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Tesla Inc will receive 2.63 billion pesos ($153 million) in incentives from the Mexican state of Nuevo Leon to build its next major factory there, as state officials seek to assuage local concerns about delays to the electric-vehicle maker’s plant.
The incentives, approved by the state’s economic development council, include the creation of basic infrastructure such as roads and water treatment, as well as a reduction in payroll tax, the Nuevo Leon government said in a statement.
Tesla’s billionaire Chief Executive Officer Elon Musk had requested earlier this year that Nuevo Leon improve electricity, water and transportation in the region before it starts construction. The state agreed to do so, but the factory has still faced delays.
Musk said in October he wasn’t ready to go “full tilt” on the facility because of high interest rates. And in a recent interview, Musk said that Tesla will produce its next-generation entry level vehicle in its Texas factory before its Mexican facility since the new plant won’t be ready in time.
The incentives come after Mexico’s environmental regulator approved Tesla’s land use permit.
Tesla still requires a series of local and federal permits, such as from the Energy Regulatory Commission, to build and operate the Nuevo Leon factory.
The automaker has said it will invest about $10 billion in the factory over several phases. Tesla’s initial investment will be $4.5 billion, according to the Nuevo Leon government.