Tesla reconsidering Nuevo León plant due to power supply concerns – reports

Claims have surfaced that electric vehicle company Tesla may be reconsidering its reported plans to build a "gigafactory" in Nuevo León state, northern Mexico, due to concerns over power supply from state-owned utility CFE.

Negotiations between the US firm and CFE have run into difficulties because of the public company's inability to fully supply the plant, coupled with its rejection of Tesla's proposal to buy electricity directly from a private provider, Mexican press reported, citing US sources close to the talks.

Reports that Tesla was considering plans to build a large factory in Nuevo León state, which the company was expected to unveil in the first quarter of 2023, go back to the end of last year. Tesla CEO Elon Musk is thought to have visited Nuevo León twice last year to look at site options for the plant. 

Tesla has been seeking locations around the world to set up a new factory, supposedly looking at Indonesia, South Korea and Canada. In December last year, the company was reported to have chosen northern Mexico after holding talks with Nuevo León authorities, although no official announcement has been made.

Rumors have even emerged that the Mexican government was trying to persuade Tesla to switch the location of the gigafactory from Nuevo León to Mexico state, close to Mexico City, although there no corroborating evidence has yet been presented.

Tony Payan, head of the Center for the United States and Mexico at Rice University's Baker Institute, claimed on his Twitter account that the Mexican government had asked CFE to deny power to Tesla near the city of Monterrey in an effort to "lure Tesla's new plant away from Monterrey and into the State of Mexico (a political move in an election season)," he said.

The comment was echoed by center-right PAN senator Víctor Pérez, who railed against what he described as the government's intention to move the factory's location from Nuevo León to the outskirts of Mexico City.

Mexico City mayor Claudia Sheinbaum is a close ally of President Andrés Manuel López Obrador, and she currently leads the polls to become Mexico's president in the 2024 election.

Meanwhile, on Tuesday, presidential spokesman Jesus Ramírez said that Tesla was planning to open an assembly plant close to the Felipe Ángeles international airport (AIFA) in Mexico state that would be focused on exports, Reuters reported. 

It is unclear whether Ramírez's comments refer to a separate plant or the project originally planned for Nuevo León.

Despite the rumors, CFE's reported aversion to private-to-private power supply is perfectly consistent with the current administration's stance. The company, along with regulator CRE and grid control center Cenace, has made it a top priority to ensure that private consumers sign a supply contract directly with the public utility. 

Some private power plants in Nuevo León state, such as Iberdrola's Dulces Nombres unit, have been shut down and not allowed to resume operations due to permit issues.