Tesla might build cheaper cars in Mexico with new Gigafactory

Tesla is planning to build a new Gigafactory in the Mexican state of Nuevo León, according to Reuters, which cited a story in the Mexican newspaper Reforma. The automaker may announce the new factory with an initial $800 million to $1 billion investment as early as Friday, local newspaper Reforma reports.

The factory will cost Tesla as much as $10 billion after completion, including future expansions, according to the newspaper’s source. It could be Tesla’s most expensive Gigafactory yet. By comparison, the company’s Gigafactory in Berlin cost about $5.5 billion.

If the new project moves forward, it will be located just outside the city of Monterrey and will initially be used to build components for current vehicles. Later, the plant could possibly be used to manufacture a new and cheaper Tesla model — something that CEO Elon Musk has teased over the years but has yet to deliver.

According to a Reuters source, Musk met with Nuevo León Governor Samuel García and US ambassador to Mexico Ken Salazar in October. The northern Mexican state shares a small border with Texas, which is home to another one of Tesla’s Gigafactories. The Austin, Texas, factory cost the company $1.1 billion to build and has just ramped up to building 3,000 Model Y electric SUVs per week. The facility will also host production for the long-awaited Cybertruck when it starts at the end of 2023 — if Tesla is able to meet that ever-shifting deadline.

If the news for the Mexican Gigafactory is not officially announced this Friday, then it might come in January, Reforma reported. Earlier this month, Mexican Foreign Minister Marcelo Ebrard said Musk had toured three states in Mexico before settling on Nuevo León, Reuters states.

If the project moves forward, it will be Tesla’s sixth Gigafactory following California, Nevada, New York, Shanghai, and Berlin. It could also be the first time Tesla builds an electric car entirely in Mexico, something that other automakers like GM, with its upcoming Blazer EV, and Ford, with its Mustang Mach-E, are already doing.