1. Current situation of electric vehicles and lithium-ion

The market of electric vehicles (“EVs”) has been significantly rising and is projected to increase in the coming years.

Currently, the preferred battery choice for EVs is lithium-ion batteries (“LIBs”) because of the favorable material characteristics of lithium. Lithium is the lightest of all metals and offers the greatest electrochemical potential, which results in a high power-to-weight-ratio and high energy efficiency. Additionally, Li-ion batteries provide higher resistance to charging failure because of their “no memory” effect, and therefore these batteries require much less maintenance than other battery chemistries.

In the past, hybrid and EVs relied on nickel metal hydride (“NiMH”) batteries, but LIBs are expected to dominate the market moving forward and the subsequent demand of lithium, which is projected to rise to 100 million by 2050[1].

Despite lithium is a relatively plentiful material their resources are concentrated in select regions of the world. The main lithium reserves are in the so-called “Lithium Triangle” composed of Bolivia, Argentina, and Chile, which holds 85% of the worldwide lithium reserves.

Argentina is the fourth world’s lithium producer and according to the Interamerican Development Bank it could become the main world’s producer due to its large existing reserves and a favorable legal framework which provides a limited intervention of the State and guarantees clear rules and legal security[2]. Also, the production of lithium is also highly accepted by the communities and performed by a qualified workforce. These factors, clearly enable Argentina to promote and increase the lithium production as well as the development of the e-mobility industry[3].

2. Legal framework on E-Mobility

Argentina is currently working on the national legal framework for E-Mobility which will set out the relevant conditions for the sales and manufacturing of EVs as well as the adequate incentives to promote such market.

Specifically, two bills were introduced before the Argentine National Congress between 2020 and 2021, that regulate and institutionalize E-Mobility. These bills establish several incentives to promote the manufacturing of EVs in Argentina, such as taxes and customs duties reductions as well as the implementation of soft credits to produce or buy EVs.

Furthermore, the bills set out that the public transportation/buses shall be renewed to include at least 80% of EVs and that all public tenders concerning infrastructure works should provide the implementation of charging stations for EVs.

At the local level, in 2019, the City of Buenos Aires, launched the Clean Mobility Plan 2035, a pilot program for electric buses, which is aimed at incorporating, several units of different technologies on public lines.

3.1. Challenges associated with the regulation applying to EVs: the need for incentives in Argentina

As of April 2021, and even though traditional brands developed four models of EVs and some well-known brands are planning to get into this bullish market soon[4], the total sales of EVs in the past years are still scarce.

Undoubtedly, the main barrier for the development of the EVs market relies on the car’s price, determined by the cost of manufacturing the LIBs. To overcome such barrier and promote the development of the EVs market, several measures, as the one set out in the bills before mentioned, should be adopted by both the national and provincial government[5].

In this regard, the national government should implement tax exemptions to promote the use of EVs for a period after their registration as well as reduced tax rates thereafter and exempt EVs from the so-called “luxury tax”, applying to high-end cars. Taxes on electric company cars should also be lower, compared to regular taxes. Further, tax advantages including exemptions for the supply of charging power or charging stations should be considered. Likewise, reduced insurance costs and toll tariff should be implemented. Furthermore, municipalities should create preferential parking options and apply reduced parking rates for EVs. A specific regulation addressing the installation of public charging stations, aiming at ensuring its development, specifying the applicable technical standards, and the conditions for their operation should also be adopted.

3.2. A federal comprehensive e- waste regulation

Besides the adoption of the incentive measures mentioned, an effective e-waste policy aimed at decreasing the flow of discarded batteries should be adopted to promote the development of the EVs market in a sustainable manner.

The first step in this process should consist of slowing the rate at which electronic goods become obsolete. To that end, the e-waste policy must incentivize producers to design products that are lasting and can be repaired and upgraded. The second step is to implement voluntary programs and economic-based incentives that persuade producers to design electronic goods that can be easily disassembled and recycled. As the third step, hazardous materials should be disposed in accordance with a specific legislation that provides the framework to manage existing and future e-waste.

To illustrate, the Environmental Protection Agency (“EPA”) in the United States endorses a voluntary producer-centered approach based on extended producer responsibility known as product stewardship

The product stewardship encourages manufacturers, retailers, consumers, waste operators, and state and local governments to voluntarily share the responsibility for e-waste management. To encourage producers to join the product stewardship program and voluntarily design clean electronics, the federal government incorporated e-waste management provisions into its procurement contracts and has taken steps to identify and purchase environmentally friendly products. So as to stimulate similar market-based initiatives in the private sector, the EPA has also launched the Electronic Product Environment Assessment Tool (EPEAT) to help private consumers identify environmentally friendly products.

Certainly, the legal regimen adopted in the United States, constitutes a valuable reference regarding the handling and management of discarded electronics which, among other legal frameworks, could be considered for the enactment of the national e-waste law.

 4.Conclusion

Moreover, Argentina has the right conditions to become the largest lithium world producer and satisfy the rising demand for the manufacturing of EVs and LIBs if the appropriate measures and incentives are taken. 

By way of adopting the adequate regulations, Argentina will certainly open opportunities for companies that aim to manufacture EVs and LIBs and contribute to a cleaner and more efficient future mobility, enabling the transition towards a low-carbon economy.

[1] Electromobility influence on the demand for lithium and can be illustrated as follows: the battery of Tesla contains 6 kilograms of lithium; this is the equivalent to 17,000 cellphone batteries.

[2] El litio, la batería de oportunidades en Argentina, Interamerican Development Bank, Febraury 26, 2019, available at https://blogs.iadb.org/energia/es/litio-oportunidades-en-argentina, visited on March 9, 2021.

[3] Currently Argentina has two lithium projects under operation as well as 18 projects in an advanced exploration phase. In total, there are 21 lithium projects which amounts to 93 million reserves, that once exploited could produce an estimate of 350.000 tons per year.

[4] Demand for electromobility batteries is estimated to increase by tenfold 2019 and 2029.

[5] It should be noted that some provinces have already enacted regulations including tax incentives, as is the case of Buenos Aires, Neuquén and Mendoza where EVs are exempted from paying the fee of the corresponding license plate.

[6] See the National Electronic National Strategy for Electronics Stewardship (NSES) available at https://www.epa.gov/smm-electronics/national-strategy-electronics-stewardship-nses#what, visited on February 16, 2021.