Tesla CEO Elon Musk on Wednesday said the world’s biggest maker of electric cars is indeed building its next large vehicle assembly plant in Mexico, near Monterrey, confirming a Monday announcement made by Mexican President Andrés Manuel López Obrador.
During a question and answer session, Musk commented on the matter three hours into a Tesla conference with analysts and investors at its Giga Austin plant. He didn’t provide specifics about the cost of the new facility and how many people it will employ, nor did he offer details about the vehicle it will make.
“The most significant announcement of the day is that we’re excited to announce that we’re going to be building a Gigafactory in Mexico,” the billionaire entrepreneur said. “This is not, to be clear, moving output from anywhere to anywhere. It is simply about expanding total global output.”
That remark may ease concerns that Tesla could eventually shift away from its production operations in Fremont, California. That 60-year-old plant has been the company’s main production site for over a decade but operates in a higher-cost location. Musk abruptly shifted the company’s headquarters to Texas two years ago after railing about California’s covid rules and bureaucracy. Last month, however, he appeared to be working to smooth over relations with the Golden State by shifting Tesla’s engineering headquarters to Palo Alto at an event with Governor Gavin Newsom. California remains, by far, the main U.S. market for Tesla’s vehicles.
Adding a fifth plant to manufacture Teslas is key to Musk’s goal to dramatically increase its annual production capacity to 20 million cars and trucks annually by the end of the decade; that’s twice the current annual volume of Toyota, the world’s biggest automaker. Given the rapid increase in competition in the EV space, few industry analysts expect Tesla, which sold just 1.3 million vehicles in 2022, to hit Musk’s aspirational target.
“I want to emphasize we will continue to expand production at all of our existing factories, including California and Nevada, here in Texas, obviously, and Berlin, Shanghai,” he said. “So Giga Mexico would be supplemental to the output of all the other factories.”
During the conference, numerous Tesla executives ticked off improved manufacturing techniques, new materials and design changes the company is implementing, all with a goal of cutting the cost of making its vehicles by 50%. There was no specific timetable for achieving that, however.
As part of the grueling 3 ½-hour event, Musk also unveiled “Master Plan 3,” his strategy to convert the world to renewable power from the sun and wind, stored on massive Tesla batteries, and to get drivers out of carbon-fueled cars and trucks and into ever more affordable EVs. A promised “white paper” he referenced detailing the plan was yet to be released by the company an hour after the event concluded.
Tesla shares, up 88% this year, fell 1.4% to $202.77 in Nasdaq trading on Wednesday.