Tesla has formally paused its Gigafactory Mexico challenge over a possible Trump election win, which might enormously scale back the manufacturing unit’s profitability.
Tesla formally introduced Gigafactory Mexico again in March 2023, and till just lately, we have been questioning what was the maintain as much as begin manufacturing after the automaker stated it wished to maneuver quick.
In October, Tesla confirmed that it was pumping the brakes on the challenge amid issues concerning the international financial system.
CEO Elon Musk stated that the challenge would occur, and Tesla is ordering “lengthy lead gadgets” for it, however the timing would depend upon how they see the financial system get well. Within the meantime, the automaker prefers investing in Texas.
We suspected {that a} potential concern forcing Tesla to pump the brakes is that Former President and present Republican candidate Donald Trump has clearly acknowledged that he plans to place tariffs on autos inbuilt Mexico and coming into the US.
This could enormously scale back the profitability of a plant in Mexico for Tesla.
Musk has beforehand acknowledged that he believes Trump will win the US election, and he’s even “absolutely endorsing” him and contributing financially to his marketing campaign.
The CEO has supported Trump’s plan to take away EV incentives and emission credit, which enabled Tesla’s profitability lately.
Tesla reported its Q2 2024 monetary outcomes yesterday and confirmed that greater than half of its income got here from promoting emission credit. That doesn’t account for the consumer-level incentives, which assist Tesla’s gross sales within the US.
Electrek’s Take
That’s what we suspected. In case you consider that Trump goes to win, and Elon not solely believes that however is actively working to make it occur, then it is unnecessary to spend money on a manufacturing unit in Mexico.
Possibly Elon ought to have considered that earlier than promising the individuals of Nuevo Leon a manufacturing unit?