Musk Invites Chinese Parts Companies In Mexico “A Red Light For The U.S. Government”

Bloomberg News reported on the 14th (local time) that Tesla CEO Elon Musk is sending a warning to the U.S. Authorities by inviting Chinese Parts Companies In Mexico. Electric vehicles assembled in Mexico can receive a U.S. consumption tax deduction of up to $7,500 (about 10 million won) under the U.S. Inflation Reduction Act (IRA). In addition, Mexico is attracting attention as an electric vehicle production base due to the existing advantages of relatively low labor costs and good accessibility to the U.S. Market.

According to Mexico’s National Auto Parts Industry Association (INA), Chinese auto parts manufactured in Mexico and exported to the United States were worth $1.1 billion (approximately KRW 1.4685 trillion) last year. Last year, there were 33 Chinese auto parts companies registered in Mexico, and parts from 18 of them were exported to the United States.

According to reports, Musk has recently been building a new factory in Monterrey, Nuevo Leon, Mexico, and multiple sources said that Chinese auto parts manufacturers are rapidly flocking to the area.

These Chinese companies were invited by Musk and are pursuing a new factory outside Monterrey, these sources added. Musk’s plan is to create a copy of the local supply chain supplied to Tesla’s factory in Shanghai, China, in Mexico, and thus bring these Chinese companies to Mexico. Accordingly, these Chinese companies are expected to supply parts to Tesla’s new electric vehicle factory under construction in Monterrey.

Tesla declined to comment on this. Bloomberg reported that this move is causing concern not only to U.S. electric vehicle manufacturers but also to U.S. government officials. In particular, Chinese companies turned their attention to Mexico in large numbers in the wake of the ‘trade war’ that started during former President Donald Trump’s term.

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