Tesla is asking several Chinese supply chain companies to build factories in Mexico in order to replicate a Giga Shanghai and its supply chain system there, according to local media.
(Image: Tesla China video screenshot)
China's well-established electric vehicle (EV) industry chain is one of the key factors in Tesla's success in the country. Now, the US EV maker is reportedly looking to replicate it in Mexico.
Tesla is asking several Chinese supply chain companies to build factories in Mexico to replicate a Giga Shanghai and its supply chain system there, local media outlet 36kr reported today.
Tesla's pace is urgent and suppliers could lose orders amounting to hundreds of millions of yuan if they don't respond in time, the report said, citing a person familiar with the matter.
On March 1, Tesla unveiled plans to build a factory in Mexico for the production of next-generation cars at an Investor Day event.
Mexican Foreign Ministry officials had said the plant would invest more than $5 billion and have a planned capacity of 1 million vehicles.
Some of Tesla's suppliers in China have announced plans to build factories in Mexico since the beginning of this year.
Ningbo Xusheng Group said in late March that it would build a production base in Mexico, with a total investment of no more than $276 million. Late May, the construction of the project was officially launched in Mexico's Coahuila state.
If all goes well, the plant will be ready for production in July or August next year, 36kr said, citing a source close to the project.
According to the report, a number of Chinese manufacturers of production line equipment have already set up offices in Mexico to take charge of design, after-sales support and other business aspects.
Mexico is now a hotbed of investment, many customers are coming over, and there are even supply chain companies bringing production line workers to Mexico to build factories, the report quoted a Tesla supplier source as saying.
Low labor costs, and industrial chain support are Mexico's advantages. However, there are supply chain sources said that Mexico is not as mature as the European and American markets, social and geopolitical risks are relatively high, the report noted.
On July 18 last year, Bloomberg reported that Chinese power battery giant CATL was considering building a manufacturing plant in at least two locations in Mexico, possibly to supply Tesla and Ford.
The CATL sites would help Mexico cement its role in the region's electric vehicle production, which has long been a major part of the auto industry's supply chain, the Bloomberg report noted.
Tesla's Shanghai plant went into operation at the end of 2019 and began delivering vehicles to local consumers in January 2020.
The plant, which produces the Model 3 as well as the Model Y, has an annual capacity of more than 1 million vehicles and currently supplies vehicles not only to local consumers but is also an export hub for the EV maker.
Tesla delivered 422,875 vehicles worldwide in the first quarter, including 412,180 Model 3 and Model Y vehicles, and 10,695 Model S and Model X vehicles, according to data it released on April 2.
In the first quarter, Tesla sold 229,322 China-made vehicles, contributing 54 percent of its global deliveries.
Tesla's Shanghai plant exported 91,893 vehicles in the first quarter, up 24.39 percent year-on-year, according to data monitored by CnEVPost.
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