Tesla CEO Elon Musk Highlights Concerns About Economy, Interest Rates As It Holds Back On Giga Mexico

Tesla Inc TSLA CEO Elon Musk on Wednesday said that the company is stalling its gigafactory plans in Mexico owing to high-interest rates.

What Happened: Tesla is presently laying the groundwork to commence construction in Mexico. However, the company is also looking at how the global economy is doing before going ‘full tilt’ with its Mexico factory plans, Musk said.

“I'm worried about the high-interest rate environment that we're in. I just can't emphasize this enough that the vast majority of people buying a car is about the monthly payment,” Musk said.

Further, the company occupies only a small portion of the land available at Giga Texas and there is enough space to do all the scaling and research right there. However, in Texas, there is a lack of personnel given that the greater Austin area has only 2 million people, Musk said.

But the company is not backtracking on its plans of putting up a factory in Mexico, Musk said. The company looked at different locations before zeroing in on Mexico and feels ‘very good’ about the location and expects to start the initial phases of construction next year. The question is solely about timing, Musk said.

“If you can tell me what the interest rates are, I can tell you when we should build the factory,” Musk said while adding that he didn’t want to go full throttle into ‘uncertainty.’

Automakers And The Economy: “If the macroeconomic conditions are stormy, even if the best ship is still going to have tough times, the weaker ships will sink. We're not going to sink. But even a great ship in a storm has challenges,” the CEO said. Musk also recounted the time when legacy automakers General Motors and Chrysler went bankrupt in 2009 and added that he is still ‘somewhat scarred’ by the incident.

Tesla announced its new gigafactory in Mexico near the city of Monterrey earlier this year in March. "Our next Gigafactory will be in Mexico, manufacturing our next-gen vehicle," Tesla tweeted then, with a conceptual image of the Gigafactory.

Photo Courtesy: Frederic Legrand – COMEO On Shutterstock.com

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