Regional productive integration of the automotive value chain of Mercosur as a development strategy against the new global architecture

Type de publication:

Conference Paper

Source:

Gerpisa colloquium, Paris (2020)

Résumé:

In this work we present the main characteristics of the new global architecture of automotive production, emphasizing the production of electric vehicles and lithium ion batteries, and we characterize the main initiatives that have taken place in Latin America in general and in Argentina in particular to promote the development of electric mobility projects. Finally, we make a critical evaluation of the development program of the Argentine OEMs nucleated in ADEFA and a brief characterization of the productive integration of the Argentine segments supplying electrical components.

Texte complet:

 

Regional productive integration of the automotive value chain of Mercosur as a development strategy against the new global architecture

Mariano Treacy

Introduction

The global automotive industry is undergoing important changes that will modify the chain's governance structure and the global industrial geography. One of the main axes of this change is the transition towards sustainable electric mobility, which will require a change from internal combustion vehicles (ICE) to electric vehicles ( EVs ).

The world to come is marked by uncertainty regarding the direction of globalization. The trade war between the United States and China, the reversal of international capital flows, the rise of globalization phobic parties in the central countries and the crisis of the multilateral negotiating bodies are part of this panorama. In addition to this, in recent years there has been a sharp retraction in trade, which has caused many analysts to begin to speak of a process of decoupling or reversal of globalization. The decoupling process, together with the development of new vehicles will undoubtedly change the architecture of the global automotive value chain within a few years.

In a full globalization expansion world, the Mercosur served as an instance of empowerment for the countries to improve their bargaining power. In the new scenario, the regional bloc can function as a space to protect against these uncertainties and to develop alternatives. The domestic market is highly relevant and, furthermore, productive capacities can be used to enhance scale and access neighboring markets. In the context of uncertainty surrounding the configuration of industrial architecture in the 21st century, the regionalization of production will be a key element.

Countries such as Argentina or Brazil, with a developed but peripheral automotive industry, must execute active strategies to position themselves in this new scenario. The development of upstream and downstream linkages from the production of lithium -ion ​​electric batteries (LIBs) presents an opportunity, but there are strong warning signs due to the high competition that exists in this segment.

Argentina occupies a central position in the new scenario of transition towards electric mobility, since upstream it has significant reserves of Lithium and Cobalt, scientific knowledge and regulations to promote electronic innovation, and downstream it has a mature automotive industry and the possibility of producing electric batteries. However, the Argentine production of electrical components is very weak and dependent, and the market for the production of electrical batteries is concentrated in world class companies and covered by intellectual property rights.

In this work we present the main characteristics of the new global architecture of automotive production, emphasizing the production of electric vehicles and lithium ion batteries, and we characterize the main initiatives that have taken place in Latin America in general and in Argentina in particular to promote the development of electric mobility projects. Finally, we made a critical evaluation of the development program of the Argentine OEMs nucleated in ADEFA and a brief characterization of the productive integration of the Argentine segments that supply electrical components.

New global architecture of automotive production

The automotive sector , despite being a mature sector, continues to show dynamism and continues to be one of the leaders of the scientific-technological revolutions applied to the organization of industrial production. The car of the next few years will not have a transmission system since it will have an electric motor. It will be fully connected and leveraged in the software and it will have increasing autonomy. The connectivity of the vehicle will be total, both with the user and with other vehicles and with the city infrastructure. Mobility will expand the number of players and offering services such as car- sharing , ride - hailing , etc.

In the future, mobility services will account for 22% of revenue from automakers, which will drastically change the global value chain governance (EV Global Outlook 2019 ). There are potentials in software development and in “MaaS” (Mobility As A Service) services in the cloud, entertainment and cyber security. The Original Equipment Manufacturers (OEM), the System Suppliers (Tier 1) and the concessionaires will have to adapt to the new environment, investing in research and development and articulating with new signatures innovative new designs, e-commerce, security services and assistance, insurance, remote diagnosis, preventive maintenance and repair.

