Helicopter trips, ‘selfies’ in the Huasteca and an offer of 50 properties: this was Musk’s negotiations in Mexico

A virus a thousand times thinner than a hair has led to a project of more than 6,000 million dollars in the State of Nuevo León. The blockage in the supply chains between Mexico and the United States derived from the pandemic was the beginning for the richest man on the planet, Elon Musk, to consider the country as the headquarters of his new Tesla electric car megaplant. The story goes back to the end of 2021, when the billionaire urgently called the chancellor, Marcelo Ebrard, to ask him to reactivate the 127 Mexican factories that had some supply with his company and that, at that time, were paralyzed due to the health crisis. . That link served the federal government to learn first-hand about Musk’s ideas abroad.

From that moment, says the Undersecretary for Multilateral Affairs of the Ministry of Foreign Affairs (SRE), Martha Delgado, they began to work on a proposal for the Tesla corporate. The initiative was finally made official in February 2022. “The Ministry of Foreign Affairs made a personal marking, a direct accompaniment to the company to provide legal advice and guidance in the scouting what did you do. We took them to five states, the State of Mexico, Querétaro, Puebla, Hidalgo and Nuevo León. They had some criteria, some very specific conditions for the plant and they were analyzing them in each one of the lands, they reviewed at least 50 properties”, details the federal official.

In sync with the federal government, each of the states presented to the billionaire the bonanzas and attractions of their entities to try to convince him. In the case of Nuevo León, Governor Samuel García has announced that the first contact occurred during a visit they made to Texas. Secondly, the president has stated that the previous closeness that his Economy team had with some Tesla executives allowed them direct access to send them economic and demographic information on the State’s industrial zones. Héctor Tijerina, Executive Director of the Invest Monterrey association, refers that last summer they helped the local government with data on the State to attract the eyes of Tesla. “They wanted to know the industrial zones, the ecosystem of universities, the average cost of land, the average salaries for different types of positions, from operators to general managers, economic data, demographics and quality of life issues,” he specified.

Tijerina, who worked for 10 years in the state Ministry of Economy, adds that Nuevo León’s geographical location is an advantage that other entities cannot match. “We are 600 kilometers away, around six hours away between Monterrey and Texas, that is very attractive for Tesla, in this way, they are creating a corridor where they will have their entire supply chain supplying both plants, their suppliers they just have to set up an operation in the area to be able to supply both Tesla in Austin and Tesla in Monterrey”, he mentions. In addition, he refers, Nuevo León has labor peace, productivity and an ecosystem of attractive universities for the type of job profile that the company requires, and Santa Catarina is a few kilometers from San Pedro, which is the municipality of the city with the highest socioeconomic level and with the highest quality of life in the State.

The director of Invest Monterrey admits that although they collaborated in the first phase of this process, the negotiations with the Tesla directors were always carried out by the State Government, which was the one that finally invited the billionaire to the entity last October to learn about the land, industrial zones and the logistical facilities they offered. Regarding this visit, the governor told EL PAÍS in a previous interview that it was in this meeting that the also owner of Twitter ended up being convinced that his next factory was domiciled in the municipality of Santa Catarina. A helicopter trip over the Huasteca was enough for the millionaire to take out his cell phone and start taking selfies. “In front of us (Musk) told his construction manager: ‘I want the plant here.’ He was not considering going down to the field and he made us go down, he saw it, he liked it, he liked the mountains, I saw him there very convinced, ”García told EL PAÍS.

The decision was made. After more than 14 months of work by both the federal and state governments, the richest man in the world opted for Santa Catarina to install a three-story factory on 1,600 hectares where one million cars will be produced per year. In perspective, the federal undersecretary, Delgado, warns that the municipality and Mexico won the long-awaited project that other countries were looking for due to three factors: the network of free trade agreements that the country has, its proximity to the United States and therefore to the Musk’s productive enclaves in North American territory and finally, for the quality of the labor of Mexican engineers.

Details about the incentive package are still being negotiated behind closed doors. Governor García has stated briefly that the company will make its requirements in the coming weeks and from then on the Government will reject or accept his proposal, until reaching a final memorandum. On behalf of the federal government, Delgado has assured that Tesla did not ask for extra incentives, however, other benefits are on the table for the electric battery plant that seeks to land in the country. “From the federal government they do not have additional incentives to those that any other company has in Mexico. In fact, they did not look for them. Rather, for the other plant that they are interested in installing in the country of batteries, there we do need a very intelligent scheme because in the United States the electric battery plants have enormous subsidies and in Mexico we do not have that and the current situation is not competitive. . Here we need to take advantage of some tax incentive that can make the manufacture of electric batteries in Mexico competitive ”, he explains.

Musk has already announced his first mega-investment in Santa Catarina, however, the portfolio of projects pursued by the federal government goes far beyond the first 6,000 million dollars that will be disbursed in this mega-plant. The Undersecretary of Foreign Affairs specifies that the construction of an electric battery plant not only for Tesla cars, but also for cars of other brands is still in the pipeline; an aerospace technology center in the trans-isthmic corridor —the Isthmus of Tehuantepec area— as well as a science and technology collaboration for lithium refining in Sonora. The official indicates that they will continue to have meetings with the Tesla management team in the coming days to evaluate these offers. Delgado estimates that, in the best of scenarios, this additional portfolio would be valued at around 5,000 million dollars.

On the eve of Musk making his decision to invest in Nuevo León official, the project was not immune to the political turbulence marked by the interest of President López Obrador for the millionaire to consider the options for the center of the country. The president threatened not to grant the permits if the project landed in Nuevo León, however, the controversy was settled after a couple of video calls between Musk and the Executive. After those calls, the president indicated that an agreement was reached with the corporation and even thanked Musk for his arrival in the country.

With the ambitious goal of producing 20 million electric cars per year by 2030 at profitable prices on his shoulders, Musk has made a final decision in favor of Nuevo León. On Tesla’s roadmap for the future, the highlands of Santa Catarina now appear on the map.

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