Elon Musk Confirms Tesla's Fifth Factory in Mexico

The manufacturer of electric vehicles continues its expansion and aims to increase production in its other factories.

Elon Musk put an end to the suspense on March 1, concerning the construction of a new factory, Tesla's fifth. The billionaire and CEO has confirmed that the group, based in Austin, Texas, will open a giant factory in Mexico, near Monterrey, in the north of the country, an arid region.

"We're excited to announce that that the next Tesla Gigafactory will be in Mexico near Monterrey [city]," Musk announced just before the start of the questions & answers session, following the presentation made to investors by company executives in Austin, TX. The event was streamed live.

He did not give details: for example, we do not know the cost of the investment, when the work will start and when Tesla plans to open this factory.

'Big Event'

A Tesla  (TSLA) - Get Free Report executive said that the vehicle to be produced there will be a "huge volume product."

Musk said that there will be a big opening and insisted that Tesla would continue to ramp up production at other factories.

"I do want to emphasize we will continue to expand production at all of our existing factories so including California and Nevada to Texas obviously, and rather than Shanghai, so we intend to increase production at all factories.," the billionaire repeated.

"So the Giga Mexico would be supplemental to the output of all the other factories. So this is not, to be clear, moving output from anywhere to anywhere. It is simply about expanding total global output."

He concluded: "We're looking forward to it and having a big event too for the great groundbreaking and opening."

The president of Mexico, Andrés Manuel López Obrador, on Feb. 28 indicated that the electric-vehicle leader has agreed to build a production site in the industrial hub of Monterrey, in northern Mexico. 

The promise was made after he and Musk spoke by phone the day before. Mexico's president didn't provide details about the plant, including which vehicle or vehicles it will build, how big it will be, how many jobs it will create, the cost of investment and the production capacity.

"This is going to mean a considerable investment and many, many jobs," López Obrador said. 

A New Way to Build Cars

The factory will be located in Santa Catarina in Monterrey city, the capital of Nuevo Leon state, in an industrial area of ​​northeastern Mexico. While it's unclear which models will be produced at the new factory, automakers generally produce their cheaper models in Mexico, where labor is cheaper.

The base price of the Model 3 sedan, Tesla's current entry-level vehicle, is $42,990.

Tesla also unveiled a new vehicle manufacturing platform on March 1, aimed at reducing production costs by up to 50%. This platform, called  New Generation Vehicle, would allow the carmaker to manufacture low-cost cars for the masses and thus reach emerging markets and consumers who cannot currently afford its vehicles.

This next-generation manufacturing platform promises a new way to manufacture a vehicle, quickly and inexpensively, Musk said

The new plant will be the company's fifth and the third outside the U.S. The company already has four car-assembly factories: Fremont, Calif., and Austin in the U.S. as well as Shanghai and Berlin.

The first two mainly serve the North American market and have a combined production capacity of 900,000 vehicles per year, according to Tesla. They produce all models sold by Tesla: Model 3, Model Y, Model X and Model S. 

Late this year, the Austin factory will also produce the highly anticipated Cybertruck, in addition to the Model Y.

In Shanghai, the car manufacturer produces vehicles sold in Asia and Europe. But since the German plant opened in March, it should become the primary supplier to the European market. 

Giga Shanghai has a production capacity of more than 750,000 units annually. 

The German factory both assembles cars and develops batteries. It has an annual production capacity of more than 250,000.