Mexican President Lopez: has reached an agreement with Tesla to build a factory

Mexican President Lopez announced Tuesday that the country's government has reached an agreement with Tesla Inc. on the company's plans to build a new factory in the northern city of Monterrey.

According to President Andrés Manuel LópezObrador, the new plant will be "a considerable investment" with many jobs, and he did not provide details about the size or scope of the facility, but did say Tesla would announce more details on Wednesday. More details will be announced Wednesday.

Monterrey, which is highly industrialized and close to the U.S. border, has long been considered a frontrunner for Tesla's investment.

But the city suffered a severe water shortage in 2022, so much so that many homes had intermittent or no water supply for weeks. The government is building a 60-mile (100-kilometer) pipeline to bring in more water from the dam.

Mexico had previously expressed concern about how the plant's water needs would affect the region.

Tesla will make a number of commitments in building the factory, including using recycled water throughout the manufacturing process of its electric cars, in order to face the problem of water scarcity.

Lopez said, "I want to thank Musk for his respect, concern and understanding in addressing the water shortage." He added that more details will be announced on Wednesday, when Tesla will hold an investor day, and that the new factory will be very large and create many jobs.

Lopez made the announcement after a call Monday with Tesla CEO Elon Musk, who said the two had a separate conversation last weekend.

Musk had previously floated the idea of building a $25,000 electric car, which would be about $20,000 cheaper than the current Model 3, now Tesla's cheapest car. Many automakers build lower-cost models in Mexico to save on labor costs and protect profit margins.

Musk is also expected to show off the company's production line at its Austin plant and discuss long-term expansion plans, how to use capital investment funds and other topics.