Mexico cannot match US incentives for a planned Tesla battery factory, according to a minister.

MEXICO CITY, May 2 (Reuters) – Mexico’s finance minister said on Friday that if Tesla (NASDAQ:TSLA) Inc. constructs a battery facility in the country, it will be unable to equal the incentives provided under U.S. legislation to tame inflation.

Tesla has not stated whether it will construct a battery factory in Mexico, but local authorities say Tesla has scouted possible locations in the central states of Hidalgo, Queretaro, and Puebla.

“We didn’t squander (Tesla’s) time assuming we’d be able to equal the United States’ Inflation Reduction Act,” Finance Minister Rogelio Ramirez told journalists at an event with Citigroup’s Mexico subsidiary.

Tesla’s Latin American representative did not quickly reply to a request for comment.

The Inflation Reduction Act, signed in August, provides a $7,500 tax credit to electric-vehicle purchasers if the car’s battery meets a benchmark for getting components from the United States or other free trade partners, such as Mexico.

Tesla CEO Elon Musk announced on Wednesday that the company would construct a gigafactory in the northern state of Nuevo Leon, which could bring in up to $10 billion in investment and generate 10,000 jobs.

While Mexico hailed the investment, Tesla stated that it “did not require any type of fiscal stimulus” beyond the advantages permitted under Mexico’s free trade agreements in order to construct the factory,” according to Ramirez.

A decision on establishing a battery factory in Mexico has yet to be made.

“The battery plant was not in (Tesla’s) initial proposal; it was suggested by the Mexican administration,” Ramirez explained.

Without the law, Mexico, according to Ramirez, would be unable to equal US incentives.