Outside this city, 150 miles south of the Texas border and in the shadow of the Sierra de Santa Catarina, is a cactus-dotted field. If all goes well, this unassuming site will be home to Tesla’s Giga Mexico, which could become the world’s largest electric-vehicle factory. The project promises thousands of jobs and as much as $15 billion in investment from Tesla and its suppliers. It is also catching the attention of Chinese competitors.
Mexico’s second-largest metropolitan area is seeing a near-shoring boom because of its proximity to the U.S., competitive labor costs and the U.S.-Mexico-Canada Agreement, or USMCA. The vacancy rate for industrial real estate is just over 1% and total capacity is up 40% since 2020. But easy access to the American market hasn’t brought only U.S. and other Western companies like Tesla and Unilever. It’s also attracting Chinese businesses like Hisense and Yanfeng.
Mr. Pfeiffer is director of congressional relations at FDD Action and a senior adviser at the Forum for American Leadership.