Tesla’s Gigafactory Mexico was initially slated to start production in the second half of 2024, but according to a new report out of China the factory’s opening will now take place in the first quarter of 2025.
Earlier this year Tesla announced plans to build the massive Gigafactory on a 4,200 acre site in Monterrey, about 200km south of the US/Mexico border. One of the main reasons Tesla picked Mexico was the Inflation Reduction Act (IRA) which provides incentives to automakers for producing their vehicles in North America, the definition of which includes the US, Canada, Puerto Rico, and Mexico. This includes both final assembly of the vehicles and also parts production.
To ensure they are able to access those incentives Tesla started working with its Chinese suppliers early to ensure they set up their own factories in Mexico to support the Gigafactory, as we have previously reported. According to sources within the Chinese supply chain that spoke with the media outlet Late Post, Tesla is now telling its partners to be ready to supply Giga Mexico in the first quarter of 2025, about 6 months later than originally planned.
The sources explained the reason for the delay is that building a factory in Mexico has proven more challenging than anticipated. Some of the logistical hurdles encountered have been larger than anticipated capital expenditures, higher labor costs, and poorer existing infrastructure. The plant is estimated to cost $10 billion and is expected to employ around 7,000 workers. Tesla had aimed to replicate the efficient supply chain model it established in Giga Shanghai, where over 95% of components are sourced locally.
Tesla announced Gigafactory Mexico back in March, but has yet to start any work at the site. This is different than what happened with Giga Texas as ground clearing at the site had actually already begun in the days leading up to the announcement. Once up and running it will be producing Tesla’s next-generation vehicle platform, which is expected to cost considerably less to manufacture and as a result sell for less than Tesla’s existing lowest cost vehicles.