Tesla's Mexico Gigafactory Is Still A Key Piece Of The Company's Future

A Tesla Model Y under construction at the Gigafactory in Grünheide, Germany, east of Berlin.Picture Alliance, Getty ImagesA Mexico Gigafactory could help boost Tesla's profit margins, but plans to build it are slow going.Manufacturing in Mexico is still important if Tesla wants to keep costs down.This article is part of "The Future of Supply-Chain Management," a series on companies' manufacturing and distribution strategies. .insider-raw-embed + p { display: none; } // The Future of Supply-Chain Management const seriesTitle = "The Future of Supply-Chain Management"; // Presented by const text = "Presented by"; // 6622991a49058e669357d0de const sponsorLogoID = "6622991a49058e669357d0de"; // USPS logo const altText = "USPS logo"; //https://www.businessinsider.com/category/the-future-of-supply-chain-management const hubOrCatURL = "https://www.businessinsider.com/category/the-future-of-supply-chain-management"; document.documentElement.classList.add("gi-sponsor-module"); if ( document.querySelector(".gi-sponsor-module") && document.querySelector("article section:first-of-type") && !document.querySelector(".full-bleed-hero") && !document.querySelector(".enhanced-story-byline") ) { document.querySelector(".summary-list").insertAdjacentHTML( "beforebegin", ` ${seriesTitle} ${text} ` ); } if ( document.querySelector(".gi-sponsor-module") && document.querySelector(".full-bleed-hero") && document.querySelector(".enhanced-story-byline") ) { document.querySelector(".enhanced-story-byline").insertAdjacentHTML( "beforeend", ` ${seriesTitle} ${text} ` ); } if ( document.querySelector(".gi-sponsor-module") && document.querySelector(".post-meta") ) { document.querySelector( ".post-meta" ).innerHTML = ` ${seriesTitle} `; }Tesla's Mexico Gigafactory is taking longer to come online than expected, but building south of the US border is still likely to be a key part of the company's future.An assembly plant in Mexico, where workers are typically paid less than in the US and which is closer to Tesla's Texas Gigafactory, may offer a cheaper manufacturing hub in North America that can still supply major markets like the US with more inexpensive vehicles.Efforts like the Mexico Gigafactory are part of a trend toward "nearshoring," described as moving production closer to consumers to reduce costs and logistical complications.That's especially important as Tesla aims to keep its costs down to protect its profit margins at a time when customers are more price-conscious and more likely to consider hybrids over electric vehicles.Importing cars from China could create significant headaches for American consumers as the US rolls out stricter manufacturing requirements for getting the $7,500 electric-vehicle tax credit.Tesla is starting to feel the heat of a nearly yearlong slowdown in the electric-vehicle market.