Mexico cannot match US incentives for proposed Tesla battery factory, minister says

MEXICO CITY, March 3 (Reuters) – Mexico would not be able to match the incentives offered by a US law to curb inflation if Tesla Inc builds a battery factory in the country, Mexico’s finance minister said on Monday Friday, days after Tesla announced construction of a “gigafactory” there.

Tesla (TSLA.O) has not confirmed whether it will also build a battery factory in Mexico, but local officials say Tesla has visited the central states of Hidalgo, Queretaro and Puebla to explore potential sites.

“We didn’t let (Tesla) waste their time thinking we would be able to match the U.S. Inflation Reduction Act,” Treasury Secretary Rogelio Ramirez told reporters at an event with Citigroup’s Mexico unit.

A Tesla representative in Latin America did not immediately respond to a request for comment.

The Inflation Reduction Act, signed in August, offers a $7,500 tax credit to electric vehicle buyers if the car’s battery reaches a threshold for sourcing parts from the US or other free trade partners, such as Mexico.

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CEO Elon Musk said on Wednesday that Tesla would build a gigafactory in the northern state of Nuevo Leon, which local officials say could raise investments of up to $10 billion and create 10,000 jobs.

While Mexico welcomed the investment, Tesla said it “didn’t need any sort of fiscal stimulus” beyond the benefits allowed under Mexico’s free trade agreements to build the plant, according to Ramirez.

A decision on a battery plant in Mexico has yet to be announced.

“The battery factory was not in (Tesla’s) original plan, it was the Mexican government’s suggestion,” Ramirez said.

Without legislation, Ramirez said, Mexico would not be able to match US incentives.

Reporting by Kylie Madry and Noe Torres; Edited by Sarah Morland

Our Standards: The Thomson Reuters Principles of Trust.


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