Tesla is gearing up to mirror the success of its Giga Shanghai factory by inviting Chinese suppliers to its upcoming Giga Mexico plant, aiming to establish a streamlined production line similar to that in China.
While Tesla’s move is strategic, U.S. officials express concerns about relying on Chinese suppliers for the production of Tesla’s next-gen platform in Mexico.
Giga Shanghai has been lauded for its efficiency and talent pool, making it an ideal model for Tesla’s expansion plans. However, the reliance on Chinese suppliers raises eyebrows, given the geopolitical tensions between the U.S. and China.
Chinese industrial companies have been swiftly acquiring land in Mexico for parts production, leading to a surge in industrial park space occupied by them. This trend has raised concerns about the implications for U.S. manufacturing and the economy.
Although EVs manufactured in Mexico can still qualify for the $7,500 EV tax credit in the U.S., concerns arise about the loophole that allows vehicles not necessarily built in the U.S. to benefit from the tax credit, undermining local workforce and economic growth.
Chinese automakers like BYD, Chery, and SAIC are already eyeing Mexico for EV production, potentially entering the U.S. market within the next few years. Additionally, battery companies, including CATL, are considering setting up factories in Mexico, further complicating the situation.
The influx of Chinese companies into Mexico has contributed to a decline in direct exports to the U.S. in 2023, raising questions about the long-term impact on U.S.-Mexico trade relations.