The Strangulation of a Golden Gosling


Elon Musk, founder and CEO of Tesla. Photo: Google


It may not exactly have constituted the goose that laid the golden eggs (or at least, that could have laid the golden eggs), but Elon Musk’s proposed investment of $10 billion in a giant Tesla assembly plant in Mexico was certainly a gosling to be a treasured.

But just like the short-sighted farmer in the Aesop’s fable, Mexican President Andrés Manuel López Obrador (AMLO) has been blinded by his obsession to promote his ill-fated, inaccessible, unused Felipe Ángeles International Airport (due to turn one year old next month and still shunned by major air carriers and passengers alike) and is ready to kill off the source of this potential mother lode of foreign direct investment (FDI) by trying to play chicken with Musk over where the plant should be built.

From the outset, Musk made it very clear that his intention was to build his mega-plant in Santa Catarina, Nuevo León, close to the U.S. border.

The plant would initially produce components for existing models of Tesla’s electric vehicles (hence the importance of proximity to the United States), and, in an undefined future, would manufacture a new electric car model with a lower cost than the current ones.

Having sorted out the details with Nuevo León Governor Samuel García well in advance, Musk was slated to formally announce the investment last month, an investment that would have constituted the largest FDI ever for that northern state, allowing Mexico to join the United States, Germany and China as home to one of the company’s giga-factories.

But AMLO, who couldn’t leave good things well enough alone, announced on Monday, Feb. 21, that he had rejected Musk’s proposal to build the plant in Nuevo León and had instead proposed that it be built by the AIFA or in the southeast of Mexico.

The reason that López Obrador said that the plant cannot be built in Nuevo León is that, according to the whimsical world of AMLOnian fantasies, the plant would consume too much water and the state simply doesn’t have enough of this precious liquid to spare.

Notwithstanding, engineering specialists have pointed out that the processes of Musk’s proposed company would require very little water, less than 0.3 percent of the current consumption of the entire Monterrey metropolitan area, and the water that it would use would be treated, rather than potable drinking water.

Moreover, AMLO’s arguments does not hold water (pardon the pun) because the area in Hidalgo and the State of Mexico where the Felipe Ángeles Airport is located also does not have access to sufficient water and is more direly stressed in providing clean water to its residents than Nuevo León because its has a larger population than the Santa Catarina region.

And in addition, neither the AIFA region nor Mexico’s underdeveloped southeast have the fundamental infrastructure or trained workforce that a Tesla giga-factory would require.

Elon Musk is no fool and — nearshoring be damned — he has no obligation to build a plant in Mexico (we have already seen that he won’t take gruff from those who try to change the rules in the middle of the game, as clearly demonstrated with his faceoff with Twitter).

If AMLO tries to strong-arm the second-wealthiest man on the planet into building his plant somewhere that will behoove his own political ends, he may end up with a rotten gander egg on his face and no Tesla investment whatsoever.

López Obrador might be well advised to go back and review the old Aesop tale and remember that, in the end, the farmer who owned and killed the golden-egg-laying fowl ended up with no gold and (again, pardon the pun) having cooked his own goose.



One comment

Leave a Reply