In a reminder of what happens between US cities and states in the race to win investment from tech companies, Mexico is undergoing a fierce competition between states to win a potential Tesla facility.
Mexican governors have gone to insane extremes, such as putting up billboards, creating special car lanes or making mock-ups of Tesla ads for their states.
And there’s no guarantee that Tesla will build a full-fledged factory. Nothing has been announced, and the frenzy is based primarily on Mexican officials calling Tesla boss Elon Musk There will be an upcoming phone call with Mexican President Andrés Manuel López Obrador.
The northern industrial state of Nuevo León took an early lead in the race.
It painted the Tesla logo on a lane across the Columbia border into Texas last summer, and in December put up billboards in the state capital, Monterey, that read “Welcome Tesla.”
Mariana Rodríguez, the influential wife of the state’s governor, was also shown in the leaked photographs meeting with Musk.
However, López Obrador ruled the semi-desert state out of consideration on Monday, arguing that he would not allow factories’ typically high water use to risk shortages there.
This started a competitive scramble between the other Mexican states, like feeding time in a piranha tank. The governors’ proposals ranged from clever proposals to near-comical proposals.
“Veracruz is the only state with an excess of gas,” quipped Governor Cuitlahuac García of the Gulf Coast state of Veracruz, before adding “The gas is for industrial use, for industrial use!”
Coming late to the race, García was hard pressed: He noted that Veracruz was home to Mexico’s only nuclear power plant. And he claimed that Veracruz contained 30% of Mexico’s water, although the National Water Commission puts the state’s share at about 11%. The water, it turns out, is thicker than blood.
The governor of the western state of Michoacan was not going to be spared. Gov. Alfredo Ramirez Bedolla posted a mock-up ad for a Tesla car parked next to a giant, car-sized avocado – Michoacan’s most recognizable product – with the slogan “Michoacan – Best alternative to Tesla”. .
“We have enough water,” Ramirez Bedola said in a televised interview he did amid rounds of meetings with auto industry figures and international trade representatives.
Michoacán also has a complicated problem of drug cartel violence. But similar violence in neighboring Guanajuato state hasn’t stopped seven major international automakers from setting up plants in Guanajuato.
Nuevo Leon Gov. Samuel Garcia had to think fast to avoid being completely shut down, and came up with a new strategy.
García arrived in the western state of Jalisco, whose governor, Enrique Alfaro, belongs to the same small civil movement party. Together, the two came up with an “alliance” on Thursday that would allow trucks from Jalisco preferential use of the Nuevo León border crossing, the same one where a “Tesla” lane appeared last year.
Jalisco already has a healthy overseas tech sector, but more importantly, it has more water than Nuevo León.
Both appeared intent on playing well. Alfaro said, “We are two states that do not need to compete and cannibalize each other … Cannibalism for investment is a mistake.”
Gabriela Siler, chief economist at Nuevo León-based Banco Bes, said Lopez Obrador’s focus on water may be more about politics than drought. He said the president is trying to drive Tesla investments into a state governed by his own Murray party, like Michoacán or Veracruz.
It can be a dangerous sport, Siler said.
“Tesla may say it’s not someone’s toy that can be taken anywhere, and it may decide not to come to Mexico,” he said.
Sam Abuelsamid, a principal research analyst at US-based Guidehouse Insights, said playing one state against another is common in the US.
“You remember a few years ago, Amazon talked about building their headquarters, like every state, cities in the country were bidding, trying to lure Amazon there,” Abulsamid said.
It is doubtful that whatever Musk will eventually announce will be an auto assembly plant. Foreign Relations Secretary Marcelo Ebrard said his understanding is that it will not be one plant, but an “ecosystem” of suppliers.
Kasturi has made promises before that don’t get fulfilled, or happen years after they’ve been said. For example, in 2019 he promised a fleet of fully autonomous robotaxis on the roads sometime in the 2020s. Nearly three years later, Tesla has yet to sell any autonomous vehicles.
While there has been little talk of subsidies in Mexico so far, many auto companies have received significant incentives to build plants in Mexico. That kind of race can be costly.
“It is questionable whether it is actually economically beneficial to the local people or to provide those subsidies,” Abulsamid said. “They’re sometimes spending billions of dollars in tax breaks to woo a company.”
Musk has touted the idea of making an ever-$25,000 electric vehicle, which would cost about $20,000 less than the current Model 3, which is now Tesla’s least expensive car. Many automakers make low-cost models in Mexico to save labor costs and protect profit margins.
A Tesla investment could be part of “near-shoring” by US companies that once manufactured in China but are now vulnerable to logistical and political problems there. That those companies will now turn to Mexico represents the Latin American country’s biggest foreign investment hope.
“The battle between states to attract investment from this close event is going to be an uphill, complicated one,” Alfaro said.
As Ramírez Bedola said, “Wherever Tesla is established, it will be big news in Mexico.”
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(This story has not been edited by News18 staff and is published from a syndicated news agency feed)