Industry will have to adapt its production processes and final goods to new forms of energy to produce cleaner and smarter vehicles, incorporating modern software and security. Connectivity and electrical systems will increasingly represent added value. Regulations and local incentives must also be modified and the State will have to invest in the development of physical and data connectivity infrastructure.

Electric Vehicles: types and characteristics

Since 2008 crisis there has been a very important switch in the configuration of the automotive global value chain, which has given rise to many questions about a new architecture in the organization of world production. Along with this general process, there has been a movement towards the production of electric and hybrid vehicles and digitization in the automotive sector. In 2018 4 million EV were sold globally, reaching a record. In addition to electric vehicles, bicycles and mobility aids are being developed and their sales are projected to grow in the near future (Muniz , Belzowski & Zhu , 2019).

In recent years, EVs have gained popularity thanks to their contribution in reducing greenhouse gas (GHG) emissions. They are also about four times more energy efficient than ICE vehicles (Un- Noor , Padmanaban , Mihet- Popa, Mollah & Hossain , 2017). In addition, they can be powered by any type of electricity, so renewable energy sources such as hydroelectric plants, wind generators, solar cells, etc. could be considered.

There are three main types of electric vehicles (EVs), classed by the degree that electricity is used as their energy source. BEVs<!--[if !supportFootnotes]-->[i]<!--[endif]-->, or battery electric vehicles (fully electric with recheargeable batteries), PHEVs<!--[if !supportFootnotes]-->[ii]<!--[endif]--> of plug-in hybrid electric vehicles (powered both by petrol and electricity) , and HEVs<!--[if !supportFootnotes]-->[iii]<!--[endif]-->, or hybrid electric vehicles (powered by both petrol and electricity) (Chang & Wong, 2004) .An electric powered car has three primary components: the Electric Engine, the Motor Controller , the regenerative braking system and the Battery.

Lithium: key mineral for the manufacture of electric batteries

 

The main challenge of the automotive industry in the production of EV is the development of devices to accumulate energy, which has unleashed a technological race to develop advanced batteries among the main competitors in the sector (Lara Rivero, Reyes, García, 2011).

The key component of electric vehicles are rechargeable batteries, and lithium ion batteries (LIBs) have been shown to have the most potential as they are the safest, have high conducting capacity and can achieve an energy density of up to 280 Wh / kg. The LIBs gives extra performance and range, are lighter than Lead Acid and Nickel Metal batteries but are also much more expensive (Denton, 2016). They provide light, high-density energy sources and can be used to store energy (Gil & Prieto, 2013).

Lithium, therefore, fulfills a strategic centrality in the automotive industry of the future since it is the main component of LIBs. The companies that lead the world production of lithium are the North American Albemarle and FMC Corporation, the Chilean Chemical and Mining Society of Chile (SQM or Soquimich). In recent years, the Chinese Tianqi Lithium, which operates together with Albermarle in the Greenbushes mine in Australia (the largest in the world), has grown rapidly (Lopez et Al, 2019).

Lithium, however, only accounts for between 4% and 10% of the cost of the battery. Half of the total cost corresponds to the production of electrodes and other active materials such as graphite, whose production is concentrated in China, India and Brazil<!--[if !supportFootnotes]-->[iv]<!--[endif]-->. The value chain for the manufacture of these batteries has six links: raw materials, cell components (anodes, cathodes, electrolytes and separators), cells, batteries, use, recycling. Among the companies that operate in all the links of the lithium-ion battery chain, LG Chem, Tesla, BYD and Panasonic stand out, but there are very few of them (Lopez et Al, 2019).

One of the bottlenecks to enter the competitive LIBs manufacturing market is the concentration of patents in few companies. Japanese companies master knowledge, experience, materials, equipment and economies of scale to advance in LIBs mass production. They control most intermediate materials, such as the combination of materials for the production of cathodes and the production of nickel, cobalt, manganese, and manganese oxide cathodes, and they hold around 80% of the world supply of electrolyte salts (Lara Rivero , Reyes, García, 2011).

