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Korea left in dust as Tesla names Mexico home of next gigafactory

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Tesla CEO Elon Musk speaks at the groundbreaking ceremony for Tesla’s Shanghai gigafactory in Shanghai, China on Jan. 7, 2019. [REUTERS/YONHAP]
Korea’s big ambition to attract a Tesla factory in the country has been thwarted as the world’s largest EV automaker chose Mexico for its next gigafactory.

Tesla CEO Elon Musk confirmed Wednesday that he plans to build a new factory in Mexico near Monterrey during a three-hour investor presentation. The announcement came a day after Mexican President Andres Manuel Lopez Obrador said the two reached an agreement on the establishment.

Gigafactory is a term used to describe Tesla’s big-scale manufacturing plant.

Korea has long been one of the promising candidates for Tesla’s fifth EV gigafactory. Musk said last year he will soon announce plans of building its second gigafactory in Asia.

The EV maker currently has two in California and Texas, one in Germany and one in China.

Musk even said he is considering Korea as “one of the top priority candidates” during his video call with President Yoon Suk Yeol in November. LG Energy Solution, one of the major battery suppliers of the EV maker, runs multiple plants in Korea.

A total of 17 Korean local governments including the Gwangwon Provincial Office, Goyang, and Pohang city governments have submitted applications to the Ministry of Trade, Industry and Energy.

Experts, however, say Korea is geographically and industrially disadvantaged compared to other Asian countries.

“Korea is already notoriously known for its powerful labor unions,” said Kim Pil-soo, an automotive engineering professor at Daelim University.

“Indonesia is rich in resources and considering the growth potentiality of Southeast Asian countries, Korea is less competitive.”

Bloomberg reported last month that Tesla is close to a preliminary deal to set up a factory in Indonesia, which will have 1 million annual capacity.

Indonesia has the world’s biggest reserves of nickel, essential in making batteries. The country has an estimated 21 million tons of nickel.

Musk did not comment about the Indonesia factory during Wednesday’s event.

BY SARAH CHEA [chea.sarah@joongang.co.kr]