As you all may know, today Tesla Motors Corporation has announced that it will invest in Mexico, particularly in Monterrey, Nuevo Leon in order to build a mega factory where it will produce the Mode 2. Likewise, Mexican Government has launched an ambitious project to promote lithium production. We would like to highlight some of the benefits that we have analyzed based on these two important announcements:
1. Reduce transportation cost: The State of Sonora has one of the largest reserves of lithium make it readily available for the new Tesla automobile factory in Monterrey. Lithium is a critical component in the production of electric vehicles battery. Currently lithium is primarily mined in South America, which requires significant shipment costs to bring it to the manufacturing facilities. Having lithium deposits nearby would reduce costs, hence lowering the aggregate cost of Tesla vehicles produced in Monterrey.
2. Jobs: Lithium mining and processing requires specialized knowledge and skills, which would create employment opportunities for local communities in Sonora as well as in Monterrey for its final handling, which ultimately boost Mexican economy.
3. Environment benefits: If lithium is available near the Tesla factory, it would reduce the environmental impact of mining and transportation, reducing the carbon footprint of each battery / electric vehicle produced.
4. Increase production: Having access to lithium deposits nearby would increase the production capacity of the Tesla factory in Monterrey. If the factory can access a reliable and local source of lithium, it would enable the production of more batteries and potentially increase the production of electric vehicles.
5. Clusters: All major Tesla suppliers will eventually move to Mexico in order to satisfy Tesla’s production demands.
We see this as good opportunity to all foreign investors to consider Mexico as a new investment destination.
1 Dear reader, please be advised that this piece is not, and shall not be construed as a legal advice, and it is not a comprehensive analysis of the subject matter referred to above.