Electric Vehicle Manufacturing Holds Unique Potential for Bolivia and Paraguay

Exporting electric vehicles could give two South American nations a rare niche in the global economy and deter fossil fuel development

An exploratory study by Brazilian energy experts projects that Bolivia and Paraguay together have the potential to become a global center of electric vehicle (EV) manufacturing, use, and export, thanks to their unique combination of natural resources. The study asserts that development of an EV industry would not only provide a massive economic boost to these two poorest South American nations, but also reduce their vehicle carbon footprints to near zero, while helping to forestall further fossil fuel exploration and development.

photo of Uyuni Salt FlatsPhoto by Government of Bolivia Ministry of Mining State mining workers move lithium-rich salts evaporated from brines by the sun on the Uyuni Salt Flats, the largest lithium stores and largest salt flats in the world.

Bolivia’s Uyuni Salt Flats are home to the world’s largest deposits of lithium, the critical component of lithium ion (Li-ion) batteries, which are used in EVs as well as laptops and cell phones. Meanwhile, Paraguay enjoys a 400 percent surplus of renewable electricity, drawing on its 50 percent share of the world’s most productive renewable energy generator, Itaipu Dam, split with neighboring Brazil.

Published in Renewable and Sustainable Energy Reviews last year, the study envisions an EV battery manufacturing industry based in Bolivia, integrated with EV automaking plants in Paraguay’s growing industrial parks. It recommends both countries first replace their national vehicle fleets with EVs, gaining scale, then export EV batteries and vehicles to Latin American and world markets. Led by Dr. Ildo Sauer of the University of São Paulo, the authors calculate the cumulative benefits of replacing national fleets with EVs over a 10-year period at $996 million for Paraguay and $1.373 trillion for Bolivia. They project CO2 reductions of 8398 gigagrams for Paraguay and 9420 gigagrams for Bolivia — equivalent to taking 4.1 million cars off the road for a year.

Goldman Sachs calls lithium, a silver-white salt, “the new gasoline.” With global demand for EVs skyrocketing, lithium prices have doubled since 2009 to $6,000 per ton and are projected to rise an additional 20 percent by 2017. The study calculates that the lithium in Uyuni Salt Flats is enough to build 3.38 billion EVs — three times the number of internal combustion vehicles on the road today. The lithium is dissolved in shallow pools of liquid brine groundwater which underlie the surface layer of salt crust — which is several meters thick and strong enough to support trucks and hotels made of salt. The Uyuni Salt Flats are dried lake beds left behind by evaporated Ice Age paleolakes. They span an area the size of Jamaica and form the flattest place on earth. At 11,995 feet elevation, they stretch across the southern regions of the Altiplano, the vast intermountain plateau between ridges of the Andes, on which Inca civilization was born.

Around the world, of the few countries where EVs have gained a significant market share, most rely on fossil fuels for electricity to charge the batteries. An exception is Norway, where EVs made up 2 percent of vehicles on the road — the highest percentage in the world — and over 20 percent of new car sales in 2015. Norway’s grid runs on 96 percent hydroelectricity, zero fossil fuels. Like Norway, Paraguay has a rare opportunity to power EVs without fossil fuels, with the additional potential to produce its own fleet — if Bolivia supplies the batteries. Paraguay has burgeoning industrial parks suited to vehicle manufacturing around capital Asunción and tri-border commercial hub Ciudad Este. In 2014, Hyundai invested $40 million in new auto part manufacturing plants in the Itauguá suburb of Asunción, bringing 3,000 new jobs.

map of EV manufacturing potential in Bolivia and ParaguayMap created by Robert Thornett

Landlocked and long-impoverished, neither Bolivia nor Paraguay currently has any domestic vehicle manufacturing. Both rely chiefly on used vehicles imported from Japan. Most vehicles on the road are over 10 years old, many 20 to 35 years old, with high pollution and low enforcement of emissions standards.

Until recently, Bolivia has been a sleeping giant, holding 50 percent of the world’s known lithium reserves yet producing none. But in 2015, President Evo Morales announced the government would invest $925 million through 2019 to jump-start lithium industrialization. In August 2015, Bolivia contracted German company K-UTEC for a 10-month study to design a customized conveyor system for lithium extraction. Meanwhile, Bolivia’s first lithium battery factory opened in March 2014 in the town of La Palca near Uyuni Salt Flats, built by Chinese contractor Linyi Dake. At the factory’s inauguration in 2014, Morales said “If we in Bolivia have the greatest reserves of lithium, why not have the greatest lithium industry? This must be our goal and it is in our hands.”

Overall, the Bolivian government’s long-term plan is to maintain state control of lithium industries while limiting lithium exploitation to only 400 of the 10,582 total square kilometers within the Uyuni Salt Flats. Morales projects that this area is enough to continue exploiting lithium for 100 years.

The environmental impacts of developing an EV industry in Bolivia and Paraguay are not fully known. To be sure, Itaipu Dam destroyed 700 square kilometers of rainforest and several waterfalls, flooded 1,350 square kilometers, and displaced over 59,000 people. The future impacts of lithium extraction are disputed. Mining minister Luis Echazú says the government has carefully chosen a new alternative method of lithium extraction which uses sulfate technology and has minimal environmental impact — avoiding the large-scale industrial waste associated with lime soda evaporation, the most common extraction method. Critics argue that the new method is still experimental, with no studies yet published to document its environmental effects.

Notwithstanding the promise of an EV future, at present both countries’ governments are pushing hard to explore for oil in untapped regions. Bolivia recently achieved self-sufficiency in oil, yet in 2015 its government passed a controversial law opening up the country’s 22 protected natural areas to fossil fuel exploration. This includes 75 percent of Madidi National Park in the Bolivian Amazon, among the most biodiverse places on earth.

Paraguay produces zero fossil fuels and must import over $1.5 billion in oil each year. But Defensores del Chaco National Park, in Paraguay’s remote, dry Chaco plain, is believed to have massive oil reserves of four billion barrels or more. The park is home to the Ayoreo tribe and rare species including pumas, jaguars, giant anteaters, and Azara’s night monkeys. In 2014, British company President Energy drilled two new wells inside the park, discovering oil in both, and in 2015 the company signed a deal for the rights to future drilling.

Rather than invest in new oil projects and continued fossil fuel subsidies, the study calculates that Bolivia and Paraguay would be far better off — economically, environmentally, and socially — shifting investment toward an EV future: lithium extraction projects, EV battery and vehicle manufacturing chains, and increased electricity subsidies to power new EV fleets. The switch would reduce the countries’ vehicle carbon footprints to near zero, preserve pristine ecosystems, drastically reduce pollution and improve health, attract foreign investment accompanied by high-tech knowledge transfer, and bring thousands of desperately-needed jobs. Rather than investing in a chance to be one more player in an already-saturated global oil market, the transition to EV manufacturing would transform the Bolivia and Paraguay into global exporters of rare, high-value, cutting-edge products for the first time in modern history.

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