Between 1976 and 2008, only 13 companies concentrated 50% of LIB patents, most of them Asian: Samsung (South Korea), Valence (USA), Matsushita (Japan), Hitachi (Japan), Sanyo (Japan), Poly Plus (USA), Willson (USA), NEC (USA), Sony (Japan), 3M (USA), Mitsubisho (Japan), Canon (Japan), US Gov (USA). Japanese companies Asahi Chemical and Sony won the race to the North American Duracell and Energizer in the exploitation of the patents of the Lithium-Ion batteries (Lara Rivero, Reyes, García, 2011).

Initiatives to promote the transition to electric mobility

According to a report by the United Nations Environment Program (2018), Latin American and Caribbean region has "favorable conditions for electric mobility" since it has three countries with large automobile manufacturers (Argentina, Brazil and Mexico), three countries with large lithium reserves (Argentina, Bolivia and Chile) and the world's highest percentage of renewable energy sources.

The electric vehicle industry can play a catalytic role in the transition towards sustainable mobility with low carbon cities. Much of the air pollution comes from transportation. Per year, according to the World Health Organization, more than 850 thousand people in Latin America die from diseases attributable to environmental pollution. In addition to the environmental benefits, in terms of population health and synergies at the production level, the deployment of electric mobility in Latin America could be a source of fuel savings of approximately US $ 85 billion by 2050 (UN , 2018).

Improvements in vehicle efficiency can achieve a significant reduction in greenhouse gas emissions in the transport sector. At the regional level, initiatives are being coordinated in conjunction with the UN Environment Section's Electric Mobility in Latin America program that aim to fulfill the climate commitments assumed by improving the quality of air and the health of the population. In the framework of this program, the Electric Mobility Dialogue has been promoted at the XXI Meeting of the UN Forum of Ministers of Environment of Latin America and the Caribbean hold in Buenos Aires in 2018.

In addition to formal instances of dialogue, many initiatives have been developed in most of the countries of the region. There are some examples, such as that of TranSantiago in Chile, which since 2017 has been incorporating zero emission buses for passenger transport. In Brazil, Colombia, Chile, Ecuador and Mexico there are pilot tests for incorporating fleets of electric taxis. Uruguay<!--[if !supportFootnotes]-->[v]<!--[endif]-->, Mexico and Brazil have been pioneers in the installation of interprovincial rapid recharge corridors. Finally, Costa Rica has led the development of laws for the promotion and incentive of electric transport.

Electric mobility presents a possible point of convergence around common interests for many of the countries in the region. Technological conditions, tools and knowledge already exist to create an opportunity to incentivize solutions to reduce emissions, generate decent jobs, reduce inequality and strengthen social inclusion. The electric vehicle market in the region is still very small, so that progress can be made specifically to be generated agreements between different countries to facilitate the promotion of policies and incentives to generate value added in the local industry, industrialization of batteries and electric vehicles<!--[if !supportFootnotes]-->[vi]<!--[endif]-->.

To achieve a greater market for EVs, a long-term policy that encourages their use will be necessary. This could be done through an economic stimulus, subsidizing the purchase until greater production scales are achieved to diminish mean average costs. A scheme could also be considered to promote collective electric transport and electric trains. It will be necessary to implement common policies that combine incentives and collaborations to promote electric mobility, incentives to reduce initial prices, taxes on CO2 emissions, elimination of fuel subsidies, regulation of imports of used vehicles, development of minimum emission standards, labeling, charging infrastructure creation, collaboration to develop common policy and regulatory frameworks, etc.

Electric mobility initiatives, EVs and batteries in Argentina

Argentina will play a central role in the transition towards electric mobility in Latin America. According to some analysts, this country has the potential to become the world's leading producer of lithium carbonate, the raw material from which the components of battery cells are manufactured. Lithium batteries with imported cells are already being assembled in Argentina<!--[if !supportFootnotes]-->[vii]<!--[endif]--> and investments are being explored to enter the lithium value chain including the possibility of manufacturing battery cells.

