Tesla has officially chosen the Mexican state of Nuevo León as the location of its next vehicle production plant, also known as the Gigafactory, so even though it was just a rumor, it’s a decision that has Most surprising.
For those of us who have been following Tesla very closely, we probably had Canada and Indonesia on our radar, the United Kingdom, but didn’t really put much weight into Giga Mexico, because we’re idiots who really care that much.
Global Economy Once you start looking at it, there are a lot of important reasons why Tesla is opening up shop in Mexico and not just with a new factory, but the largest gigafactory ever, this Giga Texas for short. Will give Let’s talk about why Giga Mexico is such a big deal for the future of Tesla crossovers.
Giga Mexico So the primary importance of Giga Mexico is that it will almost certainly be the first Tesla factory to produce its next generation vehicle platform the company’s first economy car or Model 2 or 25k Tesla whatever you want to call it. It’s the vehicle that Elon Musk estimates will outsell every other Tesla vehicle combined and that’s probably why the land Tesla bought for this factory has the largest footprint ever.
The 4,200-acre Mexico purchase is 68 percent larger than Tesla’s Giga Texas property. Germany and Texas is that they use the surrounding land to build peripheral support infrastructure for core factory things like battery cell manufacturing drive unit production power generation.
Tesla executives have long talked about wanting to make their supply chains as local as possible. So the assumption would be that Giga Mexico would eventually have all the manufacturing infrastructure they would need. According to the information received from the governor of Nuevo Leon Tesla, this factory will be started with a brand new production line.
Giga Shanghai about how it went from groundbreaking to production in eight months, but in that case Tesla was just making a copy of something they were already doing in Fremont, of course it’s a much better version, But they already knew how to model 3 at that time. Tesla is debuting a new manufacturing system with this next-generation platform, which is one of the highlights of their Investor Day in March.
The company is moving towards a highly automated highly efficient production method that allows them to manufacture completely front to back. and the sides of the vehicle separately and together and then finally bring them all together for final assembly, since the company is introducing a new production method on a new car, we shouldn’t expect the Giga Mexico to light up Will move forward with speed.
The vehicle that came before this is a process they want to get right the first time as well as give a quick shout out to our amazing Discord community this is our question of the week and this was our favorite answer and here is the meme.
winner of the week join our discord community next week to participate via link in description below why mexico interesting factor here just trying to understand mexico clearly tesla sees this place Why is critically important to your next big move as a company.
The easy answer would be to just say cheap labor and that is true but there has to be more to it as Tesla already having access to cheap labor in China could very easily continue to expand its operations there and that is not the case That labor cost has always been a significant concern for Tesla. If they can make a profit building cars in Berlin Germany, they can make money making cars almost anywhere.
Also the whole point of the investor day presentation was that Tesla is streamlining and automating their new production process so that they can achieve higher production volumes per unit of labor which makes human labor alone more economical. Everyone’s expenses are less. It talks about doing what is easier but increased productivity has the same effect on profit and the result is a bigger mark market share which inevitably leads to even more profit.
Elon is telling us all that the company is not only making that car affordable by cutting corners and cutting costs, the reason the new car will be affordable is because it will be fully optimized for mass production. This new platform will be ready in half the time it takes to build a model. 3. Tesla will remove rare earth metals from the drive unit they are using LFP battery cells and the structural pack they are using Giga Casting which they have redesigned.
With a vast amount of components removed from the electronic system and wiring harness to run on the 48-volt architecture, there are so many factors that go into making this new platform so affordable that it’s absurd to say that cheap labor leads to a cheap car. Is equal to . And the really interesting factor is wondering which markets this factory wants to serve. According to a report by Dave Lee on Investopedia, who was able to speak with Tesla executives at the Investor Day, Dave was told that Giga Mexico would also not make cars for the North American market.
It won’t be a factory sending products down that sink. Giga Mexico will be making cars for Mexicans, but it will also serve as a global export hub for South and Central America, including Africa, New Zealand and Australia, perhaps Europe. may involve. Really think about who this car is for the easy answer is, let’s just say it’s someone who can’t afford a Model 3, but the consumer automobile market doesn’t work like that.
Price is more of a factor in buying a car, Elon said, adding that the new platform will be smaller than the Model 3. It’s pretty young americans who on average don’t like small cars, sure some people in north america drive compact cars cool but most have decided their wants and needs as a consumer require a larger vehicle Yes, Tesla is not.
This is about to change but everywhere in the world people prefer small cars in many cases because their small roads they don’t like at all I have experienced it first hand the difference from Canadian roads with big ditches on both sides Too wide and mostly empty for driving in Europe, it’s a miserable experience.
I’m not that scared behind the wheel of a car I’d rather drive in a blizzard so Tesla knows what they’re doing here they’re going to sell millions and millions of this new car but they’re not in North America The US is not going to be a massive hit and here the economic case Mexico really comes into play. Did you know that Mexico has free trade agreements with 50 different countries, the United States only has free trade agreements with 20 countries? There are trade agreements.
Mexico’s free trade, by comparison, extends to the European Union, Japan, Israel, Latin America and South America, meaning Tesla can reach its target market for this vehicle without paying any import duties. Economics further strengthen the case and Tesla is far from the only company that has identified Mexico as a desirable area for expansion over the past few years.
Lots of articles that claim Mexico will become the new China and it seems that in 2016 Donald Trump declared a minor trade war between the US and China, making it worse than the coronavirus pandemic. And then made even more problematic by the Russian invasion of Ukraine, many people fell into the trap of believing that we would always do cheap easy peaceful trade with China.
Not that we’ve all seen global supply chains crumbling and collapsing, and smart business leaders won’t be interested in going back to exactly the way things were before what was dubbed Near Shoring began , pretty self-explanatory companies trying to get their builds closer together geographically. For their consumer market, it removes problems such as global shipping routes, congested ports and busy canals from the supply equation.
In many cases it reintroduces good old fashioned trains as a way to transport your product to the state of Nuevo Leon where Tesla will set up shop. The capital is Monterrey, which is already a thriving modern manufacturing center. Something you won’t find in China, it has skyscrapers, world-class architecture an international airport and the Monterey Institute of Technology is considered one of the top universities in the world.
We’ve seen Chinese companies moving to Nuevo León and setting up new manufacturing facilities at the Tesla Gigafactory site, an industrial park where 28 Chinese companies have bought land and are either actively doing business or not far from the manufacturing process have seen. Tesla is far from the first American automaker to come to Mexico. Ford has always built its electric car, the Mach E, in a factory near Mexico City which is a lot further south than Monterrey and logically so.
But that’s Ford. GM has been building trucks in Mexico for years and starting in 2024 it will build its electric vehicles at a refurbished plant outside Monterrey, also a controversial area but in many ways the manufacturing hub in Mexico. Making America stronger is actually good for the American economy. The more products that are being assembled in Mexico, the bigger the market is for components and materials that are made in the US. Tesla may make battery packs and cars in Mexico but we know they make their battery grade lithium in Texas. Will process and then ship.