- Tesla supplier Hota is investing $99 million to establish its first U.S. plant in New Mexico, reflecting the shift towards regional production in global supply chains.
- Changes in the global landscape drive Hota’s strategic move due to COVID-19 and trade tensions, as well as its proximity to North American customers and the growing U.S. electric vehicle (EV) industry.
Tesla supplier Hota Industrial Mfg. Co (1536.TW) has unveiled plans to invest $99 million in establishing its inaugural plant outside of Asia, marking its entry into the U.S. manufacturing landscape. The Taiwanese company’s decision aligns with the growing shift towards regional production within global supply chains.
Hota, renowned for its production of gears and various automotive components primarily in Taiwan, has set its sights on constructing this new facility in Santa Teresa, situated close to the U.S.-Mexico border. Construction is slated to commence early in the upcoming year, with full-scale production expected to kick off in 2025.
Strategic Move Benefits Hota and U.S. Electric Vehicle Market
The Chairman of Hota, David Shen, explained the motivations behind this strategic move during a press conference in Taipei. He cited the transformative impact of the COVID-19 pandemic and the U.S.-China trade tensions, which have reshaped the landscape of globalization and fostered the emergence of regionalized supply chains. In light of these shifts, Hota reconsidered its investment strategy, leading to this significant move into the United States.
Thriving U.S. Electric Vehicle Industry
Hota’s decision was influenced by its proximity to North American customers, constituting a substantial 60% of the company’s sales. The thriving U.S. electric vehicle (EV) industry also played a pivotal role in driving this strategic choice.
Hota’s entry into the U.S. manufacturing sector not only underscores the evolving dynamics of global supply chains but also positions the company to tap into the burgeoning EV market in the United States.
- New Mexico Governor Michelle Lujan Grisham expressed optimism about the state’s readiness to cater to the needs of Taiwanese companies and leverage their manufacturing expertise during an interview with Reuters.
- She noted that the state’s existing infrastructure positions it well to meet the rising demands of Taiwanese businesses.
- Governor Lujan Grisham also highlighted the advantages of collaborating with Taiwanese manufacturers, emphasizing that they bring valuable know-how to the table, eliminating the need to start from scratch.
- She playfully acknowledged the prowess of Hota’s Chairman, David Shen, known as the “Gear King” in Taiwan, suggesting that competing with him is not a feasible endeavor.
In terms of financial support, the state of New Mexico will allocate $3 million in funding for Hota’s venture, with the potential for additional tax credits.
Key Role as a Tesla Supplier
Across the border in Arizona, another Taiwanese company, TSMC (Taiwan Semiconductor Manufacturing Company), has committed a staggering $40 billion for the construction of two chip factories. This substantial investment represents one of the largest foreign direct investments in U.S. history and aligns with Washington’s ambitions to bolster domestic chip manufacturing.
Hota is a crucial supplier to prominent automotive companies, including Tesla, GM (General Motors), and Ford.
1. Why is Hota establishing its first U.S. factory in New Mexico?
Hota is responding to changing global supply chain dynamics and regionalizing its production. Proximity to North American customers and the growing U.S. electric vehicle industry also influenced this decision.
2. When will the construction of Hota’s U.S. factory begin?
Hota’s US factory Construction is set to commence early next year.
3. When is full-scale production at the U.S. factory expected?
Full-scale production is projected to start in 2025.