Argentina, which has the fourth world lithium reserve and is currently the third producing country in the world<!--[if !supportFootnotes]-->[viii]<!--[endif]-->, has granted exploration permits in 15 salt flats of Catamarca, Jujuy and Salta to different companies, most of them in territories of indigenous communities. Despite this, only two companies are in the operational phase: Minera del Altiplano (subsidiary of FMC Lithium Corp)<!--[if !supportFootnotes]-->[ix]<!--[endif]-->, in the Salar del Hombre Muerto (Catamarca) and Sales de Jujuy, a joint venture between Australia's Orocobre, Japan's Toyota Tsusho Corp. and the state firm Jujuy Energía y Minería Sociedad del Estado (JEMSE), which operate the Olaroz Salt Flat (Lopez et Al, 2019). There have been many complaints by indigenous communities that defend water<!--[if !supportFootnotes]-->[x]<!--[endif]--> and demand companies to leave their territories (Gullo y Fernández Bravo, 2020).

The main project to manufacture batteries in Argentina stems from an agreement signed between JEMSE and the Italian group SERI, from which the provincial company Jujuy Litio was created<!--[if !supportFootnotes]-->[xi]<!--[endif]-->. The main objective is to build a plant to manufacture active material, lithium cells and systems or devices that use this type of batteries. Jujuy Lithium has developed the first prototypes of domestically manufactured LIBs<!--[if !supportFootnotes]-->[xii]<!--[endif]--> and has the project to set up a lithium battery assembly pilot plant, the manufacture of lithium battery cells and the production of active material (Ambito Financiero).

In addition to lithium extraction and battery manufacturing projects, Argentina has scientific knowledge and a mature automotive industry, so the development of an electric vehicle fleet would allow important industrial chains to be developed.

The Argentine government has promoted legislation to encourage the transition to a fleet of EVs. Customs tariffs have been reduced from 35% to 5% for imports of hybrid vehicles and to 2% for imports of electric vehicles. In the Autonomous City of Buenos Aires, the patent tax has been exempted for light and heavy vehicles with HEV or BEV engines<!--[if !supportFootnotes]-->[xiii]<!--[endif]-->. In addition to these measures, the central government promoted an “Inter-ministerial Table for Sustainable Transport” in 2016, a National Plan for the Mitigation of the Transport Sector in 2017 and a National Strategy for Electric Mobility in 2018.

There are major investment announcements to install electrical corridors and local manufacturing plants. The companies QEV and ABB have announced together with YPF the installation of more than 200 charging stations for electric vehicles with an investment of US13 million. The Chinese company Dongfeng (DTFC) announced an initial investment of US $ 300 million to install the first electric bus factory in Argentina in the municipality of José C. Paz. Bravo Motor Co and CTS Auto (in alliance with Chinese company BYD) have also shown interest in investing in the local manufacture of EVs .

Additionally, there is already a history of manufacturing and marketing locally produced EVs. In 2019, the local company Sero Electric launched the first nationally produced serial electric vehicle, approved for patenting and circulation in urban areas<!--[if !supportFootnotes]-->[xiv]<!--[endif]-->. The Sero has 80% of components of national manufacture, but an adequate production scale has not yet been achieved, so the unit cost of the parts is very high. Battery and electronic components account for about 50% of the cost of the vehicle, which went on sale for US$ 14,600 (Silveira, 2019).

Large OEMs have also proposed strategies linked to a transition towards electric mobility. Toyota and Peugeot have been investing in the development of some ecological prototypes of hybrid and electric vehicles. Toyota Motor Corp. took on a series of environmental challenges by 2050, when it hopes to have its full line of electric vehicles. By 2025, as an intermediate goal, it hopes to have a hybrid version of each one of its vehicles. In Argentina, it has already sold more than 1500 hybrid vehicles between its Prius and RAV4 models. The CEO of Toyota in Argentina has announced that the Zarate plant in Buenos Aires will produce the hybrid version of the Pick Up Hilux and the SUV SW4.

