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Tesla Gigafactory Mexico could surge a major impact on cross-border trade

Credit: Corporation for the Development of the Border Zone of Nuevo León (CODEFRONT) via Bloomberg

Tesla Gigafactory Mexico could surge a major impact on cross-border trade, contributing upwards of $15 billion in growth, officials believe.

The [Tesla factory] means a great step for Mexico in several ways,” Mexico’s Undersecretary of Foreign Affairs, Martha Delgado Peralta, said. “We would be encouraging an ecosystem of electric vehicles and raising our levels of exports to the United States by 3.5% annually, equivalent to a sum of $15 billion, representing a 10% increase in auto-related exports.”

After Tesla announced it would build its next production plant in Mexico recently, speculation persisted that the automaker would help surge the electric vehicle supply as demand continued to rise.

However, things go past EVs. Trade experts believe logistics and trucking will surge due to the transport of supplies and parts. A report from FreightWaves shows trade experts are excited about the prospect of further growth.

After Tesla started operating at Gigafactory Texas in Austin, Jordan Dewart, President of Logistics Operation at Redwood Mexico, said tier 1 and tier 2 suppliers “either moved to Mexico to start new factory operations, or greatly increased the size and scope of current operations.”

Tesla had its situation improved as well by having its own dedicated lane at the U.S.-Mexico border. This contributed to quicker and more streamlined logistics operations, helping ramp production at Gigafactory Texas.

Tesla has an exclusive lane for quick stops at the U.S.-Mexico border crossing

With the new factory being built and production expected to begin as soon as early 2024, logistics rates in both directions are expected to be increased, and industrial space near the border could become more valuable as more companies will want to be located along the corridor where trucks will travel from Giga Texas to Giga Mexico.

One of the companies is glass supplier AGP Group, which recently invested $800 million in a new facility in the same area as Tesla.

“The Tesla plant is going to cause much more freight between Texas and Mexico,” Jorge Canavati of J. Canavati & Co., a logistics firm, said. “In Monterey, you have various Tesla suppliers already there and there are going to be more. The regional impact is going to be just amazing.”

Tesla is largely based in Texas now, and there are indications that Mexico could have been a major contributor to that decision. While CEO Elon Musk and other executives left California for Texas last year, establishing the company’s HQ in Austin, Mexico is set to be the largest plant the company has in operation.

Tesla Giga Mexico site will be far larger than Giga Texas complex: official

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Tesla Gigafactory Mexico could surge a major impact on cross-border trade
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