Mexico gives Tesla land-use permits for gigafactory, says state government

By Kylie Madry

MEXICO CITY (Reuters) – Electric automaker Tesla (NASDAQ:) has received land-use permits from Mexico’s federal environment ministry to build a planned “gigafactory” in the northern border state of Nuevo Leon, the state government announced on Tuesday.

The state government on Tuesday said the land designated for the plant spans around 261 hectares (645 acres).

The automaker in March announced plans for a new factory in Mexico without providing a timeline for construction.

The Nuevo Leon government has estimated it would cost more than $5 billion but Tesla is yet to share a capital cost forecast.

CEO Elon Musk said in October that he was hesitant to go “full tilt” on plans for a factory in Mexico given the uncertain economy.

After his comments, Nuevo Leon said the government would spend more than $130 million on infrastructure to support construction.

Nuevo Leon has agreed to build an electric power substation, a pipeline, railroad spurs, roads, and services for water and sewage, Reuters previously reported. The so-called “Gigafactory” is set to bring in an estimated $15 billion over the next two years through Tesla and its suppliers, Nuevo Leon Governor Samuel Garcia said in October.

Mexico has touted the Tesla project as proof the “nearshoring” trend is taking off as companies seek to move production away from Asia and set up operations closer to the United States.

In October, a state official told Reuters that approvals from the environment ministry would allow Tesla to begin construction on the site.

Tesla and a spokesperson for Nuevo Leon did not immediately respond to a request for comment late on Tuesday.