MEXICO CITY (Reuters) - Tesla (NASDAQ:TSLA) Inc. would be denied permits to build a plant in the northern Mexican state of Nuevo Leon, where it has eyed investing, if water is scarce, Mexican President Andres Manuel Lopez Obrador said on Friday.
His comments mark the strongest sign yet that his concerns over water supply could become a deal-breaker for Tesla's plans near the U.S.-Mexico border, underscoring critiques from analysts and investors that interference from Lopez Obrador's government is undercutting Mexico's potential as a nearshoring destination serving the U.S. market.
"If there's no water, no," Lopez Obrador told reporters, when asked if he would allow the electric vehicle maker led by billionaire Elon Musk to open a plant in Nuevo Leon, a major industrial hub considered a top contender to land the investment.
"Simply put, we don't give out permits for that. It's not feasible."
Tesla did not immediately respond to a request for comment.
Lopez Obrador called out arid Nuevo Leon for its water scarcity earlier this week, instead touting the benefits of Mexico's poorer southern region where he has sought to increase development.
In 2020, he said he would withhold permits for a Constellation Brands (NYSE:STZ) brewery in the northern state of Baja California after criticizing the project for consuming too much water in a dry zone. On Friday, the leftist leader praised Constellation for choosing to relocate to a state in southeastern Mexico.
"They understood very well," Lopez Obrador said. "They are now building their plant in Veracruz."