Musk Hesitates To Go 'Full Tilt' On Tesla Mexico Factory As Interest Rates Rise

Tesla CEO Elon Musk revealed Wednesday he was worried about higher interest rates for car buyers in Mexico, as the electric vehicle maker was planning to open a plant in the country.

"For Mexico, we're working on infrastructure and factory design in parallel with the engineering development of the new production [line] that we will be manufacturing there," Musk said during the company's third-quarter earnings call with analysts, Reuters reported.

He further explained the company wanted to "just get a sense for what the global economy is like" before it goes "full tilt on the Mexico factory," adding that he was worried about the "high-interest rate environment."

The central bank, Federal Reserve System, has increased the interest rates 11 times since last year's March from 0.25% to the current month, 5.5%.

According to the 52-year-old business magnate, high-interest rates in the United States are creating a negative impact on the sales of the automobile industry.

He said a vast majority of people buy a car on monthly installments and "as interest rates rise, the proportion of that monthly payment that's interest increases naturally," and added "if interest rates remain high, or if they go even higher, it's that much harder for people to buy a car, they simply can't afford it."

Even though Tesla will definitely build a factory in Mexico, Musk said he was not sure about how much time it would take. Previously, the Mexico factory was scheduled to start operating in 2025; however, looking at the interest rate, Musk hinted the project might be halted.

"We're going to build it and it's going be great," he said. "The pressure is really just about the timing and I'm going to be a broken record on the financial front, it's just that the interest rates have to come down."

Tesla's CEO apologized for being more "paranoid" than he should have been, considering the PTSD he still has from the 2008-2017 timeline, when Tesla was about to collapse financially.

"I apologize if I'm perhaps more paranoid than I should be because that might also be the case because I am. I have PTSD from 2008 — 2017 through 2019 not perfect either," he admitted. "That was very tough going. So, you know, the auto industry is also sort of cyclic. It's because people tend to hesitate to buy a new car if there's uncertainty in the economy."