Elon Musk said this Wednesday that until interest rates fall, Tesla will take it easy on the construction of the assembly plant it has planned for Mexico for fear of another crisis like the one that almost wiped out manufacturers like General Motors (GM) in 2009.
In a call with analysts and the media after the presentation of Tesla’s financial results for the first nine months of the year, Musk insisted that concern about high interests, as well as the outbreak of war conflicts, such as those in Ukraine and Loop, They are slowing down plans for the construction of that plant.
We want to understand how the global economy is doing before going full steam ahead with the Mexico plant. “I am concerned about the panorama of high interests in which we find ourselves,” said the businessman.
Musk reasoned that for “the vast majority of people who buy a vehicle it’s about monthly payments” and “with interest rates rising, the proportion of interest in those monthly payments naturally increases.”
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He later made it clear that “for sure” Tesla will build an assembly plant in Mexico, for which they already have a location, in the state of Nuevo León, bordering the United States, as the company announced a few months ago.
“It’s a matter of time,” he explained and then added: “Interest rates have to go down.”
The businessman stated that if he knew what the interest rates would be in the future, he could indicate when the plant would be built.
We’re going to start the next phase of construction next year, but I still have scars from what happened in 2009, when General Motors and Chrysler almost went bankrupt. It’s etched in my mind. So I am not going to go at maximum speed in the direction of uncertainty,” he concluded.
Also announces delivery of the Cybertruck
Musk also revealed that Tesla will begin delivering the highly anticipated Cybertruck pickup truck to customers starting November 30.
But the businessman acknowledged that production will be limited until at least 2025.
It will take an immense effort to achieve high production volumes and have a positive cash flow with a price that people can pay,” explained Musk, who estimated that until 2025 Tesla will not be able to produce 250,000 units of the truck per year.
“Financially, it will take between a year and 18 months for (the Cybertruck) to contribute significantly to positive cash flow. “I would like it to be different but it is my best estimate,” he added.
Tesla reported this Wednesday that in the first nine months of 2023 its net profits, of $7,069 million, fell 20.3% compared to the same period in 2022.
The company said its profitability was negatively affected by high production costs at its new assembly plants.
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