Tesla Puts Brakes On Gigafactory Mexico Plans Amid U.S. Election Uncertainty

Tesla has officially paused its plans for Gigafactory Mexico due to concerns over the potential outcomes of the upcoming United States (U.S.) presidential election.

The announcement arrived during Tesla’s Q2 2024 earnings call, where CEO Elon Musk addressed the political risks associated with the project, where the stoppage of the development of the Nuevo Leon plant stems from Republican nominee and former President Donald Trump’s campaign promise to impose hefty tariffs on vehicles produced in Mexico and imported to U.S. soil.

“We’re currently on pause on Giga Mexico,” Musk stated during the earnings call. “Trump has said that he’ll put heavy tariffs on vehicles produced in Mexico, so it doesn’t make sense to invest a lot in Mexico if that is going to be the case.”

As a result, this pause shifts Tesla’s expansion strategy. The Gigafactory Mexico project, initially announced in March 2023, is one of the largest investments from the company. This development also raises questions about the future of the EV industry’s growth, which has been bolstered by the Inflation Reduction Act (IRA).

Read More: Clean Vehicle Tax Credit: What You Need to Know for New EVs

Tesla Shifts Production To Existing Plants

Notably, Musk suggested that gutting the IRA would be “devastating for our competitors.” He also claimed it would only “hurt Tesla slightly,” emphasizing that “the value of Tesla overwhelmingly is autonomy.” In light of the Mexico project’s pause, Tesla plans to increase production rates at its existing U.S. plants in Fremont, California, and Austin, Texas, to maintain growth and meet demand.

With Tesla releasing its Q2 2024 earnings results for its EV sales, the company’s future of Gigafactory Mexico and potentially other international manufacturing projects may also be determinant of the results of the U.S. presidential election in November 2024.

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