Tesla seeks to replicate Giga Shanghai in Mexico

Asian Tech Press (June 8) -- US electric car manufacturer Tesla is looking to replicate in Mexico the success it achieved at its Shanghai gigaactory, sources said.

One key factor in Tesla's success in China is that the country has a strong and comprehensive electric vehicle supply chain, as the industry consensus now stands.

As a result, Tesla is looking to replicate a Giga Shanghai and the plant's supply chain system in Mexico.

The US carmaker is asking several China-based supply chain companies to build factories in Mexico in order to reach that goal, Chinese media outlet 36kr reported on Thursday.

Tesla's pace is quite urgent and if suppliers don't respond in time, they could lose orders worth hundreds of millions of yuan, the report said, citing people familiar with the matter.

Earlier in March, Tesla announced it would build a new super factory in Monterrey, Mexico's third-largest city and industrial hub, where the firm would produce its "next-generation" vehicle.

Mexican Foreign Ministry officials have said that the factory will invest more than $5 billion and has a planned annual capacity of one million vehicles.

Since the beginning of this year, some of Tesla's suppliers in China have announced plans to build factories in Mexico.

Ningbo Xusheng Group, which supplies aluminium parts and moulds to Tesla, announced at the end of March that it would build a production site in Mexico, with a total investment expected to be no more than US$276 million.

In late May, Xusheng announced the launch of its investment project in Saltillo, the capital of the northeastern Mexican state of Coahuila.

If all goes well, the plant will go into production in July or August next year, according to a source close to the project.

In addition to Xusheng, Taiwanese electronics manufacturer Quanta Computer also said in late May that it would invest US$1 billion to expand production in the northern Mexican state of Nuevo Leon.

Quanta is not only an assembler of Apple laptops, but also OEMs electronic control units (ECUs), advanced driver-assistance system (ADAS) and carputers for Tesla.

Meanwhile, some Chinese manufacturers of production line equipment have set up offices in Mexico, responsible for design, after-sales support and other operations.

A Tesla supplier source told 36Kr that Mexico is now a "hotbed" for investments, with many customers coming over and even supply chain companies bringing production line workers to Mexico to build factories.

Low labour costs, as well as industry chain support are Mexico's strengths, helping to attract some global companies like Tesla to invest in the country.

However, some supply chain professionals said that Mexico is not as mature as the European and American markets, with relatively high social and geopolitical risks.

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