Following a highly touted Investor Day event this week that turned out to be rather blah, there is some real news about Tesla that should get people — investors included — excited. The president of Mexico is telling the world that Tesla has agreed to build its next gigafactory in Santa Catarina, a town just west of the Monterrey in the state of Nuevo León. President Andres Manuel Lopez Obrador said “the whole Tesla company” was coming to Mexico to build a “very big” automotive plant, according to Reuters.
Tesla, of course, refuses to speak to the press, so any details about this announcement have to come from other sources. The official announcement said Tesla would invest up to $5 billion to build the new factory, but a source tells Reuters the initial investment will be worth around $1 billion and further phases could bring total spending to $10 billion. Some are saying this could be Tesla’s largest factory yet and that it will manufacture the Tesla Semi and the Roadster 2.0, while at least one other source hints a new SUV type vehicle may be assembled there as well.
Samuel García, the governor of Nuevo León, told the New York Times in an interview that Tesla executives have told him the new factory could grow to be the company’s largest, producing not only cars but also batteries, semiconductors and software. Over time Tesla could double or triple the initial $5 billion investment, he said. In addition, he claimed the factory will go up very quickly and could begin manufacturing cars as early as next year. “These opportunities, I think they happen once every 100 years,” he said.
Rumors of a new Tesla factory in Mexico have been in the wind for some time. There were suggestions that Tesla might be considering several smaller factories to build components that would then be shipped to the gigafactory in Austin to be incorporated into the cars being built there. In December of last year, we reported that several parcels of land had been purchased near Santa Catarina in different names — Tesla Turbo, Tesla Engineering, Tesla Consultores, Tesla Electromechanics, Tesla Plastics, and Tesla Smart Sport. That may have been a tactic to acquire the land for the factory without revealing what it would be used for, information that likely would have driven up prices.
At that time, Governor Garcia said, “Due to different global circumstances, they made me sign confidentiality contracts, so I can’t talk about more, but I can tell you halfway that historic investments are coming for Nuevo León , some of them, to give you an idea, they will be the largest investments in the history of the country.”
There had been fears that the factory plan would be nixed by Mexico because of critical water shortages in and around Santa Catarina, but in a recent phone call, Elon Musk gave President Lopez Obrador assurances that the factory would recycle most of its water. That was the critical piece of the puzzle needed to get final approval for the factory.
Whether the new factory becomes Tesla’s largest remains to be seen, but Governor Garcia tells the New York Times he has spoken to Tom Zhu, the former head of Tesla China who now heads factory operations for Tesla. Zhu told him the company wanted to build the new plant in Mexico faster than it built the gigafactory in Shanghai, which began producing cars less than a year after breaking ground. “He told me that he was very optimistic that he will break again his record,” García said.
Model Y “Jupiter” Upgrade Coming
The Tesla Model Y has been in production for about two and half years and is the best selling electric car in the world. But Tesla is not one to rest on its laurels. Sources tell Reuters the company is getting close to introducing a major upgrade to the Model Y known internally as the “Jupiter” project. The sources say the changes to the Model Y involve both the exterior and interior of the car and will be introduced in 2024.
“With the Model Y being not only being Tesla’s top seller, but also the top selling EV in the world, it’s important to keep it fresh,” AutoPacific president and chief analysts Ed Kim told Reuters. He added that he had been tracking Project Juniper for some time. “As the global EV sales leader, Model Y has a target on its back. As with Project Highland (the rumored refresh for the Model 3), Project Juniper should deepen Tesla’s already massive production cost advantages over the competition.”
At the present time, there are variations in the Model Y depending on which factory they are produced in. It is believed that with the Jupiter program, Tesla intends to standardize the production process at all its factories in search of even lower costs of production. Tesla already leads the industry in that metric.
Tesla has asked suppliers for quotes for exterior and interior components that will be used in the Project Juniper version of the Model Y, two of the people with knowledge of the plan said. The projected start of production is October 2024. Tesla is also said to be working on a refresh of the Model 3 sedan in project code name Highland. There are few details about that effort, but the cost of goods sold for the Model 3 is higher than for the Model Y. Presumably, Tesla would like to apply what it has learned from building to the Model Y to update that car and lower its production costs.
Tesla Heat Pumps?
As this story was being written, an email from Bloomberg Green arrived that hinted Tesla may be thinking about delving into the production of heat pumps for residential customers. Tesla already has significant experience with heat pumps, which it introduced on the Model Y, and Bloomberg points out that at the recent Investor Day, Elon Musk made some breezy assertions about how the world will transition to a sustainable economy in the foreseeable future.
Heat pumps are important for the same reason electric cars are important. Both use energy much more efficiently than the devices we rely in today for heating, cooling, and transportation. Efficiency is one of the keys to a sustainable world. Replacing furnaces and boilers with heat pumps that operate on renewable electricity could eliminate 500 million tons of carbon dioxide emissions annually.
There are hurdles that will need to be overcome, however. The pool of qualified installers is limited, but the potential upside for Tesla is enormous. Bloomberg says, “Locking in heat pump customers would bolster the company’s push for its own ‘walled garden,’ in which a home’s entirely-Tesla technology — electric car, solar panels, Powerwall battery, and heat pump — could stay seamlessly connected. Smart-home technology that lets users get the most out of their green gadgets (soaking up solar energy during the day and storing it for use in heat pumps and chargers overnight, for example) may prove key to avoiding overloading the grid in a world more reliant on electricity.”
During an investor call in 2021, Musk said, “It really becomes quite a compelling solution to the consumer where you integrate the electric vehicles’ charging, solar energy storage, hot water, HVAC, in a very tight compact package that also looks good, It just doesn’t exist.” One would think a company that has access to engineers who can make a rocket fly backwards might be able to make such a system possible.
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