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Tesla has committed to building a new automotive facility in Northern Mexico, the country's President said on Tuesday, as part of Tesla's move to expand into markets outside the United States.
The deal, said to be worth at least $1 billion initially, was referred to as some Mexican officials as a Gigafactory. Future phases of the project could bring spending of as much as $10 billion, Mexican media said.
According to President Andres Manuel Lopez Obrador, "the whole Tesla company" was coming to Mexico to build a "very big" plant. The plant was said to be an assembly plant, but did not elaborate on which models the Tesla plant would produce.
The commitment to build a plant in Mexico came over a phone call between Elon Musk and President Obrador, ending months rumor and speculation about Tesla's future plans there.
The news comes after Obrador had previously dismissed the possibility of placing that type of plant in the northern part of Mexico known as Nuevo Leon because of the water shortages prevalent in that region. However, Musk has committed to using recycled water.
"This will represent a considerable investment and many, many jobs," Obrador told reporters on Tuesday.
More details about what exactly the plant will produce and the size of the detail are expected to come on Wednesday. Tesla is expected to elaborate further on the company's plans at an Investor Day event tomorrow, as well as share details about a new cheaper EV model.
Tesla so far has plants in the United States, Germany, and China, and is considering other locations for its next gigafactory, including Canada, South Korea, and Indonesia, as it strives towards its target of selling 20 million EVs annually by the year 2030.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.