Tesla is destined to remain or grow in Mexico in some form or another. It’s just a matter of when, where and who has the best avocados in the country.
Jalopnik
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