Mexico Mulls Creation of Lithium-Battery Cluster With Tesla, Among Other Companies

The Foreign Ministry’s undersecretary for multilateral affairs tells Bloomberg Línea that the country’s energy dispute with the US will not affect the operation of Tesla’s Gigafactory in Nuevo León state

The Mexican government is planning to create an electric battery industrial park where Tesla and other lithium battery manufacturers could set up shop.
March 07, 2023 | 07:10 PM

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Mexico City — The Mexican government is planning to create an electric battery industrial park where Tesla and other lithium battery manufacturers could set up shop, targeting the center of the country as the location, Martha Delgado, undersecretary for multilateral affairs and Human Rights at the Foreign Ministry, told Bloomberg Línea.

Delgado said the government wants to create an industrial park where several battery manufacturers could set up shop, among them Tesla, Elon Musk’s company, with which the government has been in talks for several months regarding the company’s plans.

The government’s plan is for the battery cluster to be built in the center of the country, since it is a strategic location for supplying automotive plants located in the states of Puebla, Querétaro, Mexico and Guanajuato.

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The undersecretary also mentioned the state of Hidalgo as one of the entities that would benefit from the installation of the plant in the center of the country, although the state does not have a light vehicle manufacturing plant, according to the Mexican Automotive Industry Association (AMIA).


On March 1, President Andrés Manuel López Obrador said in his morning conference that he sees the possibility of investments in Sonora or Hidalgo related to lithium by Tesla.

“We want it to happen this year,” Delgado said when asked if the government plans to create the lithium-battery cluster in the near future. Delgado said that there is also the question of subsidies, which is being discussed with Tesla, and which the government and the Finance Ministry are also discussing.

She said that the US currently offers subsidies to lithium battery manufacturers, while the Mexican government has said that there will not be direct subsidies to such companies, and that the finance ministry is working on a package of “interesting” incentives for Tesla to set up shop in Mexico.


“We will work with the Finance Ministry on the tax incentive package (...) we can put together a package that integrates, for example, the country’s competitive advantages on the free trade of certain raw materials that do not have tariffs in Mexico, and things of that kind that will bring the numbers closer together to make investment here convenient.”

Martha Delgado, undersecretary for multilateral affairs and human rights at Mexico's Foreign Ministry

On March 3, Mexico’s Finance Minister Rogelio Ramirez de la O. told a press conference that the proposal from Tesla executives was for the government to match US tax incentives under the Inflation Reduction Act (IRA), estimated at $369 billion to mitigate climate change and spur the growth of the electric vehicle sector.

However, the Mexican government refused to match the US tax incentives for Tesla to invest in a battery plant in the country.

Martha Delgado, subsecretaria para Asuntos Multilaterales y Derechos Humanos de la Secretaría de Relaciones Exteriores, durante la presentación del Diagnóstico y Recomendaciones para la Transición de la Industria Automotriz en México. (Cortesía: SRE)dfd

Mexico-US energy dispute “will not affect Tesla”

Delgado also said that the energy dispute within the framework of the USMCA free trade agreement between Mexico, Canada and the US was not an issue that was discussed with Elon Musk because it does not affect the operation of the plant to be located in Santa Catarina, a municipality of Nuevo León state.

“The dispute has no impact on this plant,” she said.


Questioned about whether Tesla will generate all the energy it requires, she answered that no, that the Gigafactory will generate part of its energy needs and the other part will be requested from state-utility Federal Electricity Commission (CFE), like any other factory in the state.

She said the energy dispute is about the self-supply of companies that have formed a group to self-supply among several companies, and which is not the case of Tesla.

The commercial dispute, she added, is due to the fact that there were companies that used the figure of self-supply to form a group with fictitious association percentages and sell energy among themselves, which is illegal, that is why the self-supply model was prohibited,


“That does not mean that there cannot be a real self-supply, a single plant that generates energy for itself, and that is happening in Mexico every day, it is not new, and Tesla is going to do it, and many automobile plants and many other industries have self-supply, but they do it well, they do not sell electricity to others or group together with others to pass on their self-supply.”

Martha Delgado, undersecretary for multilateral affairs and human rights at Mexico's Foreign Ministry

Separately, and also on March 3, Bloomberg Línea asked Nuevo León state governor Samuel García if the energy poicy dispute with the US had been on the table during the discussions with Tesla, and he said it was not a theme discussed with Musk.

“The place where they are going is where there is the most energy in the entire northeast, and that is what gives them the guarantee that they will be 100% sustainable, their entire roof willbe photovoltaic, but in addition, all that they need is there in that area”

Samuel García, governor of Nuevo León state

According to Economy Minister Raquel Buenrostro, more than 400 companies have expressed an interest in setting up shop in Mexico to relocate their supply and production chains, but she acknowledged that the energy issue is a fundamental one regarding their decision.

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