According to Chinese media, Tesla underestimated the difficulty of building a factory in Mexico.
Tesla’s Mexico Gigafactory is expected to start vehicle production in the first quarter of 2025, according to a report from the China-based publication Late Post, which quotes people reportedly familiar with the matter.
The new timeframe means that the Mexican factory might start production one or two quarters later than initially expected, as Teslarati writes, the main reason being that the American EV brand apparently underestimated the difficulty of building a facility in Mexico.
As per Late Post, Tesla reportedly shared the updated start of production target with suppliers in China, which were informed that if they fail to build their own facilities in Mexico to aid in the whole manufacturing process, they might end up losing their export deals to the EV maker’s American factories.
That’s quite an aggressive move from Tesla if it turns out to be true, but it’s worth noting that for selected partners, the electric car maker will adopt an 18 to 20 percent higher purchase price compared to its orders in China, allowing at least one supplier cited in the report to build a factory in Mexico and increase its gross margins by about 3 points.
Furthermore, the American company might reportedly not offer additional assistance to Chinese suppliers that are planning to open facilities in Mexico, nor did Tesla promise to order components from Chinese suppliers overseas.
In other words, it looks like Tesla is trying everything it can to keep key suppliers as close to its Mexico Gigafactory as possible, which should result in lower costs overall compared to importing components from different parts of the world and shipping them to Mexico.
At this point, it’s worth mentioning that we have no way of verifying this information with Tesla, as the company hasn’t had a press relations office since 2020 when Elon Musk dissolved the entire public relations department.
What we do know, however, is that the Austin-based EV maker will build a brand new car factory in the Santa Catarina municipality near Monterrey in Mexico, where the firm’s next-generation, more affordable EVs will be manufactured.
The site will initially involve an investment of around $5 billion and approximately 5,000 people, but in the end, it will all cost an estimated $10 billion and about 10,000 jobs will have been created to support a production output of 1 million vehicles per year.
A previous report said that construction of the factory would take anywhere from 12 to 15 months to complete, which would be longer than what the Shanghai factory took, but that’s reportedly due to the brand-new assembly line that Tesla is planning to use for its compact vehicle.
As always, we’d like to know what you think about this, so head over to the comments section below to give us your thoughts.
Source: Late Post (Chinese) via Teslarati
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Keyword: Tesla Gigafactory Mexico To Begin Car Production In Q1 2025: Report