EspañolTesla’s decision to install in monterrey the world’s largest gigafactory: lessons from a regional cluster for attracting investments

DOI: https://doi.org/10.18543/bee.2967
Keywords: Mexico, Regional Competitiveness, Automotive industry, Nearshoring

Abstract

Since 1994, Mexico has been a significant recipient of foreign direct investment (FDI) in the automotive industry. This industry attracts, on average, annual investment of 4.5 billion dollars, with a growth rate close to 11% annually. However, FDI in the automotive sector is concentrated in only three regions, which compete to attract new investments. The global phenomenon of nearshoring has intensified regional disputes over investments in the industry. For instance, there was a recent political and media battle between regions due to Tesla’s intention to install a factory in Mexico. This research aims to study Tesla’s decision to invest in Mexico with two objectives. First, to delimit and examine the regional automotive clusters to understand Tesla’s decision within the framework of regional competitiveness. Second, to derive lessons from successful public policies to attract FDI in the automotive sector. We propose a methodology to delimit and characterize the regional automotive clusters present in Mexico and analyze the policies that encouraged the investment decision. Our analysis reveals the most outstanding competitive advantages: strategic location, cohesion, security and infrastructure, and availability of qualified labor. These advantages are enhanced through policies to provide logistical infrastructure and well-designed tax incentives.

Author Biographies

Ernesto del Castillo de la Fuente, Tecnológico de Monterrey, Campus Monterrey

Professor of Economics and Business at Tec de Monterrey, Monterrey Campus, Mexico, since 2020. Additionally, he has been a professor in executive education programs at Tecnológico de Monterrey. He joined EGADE Business School as a part-time professor and researcher in 2022. His professional career includes more than ten years of experience in research and business intelligence. His academic research has been published in prestigious journals, such as Journal of Product & Brand Management, Journal of Retailing & Consumer Services, and Economic Research. Furthermore, Dr. del Castillo has presented his research at national and international conferences, such as FIMEF (Financial Research Congress), ACACIA (Academy of Administrative Sciences), IAM (Ibero-American Academy of Management), SMLA (Strategic Management in Latin America), CERALE (Centre for Latin American and European Studies and Research), and WEAI (Western Economic Association International). Dr. del Castillo holds a Ph.D. in Administrative Sciences and a Master’s degree in Economics from the School of Government and Public Policy at Tecnológico de Monterrey.

Sergio Madero, Tecnológico de Monterrey

Sergio Madero studied PhD in Universidad de Deusto, San Sebastián, Spain, Master in Organization Development and MBA, bachelor’s in information systems Tecnologico de Monterrey. Currently, he is working as a full-time research professor in Business School in Management and Leadership Academic Department at Tecnologico de Monterrey, Campus Monterrey. Sergio Madero’s research interests have been focused on the HRM areas, workplace environment, attract and retain talent (e.g., compensation management, career and first experience job). Current research agenda focuses on the innovative HRM, automation in HRM, organizational flexibility, organizational design, and future of work. He is the leader of the Organizational Design and Culture Thematic Update Group -GAT- in Tecnologico de Monterrey.

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Published
2025-02-26
How to Cite
del Castillo de la Fuente, Ernesto, and Sergio Madero. 2025. “EspañolTesla’s Decision to Install in Monterrey the world’s Largest Gigafactory: Lessons from a regional Cluster for Attracting Investments”. Bulletin of Economic Studies 79 (235), 145-68. https://doi.org/10.18543/bee.2967.
Issue
Vol. 79 No. 235 (2024): Building sustainable competitiveness futures through transformative research
Section
Articles

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