Why would you invest in Mexico? Just Ask Tesla.
Much has been said about near-shoring as a global trend. The war in Ukraine, conflicts in supply chains, or, for example, the increasingly difficult political climate in China, among other reasons, have prompted companies around the world to diversify and move their companies where they can find more certainty. Some of the places that have been identified as possible locations include Latin America and, more precisely, Mexico.
According to a study by the Inter-American Development Bank, Mexico is considered to have the best nearshoring opportunities in Latin America. To confirm this, we can take Elon Musk’s announcement to build a Gigafactory in northern Mexico.
More specifically, in the state of Nuevo Leon, Tesla is expected to invest 5 billion USD. This will, directly and indirectly, impact Mexico's growth: it generates confidence. Especially, in a moment where investors are looking for locations where there is infrastructure, transportation, supply chains, sufficient energy, and qualified personnel.
Tesla will not be the only one to produce electric cars in Mexico; they will join eight other factories that produce electric automobiles, including Ford, which already manufactures the Mustang Mach E in San Luis Potosi. As the United States diversifies away from China and fossil fuels, these investments emphasize Mexico's strategic importance.
Mexico could become a hub for the manufacturing of electric cars in the short term, which as a domino effect could boost, among many other things, the sustainability of the country. This not only helps and pushes Mexico for its energy transition but also can expand different types of markets, such as the issuance of green bonds and impact investments. More so, it can position itself as a producer and manufacturer of batteries, not only for automobiles but also to produce more complex energy storage systems that could eventually help solve the intermittency of renewables.
Tesla's decision to invest in Mexico can be considered a strategic decision that was widely analyzed not only because of its proximity to the United States. But, as a country with a large skilled labor force that has two of the best universities in Latin America, with free trade agreements, ports, roads, highways, airports, and even a project underway called “Tren Interoceánico del Istmo” to connect the Atlantic with the Pacific through a train that would streamline trade, reduce costs, and would be even more attractive than the Panama Canal, considering the infrastructure and connectivity of Mexico.
Therefore, if you wonder where to invest, it might be a good idea to ask Tesla. And if you happen to choose Mexico. Then, Mexpando can assist you with that process.
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Ventura, A. M. (July, 2019). Corredor Transístmico elevará 11 veces el transporte de carga en la región. El Financiero.