Mexico could provide a source of lithium for electric vehicles

One of the hottest global markets is for the production of electric vehicles.

According to Car and Driver magazine, e-vehicle registrations in the United States increased by 60% in the first quarter of 2022. This occurred while the registration of new car registrations overall fell by around 18%. . About 1% of the approximately 250 million vehicles on US roads are electric vehicles. Data services provider IHS Markit, which merged with S&P Global this year, predicts between 25% and 30% of new vehicle sales will be electric by the end of the decade. Globally, electric vehicle sales increased by 43% in 2019 and 46% in 2020. In 2021, electric vehicle sales more than doubled. In that same year, more electric vehicles were sold in any given week than 10 years ago in the entire year.

We all know the appeal of electric vehicles. They are seen as a major way to reduce carbon emissions around the world. Electric vehicle technology has improved dramatically over the past decade, and electric vehicles are more efficient and easier to manage. Their range per single charge has also increased and every day more and more charging stations are added to the network. Electric vehicle companies are also touting the power of their vehicles, compared to traditional gas-burning models.

Some countries have adopted electric vehicles as their main contribution to the fight against global warming. While EV sales represent 4.6% in the United States, in Norway they accounted for 86% of the car market until March 2022.

However, the United States is taking steps to promote the increased production and use of electric vehicles within its borders. In May, the Biden administration announced that $3.1 billion in funding will be allocated to encourage efforts to manufacture electric vehicle batteries and their associated parts in the United States. The US Department of Energy is also allocating $60 million to recycling used electric vehicle batteries. Consumers who purchase an electric vehicle containing a battery made in North America with more than 40% of the metals produced or recycled on the continent may be eligible for a tax credit of up to $7,500.

And on August 31, Toyota announced that between 2024 and 2026 it would invest $5.6 billion in electric vehicle battery factories in the United States and Japan. About $2.5 billion of that total will be invested in the company’s battery manufacturing facility in North Carolina. According to a press release from Toyota, the investment will add production capacity and increase the plant’s workforce by 350 employees to a total of 2,100. In 2021, Toyota announced a global investment of $70 billion in its efforts for electric vehicles. Other major automakers, such as General Motors, Ford and Hyundai, have also announced new investments in their electric vehicle markets.

As all of these announcements took place, Mexican President Andrés Manuel López Obrador appointed Sonora Governor Alfonso Durazo to lead LitioMx, the new state-run company in charge of lithium exploration and development. LitioMx will be headquartered in Sonora, and López Obrador said Sonora will become the world leader in Mexico’s efforts to produce more lithium. The Mexican president is currently evaluating new joint ventures with private companies in the development of mining projects involving lithium in Sonora.

Mexico’s lithium efforts present an excellent opportunity for the United States to partner with its southern neighbor to formulate strategies for the production of batteries for electric vehicles in North America. If Sonora and other parts of Mexico prove ripe in the quest for new lithium production, the United States will have a source of lithium on its southern border. Production sharing between the United States and Mexico has existed for years in automobile manufacturing. For decades, companies from the United States, Mexico and Canada have all cooperated to provide components, labor and technology to produce state-of-the-art vehicles. This sharing of production has allowed North America to compete effectively and efficiently with the world in the automotive industry.

While Mexico’s lithium strategy presents an opportunity for U.S. EV makers, nothing should be taken for granted. China has invested aggressively in various projects in many developing countries with the aim of gaining a foothold in markets, gaining access to valuable resources and/or expanding its sphere of influence across the world. U.S. electric vehicle and automotive battery makers must work quickly with the Mexican government to form strategic partnerships that will benefit both countries. If the United States hesitates or allows a vacuum to arise, it is likely that China will fill that vacuum.

Jerry Pacheco is the executive director of the International Business Accelerator, a nonprofit business counseling program of the New Mexico Small Business Development Centers Network. He can be reached at 575-589-2200 or jerry@nmiba.com.

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