Giga Ontario May Be Next For Tesla

During the recent Tesla Cyber Rodeo — aka annual stockholder meeting — Elon Musk suggested that Tesla might build 10 to 12 new factories in the coming years. When a member of the audience shouted out “Canada!” Musk said, “I’m half Canadian. Maybe I should.”

Today, TechCrunch is reporting that Tesla recently added an amendment to its registration with Ontario’s Office of the Integrity Commissioner that sets out plans to work with the Ontario government to identify opportunities for an “industrial and/or advanced manufacturing facility.” Tesla is suggesting to Ontario that a new factory — Giga Ontario? — could “increase the competitiveness of Ontario and its ability to attract capital investment.”

Located just across the border from Detroit, Ontario already has a thriving automotive industry composed of manufacturers and suppliers. Ford and General Motors already have existing factories there, and in April the Canadian government invested about $415 million into two new General Motors plants, one of which will produce electric delivery vans for the company’s new Brightdrop division.

“By making Ontario a competitive business environment, including reducing the cost of doing business by $7 billion annually, we have attracted nearly $16 billion in electric vehicle investments in the last 20 months,” Vic Fedeli, minister of Ontario’s economic development, job creation and trade, said in a statement shared with TechCrunch. “We are building an end-to-end supply chain right here in Ontario, and expect to continue to see more companies from around the world looking to our province as a place to invest and grow.”

Policy Matters

No one knows exactly how the soon-to-be-enacted Inflation Reduction Act of 2022 will impact the auto industry, but its emphasis on production in North America could be a contributing factor in Tesla’s search for a new factory to complement the existing factories in Fremont and Austin. Certainly, a factory in Ontario would make it easier for Tesla to distribute cars to customers in the more northern US states and throughout Canada itself.

But building cars in Canada won’t avoid the burden of the restrictions the new law imposes on batteries manufactured with materials or components sourced from China. Tesla has just entered into a deal to buy $5 billion worth of nickel from Indonesia, yet the companies that are actually supplying the nickel are Chinese. Will that run afoul of the new restrictions? The truth is, nobody really knows for sure at this point.

Another factor Tesla needs to be aware of is that the automotive sector in Canada is heavily unionized. Elon has a virulent distaste for labor unions, but he would be building a new factory in the heart of an economy where unions are the norm, not the exception. That calls to mind this old aphorism: “Be careful what you wish for. You just might get it.”

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