Tesla Giga Mexico Could Boost Cross-Border Trade by $15B, Experts Say

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Tesla Giga Mexico could boost cross-border trade by $15 billion, experts say. In addition to transporting finished vehicles, the company's suppliers will deliver a lot of materials and components, opening up new opportunities.

Tesla recently confirmed that it is building a $5 billion factory in Monterrey, Nuevo León, Mexico. Trade experts say Tesla is already influencing cross-border logistics and trucking, according to Freight Waves.

“Tesla’s impact on Mexico can already be felt long before they actually open their Mexico gigafactory,” Jordan Dewart, president of logistics operator Redwood Mexico, told FreightWaves. “After Tesla’s move to Austin two years ago, many of their 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.”

Dewart expects Giga Mexico to impact everything from north and south freight rates to demand industrial logistics space near the border. In the first stage, the factory will create up to 6,000 jobs and produce 1 million electric vehicles per year. The opening is scheduled for 2024.

“The Tesla plant is going to cause much more freight between Texas and Mexico,” said Jorge Canavati, a principal at San Antonio-based trade and logistics firm J. Canavati & Co. “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's suppliers in Mexico are concentrated in the northern states of the country along the US border, supplying parts and components for Giga Texas. “The [factory in Monterrey] means a great step for Mexico in several ways,” Martha Delgado Peralta, Mexico’s undersecretary of foreign affairs, recently said in Reforma. “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.”

As Tesla starts to ramp up electric vehicle assembly at its Monterrey factory, expect a huge influx of freight in the region, said Matt Silver, vice president of cross-border solutions at Austin-based Arrive Logistics. “Anytime there’s a new company that’s building a plant in Mexico, it’s good for trade between Mexico, the U.S. and Canada,” Silver said. “Ultimately, when you have a big OEM build a new plant in Mexico, especially somewhere like Monterrey, one of the largest shipping points in Mexico, it’s advantageous as a shipper to go there.”

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