ADEFA “Vision 2030” Plan

In a recent document entitled “Vision 2030” (ABECEB, 2019), the business chamber that groups argentinian OEMs subsidiaries ADEFA has s stated that the strategy until 2030 will be focused on investing in traditional internal combustion engine vehicles, since investments in electric cars will go to developed countries like the United States, the European Union, Japan, South Korea or China.

The opportunity, according to this strategy, will not lie in developing linkages, upgrading processes and new technologies in the production of electric or hybrid vehicles, but rather in the production of traditional ICE motor vehicles to supply emerging markets in the global south. The reasons for this strategy, according to the report, lies in the backwardness of infrastructure and market costs in Latin America, Africa and Oceania countries, which will continue to demand ICE vehicles .

The ADEFA report sets a survival objective for the Argentine automotive segment that contemplates free trade with Brazil and the European Union in the medium term. According to the Report, Argentina lags behind South Africa, Brazil, Mexico, Thailand, China, the European Union and the United States in the maturity of their capabilities to manufacture vehicles.

In most of the competition spaces, Argentina is far from international standards, but according to the report, it has some skills to compete. It has evident disadvantages in scale, in competitiveness-cost of widely used inputs and auto parts, in its industrial efficiency, in the infrastructure for import and export, and in macroeconomic and regulatory predictability. The only point where it has an advantage is in specialization, which has been achieved mainly in the production of pick-ups. In addition, it has advantages in human capital, in ICT infrastructure, in cost competitiveness and in the existence of software companies, but investment in R + D + i is low, as is the level of association between terminals and companies in the sector.

The document sets out an agenda with opportunities in different development programs for the sector. The central strategy, as we said before, establishes a specialization in the manufacture of ICE vehicles to supply the demand of emerging countries and leave the production of electric vehicles and new technologies to developed countries. But  strategies related to energy mobility are also described. Although it is recognized that the conditions to manufacture full BEVs do not exist, they raise the possibility of exploiting the complementarities in pick-up with hybrid engines, adding value in Ion-Lithium batteries for heavy vehicles and incorporating safety and connectivity to locally produced vehicles.

Among the measures proposed, the negotiation of the expansion of the markets with the headquarters of the OEMs, the signing of free trade agreements to supply the markets of the global south and the adequacy of local regulations and regimes stand out. They also recommend some sectorial promotion policies for local manufacturing, the reconversion of the auto-part sector by investing in connectivity, security and efficiency, and the development of clusters with R&D centers.

The Mercosur Regional Value Chain

Despite being one of the most affected by the world crisis, the automotive regional value chain of Mercosur is still one of the main worldwide vehicles producers. The market in Brazil and Argentina, although it is marginal in international terms, still offers some attractiveness for the strategies of OEM companies.

Since the creation of the regional bloc in 1991, a regional productive integration process has been developed with many advances and setbacks that have highlighted the tensions arising between the interests of large OEMs and those of governments and local suppliers. Despite these tensions, relevant productive capacities have been developed and are still maintained.

As Argentina plays a minor role in the global chain of suppliers, it only manufactures parts that are not convenient to transport due to its fragility or its weight or due to previous installed capacities. Due to this reason, it has maintained a strong deficit in the trade of parts and components for the production of vehicles, and especially in those related to electrical components<!--[if !supportFootnotes]-->[xv]<!--[endif]-->.

Argentina had in the period 1992-2018 a large deficit in trade in intermediate goods for the production of vehicles, which are parts and components. In total for the entire period the deficit amounted to US $ 58,221 million, 87% of the total deficit in the sector. In trade in parts and components, the main bilateral deficit was with Brazil (-US $ 22,156 million), Japan (-US $ 5,206 million), Germany (-US $ 5,345 million) and France (-US $ 5,781 million). Instead, a weak surplus was achieved in bilateral trade with Paraguay (US $ 280 million), Venezuela (US $ 674 million), Chile (US $ 99 million) and Mexico (US $ 209 million).

The Argentine commercial performance in items SITC 7783 (Electrical equipment for internal combustion engines and vehicles and their parts and pieces) and 77812 (Electric accumulators-accumulation batteries-) in the period 1992-2018 was also characterized by a strong deficit. Both items presented deficits with Brazil, Mexico, Germany, France, Italy, the United States, Japan and China and a slight surplus with Paraguay, Uruguay, Venezuela and Chile.

