On January 26, Tesla’s CEO announced that the company would reveal the locations of its new factories before the end of the year, according to The Street.
2022 is the year we will be looking at factory locations to see what makes the most sense, with possibly some announcement by the end of this year.
Elon Musk, Tesla CEO
In August, he reiterated that he hoped to formally announce the location of the clean-energy automaker’s new gigafactory later in 2022 in his efforts to produce 20 million vehicles yearly by 2030, becoming the world’s largest automaker by production volume.
These remarks encouraged governments in many countries to court Tesla. Canada, South Korea, Indonesia, and others dangled the incentive offerings to become Tesla’s new land.
Tesla’s assembling factories
Notably, the company already has four car assembling factories: Texas, Austin, and Fremont, California in the US, Berlin in Germany, and Shanghai in China.
According to Tesla, the first two primarily serve the North American market and have 900,000 combined production capacities annually. They build all vehicle models Tesla sells, Model S/X/Y/3.
Furthermore, the Austin plant will produce the Cybertruck in addition to the Model Y from mid-2023.
Giga Shanghai’s production capacity
In Shanghai, the manufacturer produces vehicles sold in Europe and Asia. However, since the Tesla plant’s opening in Germany in March, this production site should primarily serve the European market. Giga Shanghai has over 750,000 production capacity.
Moreover, the German factory is the only European production site of the automaker. It is a battery development and car assembly site. It has more than 250,000 production capacity annually.
Tesla to announce new factory location soon
A new plant should soon be added. Tesla is anticipated to announce its new factory location this week, according to Bloomberg News citing anonymous sources close to the matter.
The company has been finalizing plans to build the assembly plant in an industrial area of northeastern Mexico. The factory is set to be in Santa Catarina in Monterrey city, the capital of the Nuevo Leon state, reported Bloomberg News.
Final details are still being done, and the talks with the automaker have involved the state government and Mexico’s foreign relations ministry.
This decision doesn’t come as a surprise. Musk was in the area last October and met with local authorities. Additionally, Tesla has an exclusive customs lane for parts crossing the border into Texas.
EV tax credits in the Inflation Reduction Act
It follows days after a victory of Mexico and Canada over the US in a matter of vehicles shipped across borders. This means that vehicles assembled in Canada and Mexico may be eligible for the new federal tax credits in the Inflation Reduction Act signed in August to encourage customers to pick an electric vehicle when purchasing their future car.
Under the new law, the EV federal tax credits remain at $7,500. The eligibility period is from January 2023-December 2032. The existing tax credit limitation when an automaker has sold the 200,000th unit is eliminated. General Motors, Toyota, and Tesla, whose cars no longer benefit from tax credits, are eligible again starting January 1, 2023.
The tax credit of $7,500 is divided into two: $3,750 will apply if at least 40% of the minerals of the battery powering the vehicle are from the US or a country having a free trade agreement with the US.
The remaining $3,750 will apply if at least 50% of the battery components are from the US or countries with a free trade agreement with the US. In summary, the EV you purchase can benefit from the full $7,500 tax credit, half or none, which depends on the battery components and minerals.
However, it’s still unclear which models will be produced at the new factory.
It is also worth noting that Tesla would not be the only automotive group manufacturing vehicles in Mexico. Ford and General Motors are already established there.
The company did not respond to a request for comment.
