Tesla is reportedly mobilizing its Chinese suppliers to open factories in Mexico. Development in the North American country is now very relevant. Delaying the opening of new factories could cost Chinese companies billions of dollars in losses.
Tesla is mobilizing numerous Chinese supply chain firms to open factories in Mexico, reports 36Kr. This is highly relevant in light of the fact that the company has announced the construction of a factory in Mexico. Companies that have established businesses in North America can benefit greatly from this new location.
Chinese companies continue to weigh whether they should follow Tesla's lead. If they do not respond, they could lose billions of dollars in orders. “There are concerns about losing billions in large orders if there’s a delay in responding to the move,” one supplier said, according to 36Kr.
Following Tesla's lead, several Chinese suppliers have already begun moving their operations to Mexico. “Mexico is now a hotbed for investment, and many clients have already arrived,” said one industry insider. Some supply chain companies already sent their workers to Mexico to build factories there.
Tesla announced plans to build its fifth Gigafactory in Mexico in early spring. The investment will be over $5 billion, but the company has room for more expansion and will likely take advantage of this in the future.
Companies in the manufacturer's supply chain can benefit significantly from facilities built in Mexico. Currently, the United States-Mexico-Canada Agreement (USMCA) and other policies give Mexico favorable terms for exporting vehicles and parts to the United States. Supply chains that extend overseas will also receive tax breaks and talent development subsidies.
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.