The deficit of the item 7783 representing 6.9% of the total sector parts and components deficit and 6% of the total deficit of the automotive sector for the period 1992-2018. Trade with the first three partners (Brazil, France and China) explains 53% of the total trade. The deficit of the item 77812 represent 4.6% of the total sector parts and components deficit and 4% of the total deficit of the automotive sector for the period 1992-2018. Trade with the first three partners (Brazil, the United States and China) accounted for 83% of the total .

The importance of China in the trade of these two subsectors is central, since trade of item 77812 represented 23% and of item 7783 6.2% of Argentina's total bilateral trade with the Asian country. Item 7783 trade with France and Italy also stands out, with which it represented 5.1% of the total bilateral exchange.

In addition to the deficit, the type of trade that characterized items 7783 and 77812 has been mostly one-way, reflecting the almost total absence of intra-industry trade and therefore of productive integration. In the case of item 77812, one-way trade amounted to 97.1% of the total and in item 7783 to 78.3% of the total for the entire period 1992-2018. The remaining 21.7% in this item was Double Track trade concentrated in low ranges, particularly in trade with Uruguay, Chile, Mexico, France and the United States.

Beyond the objectives of the large OEMs reflected in the “Vision 2030” Plan and the verified deficit in the trade in electrical components, there are conditions to regionally develop the production of EVs. In Mercosur there are installed capacities and a deep productive network with supply capacity and with a certain specialization profile<!--[if !supportFootnotes]-->[xvi]<!--[endif]-->. We assume that having developed some local integration of electrical components presents an important antecedent.

Final Remarks

Mercosur's global value chain is dominated by large transnational OEMs, which has revealed the subordination of their local production and investment on their global strategies. In the near future, the local segment is intended to supply, at best, the global south markets with ICE vehicles and to experience a further delay with respect to the international technological and productive frontier.

There are some segments of supply of electrical components that have been developed in Mercosur. However, the Argentine segment is strongly in deficit. In addition to the deficit, the type of trade in electrical components has been mostly one-way, reflecting the almost total absence of intra-industry trade and therefore of productive integration. This is due to the strong dependence that exists in the local segment of suppliers from Brazil, the United States, China and France. One of the main challenges is to achieve global standards in terms of production scale to be able to export to various markets besides Brazil. For this it is important to negotiate complementary agreements with other countries and with the headquarters of the OEMs .

Electric battery production is possible but there are very few producers who have managed to integrate the different segments of the production chain. These mainly Japanese producers have also concentrated the issuance of patents, which is why they have significant competitive advantages. A regional integration plan for batteries and electric vehicles should therefore include technology transfer and productive complementarity agreements with both the companies that lead the different segments of battery production and the OEMs .

Although there are some technical and productive conditions for the integration of the regional value chain in the dynamic segments linked to the development of hybrid and electric vehicles, political conditions will be necessary for foreign OEMs to carry out such investments. Without the explicit support of the States and the elaboration of a coordinated industrial policy between Brazil and Argentina, it will be impossible for the regional value chain to be inserted virtuously into the new global production and trade flows. It is necessary to prepare a complementary policy to the Mercosur Common Automotive Policy that includes the development of local suppliers of electrical and digital inputs and that encourages research, development and design in the adaptation of electric vehicles.

In addition to considering agreements with Brazil, negotiations should be considered that include Chile and Bolivia to develop complementary schemes in the extraction of lithium and in the addition of value for the manufacture of batteries, cells and components such as cathodes, anodes, electrolytes and separators. to supply the entire Conosur. The local integration of batteries and the production of EVs could function as a mechanism to incentivize these countries to enter Mercosur. The division of engineering and services work and the development of technologies for mineral extraction should be brought to the negotiating table. Cooperation schemes should also be considered for the recycling of batteries after use.

