How we can create a circular battery economy in Latin America and beyond

With global demand for lithium expected to grow exponentially, Latin America’s significant lithium resources are sure to garner increased attention and investment in the years ahead. These resources, in combination with rapidly growing regional demand for electric vehicles (EVs), mean that Latin America will have an increasingly complex role to play in the EV battery supply chain.

To fully capture the opportunity at hand, Latin America should invest in a regional, circular supply chain that can:

• Responsibly manage end-of-life batteries through recycling.

• Capture more value from its mineral resources by keeping them in circulation regionally with recycling and a strong midstream supply chain.

• Support the EV transition by meeting demand for low-cost EVs through vehicle imports and then recapturing the minerals within them when their batteries reach end-of-life.

Below, we explain why this is needed and how to make it happen.

More than half the world’s known lithium resources exist in Argentina, Chile and Bolivia, and close to 30% of today’s global lithium supply is mined in this region. Chile is currently the continent’s largest producer, but investment is growing in Argentina and by 2030, Argentina’s production is expected to rival that of Chile.

After refining, Argentina and Chile’s lithium chemicals are exported to be made into battery components — but exporting lithium fails to capture the greater value that exists for it downstream. As noted by the United Nations Development Programme, “Most of the profit of the lithium industry comes from a long supply chain that creates lithium batteries. Countries that just extract and export lithium are likely to have limited potential gains.”

In light of the wealth of natural resources, coupled with booming demand, we’re beginning to see investment from battery manufacturers in Latin America. For example, operations began at Argentina’s first industrial-scale lithium battery plant in the city of La Plata in December 2023. Still, battery manufacturing in the region remains limited.

Demand for EVs in Latin America is in its early stages, but growing rapidly. EV sales across the region totalled 184,000 vehicles in 2024 and made up just 4% of total vehicle sales, but this marked a doubling of sales year over year. BloombergNEF (BNEF) expects EVs to make up 10-20% of sales in the region by 2028.

Like everywhere, sales have been held back by high upfront prices, but the arrival of low-cost Chinese models is changing the picture; these more affordable models are directly contributing to an increase in sales, and this influx of vehicles could spur broader infrastructure for, and interest in, EVs. Additionally, most Latin American countries now offer financial incentives to support EV sales. Continued incentives and a stock of low-cost vehicles will be essential to support the continued growth of EV adoption.

With automobile sales around 5.6 million in Latin America today, the 10-20% share of EV sales predicted by BNEF equates to 560,000-1,120,000 EVs sold in 2028. This means that over a million EV batteries will reach the end of their lives in the region around 2040. And, if used EVs are imported to bolster the supply of low-cost vehicles, this could result in even more batteries reaching end-of-life sooner.

Regional, circular supply chains, coupled with responsible cross-border movement of batteries, can help address the challenges outlined above in three ways:

Infrastructure for battery collection, preprocessing and metal recovery will be essential in regions with growing EV adoption, like Latin America. At a minimum, the region should develop networks for battery collection, disassembly, diagnostics and preprocessing to ensure easier handling and transport of battery materials to recovery centres. Given the region’s existing capabilities, it can capitalize on synergies among current and future processes, infrastructure and skillsets to build up recycling capacity, enabling responsible management of upcoming end-of-life batteries and supplying a growing battery manufacturing industry.

Expanding participation in the EV battery supply chain by creating regional circular loops allows raw materials — whether sourced from mining or recycled batteries — to be utilized in the regions where they are produced, in addition to being exported to benefit other parts of the world. Cathode active materials (CAM), including lithium, can make up 53% of the costs of a battery cell and 30% of the total costs of a battery pack. Keeping CAM in circulation in Latin America through recycling and midstream processing has the potential to keep this value at home and earn multiple times on the same refined lithium. Expanding regional participation in the value chain through recycling and midstream processing also helps enhance the resilience of the global EV battery supply chain by reducing dependence on a few countries. Plus, it helps reduce the emissions, costs and safety challenges associated with transporting battery materials.

Extending the life of a battery through re-use or repurposing is critical to reduce negative impacts and maximize the benefits of batteries. Most South American countries have banned used vehicle imports and these regulations may need to be revised (at least temporarily) to allow used EVs with useful remaining life to be imported — providing an important stock of low-cost EVs, feedstock for recycling facilities as they build capacity and a supply of non-lithium critical minerals that don’t exist in the region. At the same time, restrictions on the age of vehicles or emissions standards, such as those in Mexico and Peru, may be needed to ensure that only useful used vehicles are imported and avoid overburdening a nascent recycling system.

Building a regional, circular battery economy can help Latin America capture the significant opportunities that lie ahead as part of the EV transition.

For more information about how a circular battery economy can maximize value, reduce risk, and increase equitable outcomes, see Powering the Future: Overcoming Battery Supply-Chain Challenges with Circularity, a collaborative report by the World Economic Forum, RMI and Global Battery Alliance.