There is potential to manufacture lithium batteries in Mexico
Mexico finds itself in a potentially privileged position for the production of lithium batteries. This is mainly due to its proximity to the United States. However, to manufacture lithium batteries in Mexico, the country must create the necessary incentives to attract the required investments. Additionally, Mexico must become a point of demand for electric cars. BloombergNEF expressed this fact during a recent virtual forum
“Mexico maintains a privileged position in terms of proximity to the United States for the manufacture of lithium batteries, but incentives are needed,” said Sharon Mustri, an analyst at BloombergNEF. She made this observation during her participation in the webinar “The future of lithium-ion batteries and their metals in Latin America.”
She affirmed that, for now, no country in the Latin American region, with the exception of Brazil, is in the first 15 places of participating nations in the supply chain of raw materials for the manufacture of lithium-based batteries for electric vehicles. On that list, the top three spots are held by China, Japan, and South Korea. Brazil comes in in the 12th position.
Beyond Brazil, Argentina and Chile also have significant deposits of the primary mineral products required to produce the power source. Given the ability to access hemispheric supply chains, the potential to manufacture lithium batteries exists.
A developed Latin American supply chain will catalyze the manufacture of lithium batteries in Mexico
“Latin America at the lithium level is significant and is playing an increasingly important role,” said the analyst. “There is an increasing mining capacity in the region, as well as the technological innovation that is required to obtain raw materials for the production of the batteries.”
However, she further clarified that in addition to the extraction of the metals necessary for the production of batteries, the manufacture of lithium batteries in Mexico requires that the country, and Latin America as a whole, becomes a center of demand.
“We do not believe that investment for manufacturing is going to reach places that are not close to centers of demand,” said Mustri.
“Another point that Mexico and the region must address,” she added, “is the experience and knowledge required to establish manufacturing at the level of materials for both the manufacture of batteries and electric vehicles.” Due to recent developments, Mexico will soon become a producer of EVs.
In this sense, she highlighted the importance of local governments, beyond federal administrations, to attract foreign investment. “In Argentina, governments at the state level have become more involved with lithium production for export and with the supply chain in general,” Mustri stated.
She said that worldwide, the lithium market is in a challenging situation because there was a lot of supply and slack demand. This is making its extraction and production unaffordable. It has also led to the closure of several of the region’s mines.
Likewise, he predicted that in the 2021-2022 period, there would potentially be a shortage of this element. Still, it is being extracted in the United States and Canada even from unconventional deposits at affordable costs. In addition, these raw materials can be shipped to companies that can manufacture lithium batteries in Mexico.
As a response to an expressed question about the recycling of batteries, Mustri explained that the materials used in battery production are highly recyclable and that electric cars require high-performance batteries. After their useful life in electric vehicles has been reached, they can live a “second life” in other uses.
“Today, we do not see recycling as part of the global supply chain of these metals. This is because we still do not have enough batteries that have already ended their first life or second lives. However, after we reached this point, we can recycle them.” The analyst predicted that by 2030, in the case of lithium, up to 10% of the total market supply will come from recycled material.
In another context, Eduardo Canicoba, EVP of Business Development LATAM at Geotab, emphasized that Latin American governments do not have familiarity with electric vehicle (EV) technologies. As a result, they have refrained from taking measures to electrify their vehicle fleets. This could change in Mexico, however, as the country’s production of EVs becomes more commonplace.
“Education is lacking regarding electric vehicles and the related technologies. Therefore, this information is not reaching the people who make decisions,” stated during a special forum, “Electric Mobility in Mexico,” which was recently organized by Portal Movilidad.
For this reason, he spoke to encourage the “evangelization of data” to entities in both the private and public sectors to move towards a zero-emission transition in public transport. As these technologies gain traction, the potential to manufacture lithium batteries in Mexico will be fulfilled.