However, this will also generate the need to transform the orientation of production towards electric vehicles and towards the modification of the physical infrastructure of integration into a state policy. The effect of the absence of such policies will be a widening of the differences with the traditional producers of the global north that will leave a regional chain behind. It may be necessary, in this process, to force agreements that allow the appropriation of some spaces of knowledge by decentralizing some production processes that allow a certain degree of specialization. For this challenge we will also have to be prepared for short-term management , external restriction and lack of financing.

However, the Mercosur is in a deep crisis, many of our main commercial partners have already signed free trade agreements with the United States and/or the European Union and exploitation of lithium carries many social and environmental problems with local communities that protect water and resist being displaced. 

As we developed in this work, there are conditions for the regional manufacture of electric batteries and electric vehicles, but the challenges and difficulties that this path entails are very great.

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<!--[if !supportFootnotes]-->[i]<!--[endif]--> The BEVs are driven solely by electric batteries and do not emit GHGs. The main limitation is that long-life batteries are expensive, heavy, have a limited number of recharges and take around 8 hours to recharge (Muñoz, Moschen , Perelmuter & Mathe , 2014). The Peugeot Ion Electric, the Nissan Leaf and the Renault Fluence ZE are examples of BEV (Gil & Prieto, 2013).

<!--[if !supportFootnotes]-->[ii]<!--[endif]--> HEVs are currently the most widely used EVs on the market. They have an ICE that charges the electric battery and can also function as a power motor. They have a performance per liter 60% higher than conventional models and contribute to the reduction of GHG emissions. Toyota Prius , Peugeot 3008 and HYbrid4 are examples of HEV (Gil & Prieto, 2013).

<!--[if !supportFootnotes]-->[iii]<!--[endif]--> PHEVs are hybrid vehicles in which the ICE is only used to add charge to the electric battery. They also reduce GHG emission but have less autonomy than HEVs. The Chevrolet Volt or Opel Ampera are examples of PHEV (Gil & Prieto, 2013).

<!--[if !supportFootnotes]-->[iv]<!--[endif]--> The average cost structure of the lithium ion battery consists of 16% in Cathode, 12% in other materials, 10% in separator, 8% in electrolyte, 6% in anode , a 4% in scrap metal, 4% in R&D, 4% in engineering. The rest is depreciation, margin, direct work, guarantee, overheads and sales and administration (Sanders, 2017)

<!--[if !supportFootnotes]-->[v]<!--[endif]--> The case of Uruguay is an example since 98% of electrical energy is generated from renewable sources and the distances to travel are usually short. This country has also been a pioneer for having developed a scheme of tax advantages to stimulate the incorporation of electric vehicles to comply with the commitments made at the Paris Conference on Climate Change (Lavalleja & Scalese , 2019)

<!--[if !supportFootnotes]-->[vi]<!--[endif]--> The Chinese government has been one of the most committed to the transition to electric mobility and has achieved a sales record of 770,000 EVs in 2017. Since 2009, it has implemented the New Energy Vehicle (NEV) policy offering subsidies for the purchase of EV (demand-pull) and different incentives for the construction of the necessary infrastructure and the development of technology (technology-push) ( Muniz , Belzowski & Zhu , 2019)

<!--[if !supportFootnotes]-->[vii]<!--[endif]--> Bolivia already has plant projects to manufacture lithium and magnesium hydroxide, prismatic cell batteries and cathodic materials. The lithium exploitation project in the Salar de Uyuni seeks to develop the entire value chain up to the manufacture of lithium-ion batteries. A pilot battery plant was launched in 2014 through a contract with the Chinese company Linyi Dake Trade Co. Ltd. It currently produces two types of prismatic cell batteries: LCO and LFP. Bolivia also inaugurated in 2017 a cathodic materials plant where LMO and NMC are synthesized. In 2018, a four-plant construction process was launched to manufacture lithium hydroxide, cathode materials, batteries and magnesium hydroxide. In Bolivia, a national electric vehicle, the “Quantum”, was also manufactured with lithium batteries. It has 60% of imported parts and its price is around US6,000 (Lopez et Al, 2019).

