New Mexico Governor Secures Deal with Taiwan EV Supplier for U.S. Plant

The Lede: On a visit to Taipei this week, New Mexico governor Michelle Lujan Grisham boosted her state’s economic ties with Taiwan. Taiwan’s Hota Industrial Manufacturing, which supplies gears and other auto components to U.S. based automakers, announced plans for a new plant in the southwest state. This comes as Western countries direct increasing scrutiny toward the Chinese EV industry while pivoting away from traditional combustion vehicles.

What We Know:

• Hota, a key supplier for Tesla, GM, and Ford, announced plans to invest $99 million to build a plant in New Mexico. This will be its first plant outside of Asia. Construction on the factory in Santa Teresa, near the U.S. border with Mexico, is slated to begin early next year and with mass production expected to begin in 2025.
• David Shen, chairman of Hota, noted the relatively low costs for labor and land, proximity to the U.S. auto supply chain, and the unlikelihood of natural disasters related to weather and geology as major motivating factors for the decision.
• A 5% New Mexico state tax credit against manufacturing equipment and could allow Hota to forgo local property taxes through tax-free debt obligations known as industrial revenue bonds.
• Lujan Grisham is traveling with Arizona governor Katie Hobbs to attend the U.S. Business Day event and meet with Taiwanese President Tsai Ing-wen, Minister of Economic Affairs Wang Mei-hua, and manufacturing companies interested in locating to the state.

The Background: This is Lujan Grisham’s second visit to Taiwan. The state Economic Development Department has had a foreign trade office in Taipei since 2019. A handful of U.S. state have offices in Taipei. The U.S. Business Day investment forum is organized by the Ministry of Economic Affairs, the Taiwan External Trade Development Council (TAITRA), the American Institute in Taiwan (AIT) and the American State Offices Association. Since 2021, Arizona has already been working on a partnership with Taiwan Semiconductor Manufacturing Co. to open a U.S. plant in line with the Biden administration’s major investments in technology and infrastructure.

Likely Outcomes:

• The EU recently announced that it would be launching a probe into Chinese state subsidies for electric vehicles, which they argue have unfairly undercut their car brands. Along with semiconductors, solar panels, and other ‘sensitive’ technologies, the EV industry may continue down the path as an increasingly tense front in the economic and trade rivalry between China and the West.
• As this rivalry evolves, businesses aligned with the U.S. and its Western allies will reassess and reposition operations away from China and more in line with alternative supply chain avenues to more efficiently feed into the industries that Western policies are emphasizing in the larger competition with China.

Quotables:

“New Mexico has the ideal economic climate to attract global businesses, including in Asia. I see great potential to strengthen the partnerships we have already established in Taiwan, bringing continued stability and economic opportunity to all our citizens.” – Michelle Lujan Grisham, Governor of New Mexico

“They really like our investments and they really appreciate our strategy, not the least of which is child care and college. They want that workforce.” – Michelle Lujan Grisham, Governor of New Mexico

“I believe that through our joint efforts, New Mexico will become a shining example of Taiwan-US cooperation in green energy supply chains.” – Tsai Ing-wen, president of Taiwan

"New Mexico will become a very important stronghold for the U.S. electric vehicle supply chain, so the future impact of these investments between Taiwan and the United States will be wide-ranging.” – James Huang, chairman of the Taiwan External Trade Development Council

Good Reads:

Tesla supplier Hota to build first US factory in New Mexico (Reuters)

State governors from Arizona, New Mexico seek stronger economic ties with Taiwan (AP)

Taiwan, US officials talk investment at Taipei forum (Taipei Times)

Governor Lujan Grisham to lead Taiwan trade mission – Focus to be on reshoring Asian manufacturing to New Mexico (Offfice of the Governor)

President Tsai meets New Mexico Governor Michelle Lujan Grisha (Office of the President Republic of China)