Tesla CEO Elon Musk told investors on July 23 that the electric vehicle (EV) maker was delaying investment into northern Mexico until after the US presidential election, due to the threat of tariffs if Donald Trump is re-elected.

“I think we need to see just where things stand after the election. Trump has said that he will put heavy tariffs on vehicles produced in Mexico,” said Mr Musk in Tesla’s second-quarter earnings call. “So it doesn’t make sense to invest a lot in Mexico if that is going to be the case.” 

Initially announced in March 2023, Tesla’s plans to invest up to $10bn to build an EV factory in the northern border state of Nuevo Leon had already faced delays related to water usage and higher interest rates. 

As Tesla waits “to see where things play out politically” before investing into Mexico, Mr Musk said the EV maker plans to increase capacity at its existing facilities. This includes its expanded gigafactory in Texas, which will house a cluster of 50,000 supercomputer H100 chips for the company’s self-driving training.

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