(Bloomberg) -- Elon Musk said Tesla Inc. won’t invest further in its planned Mexico factory until after the US election, citing too much political risk from Republican nominee Donald Trump’s pledges to impose more tariffs on Mexico-made goods.
“I think we need to see just where things stand after the election,” Musk said during Tesla’s earnings call on Tuesday. The EV maker’s chief executive officer formally endorsed the former president earlier this month.
It’s one of the first times Musk has clearly delineated business decisions based on the outcome of the US presidential race. “Trump has said that he’ll put heavy tariffs on vehicles produced in Mexico,” he told Tesla investors and analysts. “So it doesn’t make sense to invest a lot in Mexico if that is going to be the case. We kind of need to see where things play out politically.”
Musk’s decision highlights the political risk facing Mexico, which hopes to benefit from US President Joe Biden’s nearshoring policies. The Giga Mexico plant was by far the largest investment announced in the country in years. It also raises questions about the future of the EV industry’s growth, which has been propped up in the US by the Inflation Reduction Act.
Tesla had long been delaying plans to build a factory in the northern state of Nuevo Leon, even as local officials said plans for the facility were still afoot. A request for comment from the office of Nuevo Leon Governor Samuel Garcia wasn’t immediately returned.
Musk endorsed Trump shortly after his assassination attempt and pledged to make hefty donations into a super political action committee to help with his ground game. Whether he has contributed won’t be known until America PAC files with the Federal Election Commission on Oct. 15
When asked about how a Trump presidency could impact Tesla, Musk demurred on how Trump’s plan to gut the IRA would impact the carmaker. Tesla’s business has received a big boost through manufacturing and investment tax credits through the IRA.
“It would be devastating for our competitors, and it would hurt Tesla slightly,” said Musk about the IRA being cut or reversed. “The value of Tesla overwhelmingly is autonomy.”
--With assistance from Bill Allison and Kelsey Butler.
(Adds Nuevo Leon context in fifth paragraph.)
©2024 Bloomberg L.P.
