Tesla has paused its plans to build a new gigafactory in Mexico until after the US presidential election in November, as Donald Trump has pledged to impose a 100% tariff on vehicles made in Mexico.
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.
Read more: Tesla’s gigafactory network and EV battery production blueprint
In the update, Tesla said it will ramp up production at its existing plants in Fremont, California and Austin, Texas. The results added that the south extension of the Texas gigafactory is nearing completion. In June last year, Panasonic announced plans to grow the production of batteries for EVs at Gigafactory Nevada by 10% over the next two years.
The Tesla pause comes as weak demand puts the EV-dominant future into uncertainty. Consumer resistance and trade disputes are casting doubt on the electric future, as vehicle makers express caution on zero emission vehicle targets.
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