Charging Ahead: Exploring the lucrative commercial landscape for electric cars in LATAM

The electric car market is growing year on year in Latin America and has experienced not only growth in manufacturing but also in the purchase and use of electric cars. Mexico currently ranks as the top producer, and Brazil is one of the top buyers in the region, with Brazilians buying around 13,000 electric cars in 2021 (Bloomberg, 2022)

Some of the reasons why electric cars are becoming increasingly popular in Latin America and worldwide are related to their low emissions and the high price of gasoline. Similarly, the issue of climate change has been installed on the agenda of several Latin American governments, and promoting the use and manufacture of electric cars represents an effort within the energy transitions of the countries and their proposals and agreements to reduce emissions.

Regions such as the United States, Europe, and China are increasing their purchase and manufacture of electric cars every year (IEA, 2023). Consequently, the demand for batteries that require lithium for production is increasing. Here, the Latin American region plays a key role, as it has large reserves of this mineral.

Countries such as Argentina, Chile, and Bolivia could have golden opportunities in this industry. The area shared by these three countries, known as the "lithium triangle,” is estimated to be the source of almost half of the world's lithium. By 2031, global lithium production is likely to increase by 250%. Argentina is expected to become the world's second-largest lithium producer thanks to the fiscal incentives and facilities that its government grants to companies to extract lithium (Deloitte, 2023).

This lithium production in Latin American countries could be better exploited by car manufacturing countries, such as Brazil and Mexico, placing the Latin American region as the main producer of electric cars in the coming years. This could further boost energy transitions and help reduce the dependence on fossil fuels. In addition, it boosts investment to build the necessary infrastructure for charging stations from Mexico to Argentina. Similarly, to promote the same technologies in passenger buses and cargo trucks, to reduce polluting emissions in general, but especially in supply chains.

It is not possible to deny that lithium mining represents damage to the environment and human beings if its extraction is poorly planned and the damage may even be irreversible. However, researchers in Switzerland have calculated that even when electric cars are powered by fossil fuels, they have a lower environmental impact than petrol cars. Better still, if they are charged by a renewable source, it would be impossible for petrol cars to compete with them (NBC). To produce batteries in LATAM, it would also be necessary to comply with ESG criteria and use as much technology as possible to make their production more efficient and reduce their impact to the lowest (McKinsey, 2022).

Andrew, M. (2022). Are electric vehicles definitely better for the climate than gas-powered cars? MIT Climate Portal.

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IEA. (26. April 2023). Demand for electric cars is booming, with sales expected to leap 35% this year after a record-breaking 2022. Von https://www.iea.org/news/demand-for-electric-cars-is-booming-with-sales-expected-to-leap-35-this-year-after-a-record-breaking-2022 abgerufen

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News, N. (kein Datum). Hands Down, Lithium-Ion Batteries are Better than Gas. Von https://www.nbcnews.com/id/wbna39043527 abgerufen