<!--[if !supportFootnotes]-->[viii]<!--[endif]--> Along with Bolivia and Chile, Argentina is part of the "lithium triangle" since they concentrate 67% of the world's proven reserves and about half of the global supply. In Bolivia the exploitation of the salt plats and the industrialization and commercialization of the resources has been reserved to the National State. In Chile the exploitation of Lithium has been reserved to the State since the resource was declared of a strategic nature in 1979 as it is an element of nuclear interest. The two companies that exploit it do so in association with the state mining company CORFO.

<!--[if !supportFootnotes]-->[ix]<!--[endif]--> To produce locally Lithium Carbonate Argentina, the FMC company imports lithium hydroxide. This component, along with lithium bromide, butyl lithium, metallic lithium, and its derivatives, is manufactured at FMC plants in the United States, China, India. In all cases, there are opportunities to expand local production and substitute imports (Lopez et Al, 2019).

<!--[if !supportFootnotes]-->[x]<!--[endif]--> In one year, lithium exploitation consumes the same amount of water as a city of 70 thousand inhabitants. Jujuy, Catamarca and Salta are in one of the driest regions of Argentina

<!--[if !supportFootnotes]-->[xi]<!--[endif]--> According to López et al. (2019), the “dark side” of the agreement would be that the Jujuy government promised to find buyers for the batteries. These batteries would have a significantly higher market price than that offered by the main world suppliers. They could be used to renew the urban bus fleet, for backup batteries for industrial use or to accumulate energy in the Cauchari solar park . 

<!--[if !supportFootnotes]-->[xii]<!--[endif]--> In Jujuy lithium carbonate is produced, it is subjected to an industrial process to apply the resulting material to the manufacture of the battery cells, which are later one of the central components of the LIBs

<!--[if !supportFootnotes]-->[xiii]<!--[endif]--> The Clean Mobility Plan 2035 of the City of Buenos Aires seeks to promote the penetration of alternative technologies in the transport sector. They are already testing electric buses to assess the technical and economic and environmental feasibility of the proyect.

<!--[if !supportFootnotes]-->[xiv]<!--[endif]--> Sero Electric has a plant with the capacity to manufacture 50 units per month in the Pitam de Morón Industrial Park. The EV can circulate up to 45 km / h and are offered with AGM (lead) batteries or with lithium batteries that give a range of 100 kilometers. Lithium batteries are mounted on the seats. The cells used are imported but the assembly and general construction is carried out by an Argentine suppliers. The cost per kilometer is around 10% of the average cost of a ICE vehicle. The company is already working on manufacturing utility vehicles and incorporating improvements such as an audio or heating system.

<!--[if !supportFootnotes]-->[xv]<!--[endif]--> Using the UN COMTRADE database and following the SITC Rev 3 classification at a four and five digit disaggregation level, we analyzed the commercial performance in items 7783 and 77812 since they correspond to the items linked to electrical components vehicle. The manufacture of electrical equipment such as generators, alternators, spark plugs, ignition cables, electric door and window systems, panels, voltage regulators, etc. they are included in subgroup 2931 of the International Standard Industrial Classification (ISIC).

<!--[if !supportFootnotes]-->[xvi]<!--[endif]--> The main suppliers of the electric parts and components are world class companies like Robert Bosch GmbH (Germany), Denso Corp (Japan) and Lear Corp (United States), the three of them with subsidiaries in Argentina. Bosch, which depends on the Volkswagen group, produces electric drives, starters and multimedia generators, electronics, steering systems, battery technology, among other essential parts and components. From its subsidiary in Argentina, it managed to export more than US $ 5 million in 2012, but in subsequent years its exports fell dramatically. The Denso company, which depends on the Toyota group, produces electronic and electrical systems. From its subsidiary in Argentina, it managed to export refrigerators, freezers and other material, machines and apparatus for the production of cold, even if they are not electric; heat pumps, except machines and apparatus for air conditioning, parts and and apparatus and devices for the treatment of materials through operations involving a change in temperature (NCM 84.19.5) (Nosis Trade)

 

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