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Will China Drive Its Electric Cars In From Mexico?

Outside this city, 150 miles south of the Texas border and in the shadow of the Sierra de Santa Catarina, lies a cactus-dotted field. If all goes well, this unassuming site will be home to Tesla’s Giga Mexico, potentially the world’s largest electric-vehicle factory. The project promises thousands of jobs and as much as $15 billion in investment from Tesla and its suppliers. It’s also attracting attention from Chinese competitors.

Mexico’s second-largest metropolitan area is experiencing a near-shoring boom due to its proximity to the U.S., competitive labor costs, and the U.S.-Mexico-Canada Agreement, or USMCA. Industrial real estate vacancy rates are just over 1%, with total capacity up 40% since 2020. However, easy access to the American market hasn’t only drawn U.S. and Western companies like Tesla and Unilever but also Chinese businesses like Hisense and Yanfeng.
Despite important protections against China’s unfair economic practices in the USMCA, such as an opt-out clause for trade agreements with “nonmarket economies” and regional content rules, Beijing’s heavy investment in its EV industry may allow Chinese companies to exploit gaps in the current rules. This raises concerns about Chinese EV manufacturers potentially circumventing USMCA content requirements, prompting calls for the U.S. to take action.

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Wall Street Journal, (2024). Will China Drive Its Electric Cars in from Mexico? . Recuperado de