Santa Catarina to host Tesla gigafactory, providing a major boost to Mexico’s lithium and clean energy sectors

Elon Musk's Tesla forges a clean energy future in Mexico, setting the stage for a lithium revolution and green transport transformation.

In addition to the automotive industry in Mexico, another sector could benefit from the arrival of Tesla, Elon Musk’s famous electric vehicle brand, in the country: renewable energies. The company’s cars are characterized by the use of lithium in their batteries to reduce their size, increase their useful life and reduce pollution levels. And since February, the government has officially exploited this mineral in the country. Combining a nascent sector with a strong demand guaranteed by the factory could be a great economic and environmental opportunity.

Tesla’s gigafactory is still two years away. But unofficially, it has already been said that it will be located in the municipality of Santa Catarina, 16 kilometers from Monterrey, the most important city in Nuevo Leon. In his social media accounts, the owner of Twitter predicted that his company would have a bright future in Mexico.

Among the producers of cars with low carbon dioxide (CO2) emissions, Tesla stands out for its fully autonomous driving computer. But also because its batteries need lithium as a key component: when he presented the brand’s new designs, Musk said that the transition from lead batteries to this soft and light mineral would be accelerated. In addition to extending the vehicles’ usage time, this would allow him to reduce their weight to manufacture more compact models.

Lithium: key element and economic opportunity

El litio se extrae de rocas volcánicas y sales naturales, y se usa en distintas industrias, entre ellas las baterías de dispositivos electrónicos y automóviles eléctricos. (REUTERS/Agustín Marcarián)
Lithium is extracted from volcanic rocks and natural salts and is used in various industries, including batteries for electronic devices and electric cars (REUTERS/Agustín Marcarián).

Mexico’s emerging lithium industry could benefit from Tesla’s arrival in the country. During Investor Day 2023, an event held on March 1 in Texas, United States, the CEO of the automaker announced that the Nuevo León gigafactory would use clean energy not only in the final product but also in the manufacture of auto parts and other work. The brand is also known for its production of solar panels.

But lithium remains its key component for the batteries of its vehicles. The Mexican government has considered this metal the raw material for a profitable industry.

The profile of this mineral, prepared by the Ministry of Economy (SE), mentions that its main use is the manufacture of energy sources for cell phones and electric cars. And the market has shown a positive reception of this type of battery due to its high performance compared to traditional ones.

In the case of vehicles, which in Mexico cause almost 20% of CO2 emissions, lithium batteries allow “longer life with constant voltage, higher energy density, lower weight, high capacity operation, and low temperatures,” according to the SE document.

The General Directorate of Mining Development, which coordinated the investigation of the mineral’s market profile, concluded that lithium would be indispensable in North America. The exploitation of the metal was made official with the decree published in the Diario de la Federación (DOF) on February 18. Since then, the Mexican government has promoted the advantages of switching from combustion engines to environmentally friendly means of transportation.

En febrero de 2023 México oficializó la explotación del litio en su territorio. (Cuartoscuro)
In February 2023, Mexico officially exploited lithium in its territory (Cuartoscuro).

Other advantages of lithium

Currently, Tesla uses lithium mostly for its Model 3 and, to a lesser extent, its Model Y, Model S, and Model X. In the report that Musk’s company published in 2021, Impact Report, it clarified that the metal only represents approximately 1.5% of the total weight of the rechargeable battery. Nevertheless, the amount of lithium Tesla buys is much higher than that of its competitors, such as Volkswagen.

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But lithium has other uses besides power sources for vehicles and electronic devices. Its application in the pharmaceutical industry and the manufacture of flexible glass for medical use is well known. Lithium is present in manufacturing nuclear weapons, toys, pacemakers, and air conditioners.

It is also attractive for aluminum production, as it reduces its density and increases its rigidity. And above all, according to the SE, it reduces the consumption of carbon anodes and cryolite, which “reduces the emission of fluorine into the environment by 20% to 30%, thus reducing pollution”.

Tesla’s plant in Nuevo León will be the largest in the world

El goberndor de Nuevo León, Samuel García, celebró la decisión de Elon Musk de llevar su gigafábrica cerca de Monterrey. (Twitter/samuel_garcias)
The governor of Nuevo León, Samuel García, celebrated Elon Musk’s decision to bring his gigafactory near Monterrey. (Twitter/samuel_garcias)

According to the government of Nuevo León, the Tesla plant will be the largest that the company will own in the world, and its investment is USD 5 billion. It is not yet known what kind of cars will be manufactured in the northern state in 2025, the year the company plans to start operations. One of the most anticipated is the Model 3, the regular range, featuring technological advances based on artificial intelligence(AI).

The famous dashboard of these cars uses chips called FSD that employ AI to run the fully autonomous driving system. The system also uses autonomy algorithms that make it possible to plan trajectories in high-fidelity simulations of the world.

Regarding the technological advances Tesla will promote in Mexico, the governor of Nuevo León, Samuel García, said that “a great ecosystem” has been initiated in electromobility, aerospace, and telecommunications. “This is where the cars that do not pollute will come from,” he celebrated.

Is the price of a Tesla affordable for Mexicans?

La carga completa de la batería con litio de un Tesla le permite autonomía de entre 491 y 602 kilómetros. (EFE/ Roman Pilipey)
A full charge of a Tesla’s lithium-ion battery gives it a range of between 491 and 602 kilometers (EFE/ Roman Pilipey).

The main market for Musk’s automaker is in North American countries. The Model 3, the most economical, costs 1,259,000 pesos as a base; the price may vary according to the wheel drive and numerous options, from heated seats to extra USB connectors. Another of this brand’s vehicles is the Model S, the most expensive in the catalog: 2,629,000 pesos.

Among the features that drive up the price of the Model S is automatic emergency braking, which provides additional safety. Like the others, this model is recharged overnight so it can be used the next morning. With a full battery, these vehicles range between 491 and 602 kilometers.

With these market prices and its demand for lithium, Tesla could boost the Mexican economy. It would also offer the country a transition to renewable energy-based transportation.