MEXICO – Although Elon Musk, founder and CEO of Tesla (NASDAQ:TSLA), is interested in setting up battery factories for electric vehicles in Mexico, the federal government will not provide him with subsidies like the US administration does.

During his morning press conference held from the city of Oaxaca, Mexican President Andrés Manuel López Obrador said that a subsidy like the one offered by the Joe Biden administration to semiconductor companies and clean industries “does not align with our policies”.

“The US government now has a good policy, I believe, but they have the possibility of applying it, that if a company invests, the government gives it a 50% subsidy of its investment,” explained the president.

The president said that if companies related to clean industries, the automotive industry for electric cars, and semiconductors invest $1 billion, the US government gives them a non-reimbursable $500 million, “and the government does not become a partner.”

“When I talk to him (Elon Musk), he talks to me about batteries and I tell him that’s fine, but we’re not going to give 50%, we couldn’t do that, and besides, it doesn’t align with our policies,” he commented.

In early March, the Mexican president announced that the electric vehicle manufacturer will set up its largest plant yet in Nuevo León, for which an investment of $5 billion is projected and will have a production capacity of up to 1 million units, equivalent to 76% of the units manufactured in 2022.

Later, Musk confirmed the investment at Tesla’s Investor Day, where he clarified that the production already established in the United States, China, and Germany would not be moved to that plant, but the manufacturing capacities of his new generation of electric cars would be expanded.

At 8:54 a.m. Mexico City time, Tesla’s shares were up 4.37% after a report was released stating that the automaker had one of its best quarters in the Chinese market for the first three months of 2023.