Tesla set to announce electric vehicle assembly plant in Mexico next week

The factory is part of a push to expand the company's global manufacturing

Tesla Model 3 vehicles at the car maker's factory in Shanghai, China. Reuters

Tesla is finalising plans to build an electric vehicle assembly plant in an industrial area of northeastern Mexico and may announce the factory as early as next week.

The plant is to be located in Santa Catarina in Monterrey city, the capital of Nuevo Leon state, sources said.

Final details are being worked out, and the talks with the company have involved both the state government and Mexico’s foreign relations ministry, one said.

Chief executive Elon Musk visited Nuevo Leon in October and met officials, and the company’s relationship with the state’s government has earned it an exclusive customs lane for parts crossing the border into Texas.

The factory would be Tesla’s first south of the US border with Mexico and part of a push to expand global manufacturing that has included new plants in Austin, Texas, and Berlin, as well as a factory in Shanghai.

Tesla has long mulled building a third factory in North America, with Mr Musk telling shareholders in August that a decision might be made before the end of the year.

The announcement would come just days after Mexico and Canada won a trade dispute with the US over cars shipped across regional borders, a development that gives car makers more incentive to manufacture in those nations.

A Mexican-made electric vehicle would be likely to qualify for subsidies under US legislation signed in August designed to spur adoption of EVs, as long as it met battery content requirements.

Tesla field engineers heat-test vehicles in Dubai — in pictures

It is unclear which models Tesla will produce in its Mexican factory or when it would begin production. Those details could be announced in the coming days, the sources said.

Tesla would be locating in an automotive corridor of Nuevo Leon that is home to factories for General Motors and Kia Motors, a unit of South Korea’s Hyundai Kia Automotive Group.

Ford Motor also builds its electric Mustang Mach-E in Cuautitlan, near Mexico City.

Mr Musk has set a goal of selling 20 million electric vehicles a year by 2030, which would make Tesla twice the size of any rival and account for 20 per cent of global auto output.