Tesla prepares incursion into South America via lithium-rich Chile

Tesla Inc. is taking steps to begin operations in Chile, a country with the world’s biggest reserves of lithium but still low penetration of electric vehicles.

The company registered Tesla Chile SpA, according to a post on Chile’s official gazette dated September 28. The unit can carry out activities such as the sale and fabrication of cars and those related to “generation of energy and electricity.”

The electric-vehicle juggernaut also is recruiting for three positions in the capital Santiago, including for a country manager “to help launch the market”, according to postings on LinkedIn.

To be sure, registering for business activities doesn’t necessarily mean Tesla will go forward with these plans, but it does pave a legal path to do so.

A team from Tesla visited lithium extraction sites and an energy storage project in Chile in February, according to the company’s impact report. “These trips focused on questions related to water usage, indigenous peoples’ rights and the use of new technologies, such as Direct Lithium Extraction (DLE), to extract lithium in a more efficient way that reduces land use, water use and energy use,” Tesla said. Lithium is a key component in the rechargeable batteries that power electric vehicles.

Tesla would join its biggest electric-vehicle rival, BYD Co., in Chile. The Chinese firm last month launched its Seal sedan in Santiago as part of a push into Latin America. BYD has plans for a cathode factory in Chile after being granted access to preferential prices for lithium mined by SQM.

Tesla would face the same barriers that other electric-vehicle sellers have faced in the region. EVs are on average 2.5 times more expensive than internal combustion engine vehicles, according to BloombergNEF. EV sales accounted for only 2.5% of total vehicle sales in the first nine months of the year, according to Chile’s car association.

A search on Telsa’s website only shows job openings in Mexico and Chile and no presence in South America. Mexico’s President Andres Manuel Lopez Obrador announced in March that Tesla would build a new plant in Monterrey, the company’s first factory south of the US border.

Chile also has some of the world’s best conditions for renewable energy generation, with sun-drenched deserts in the north and strong winds in the south. However, the country’s renewable energy boom has been hamstrung by transmission bottlenecks and a lack of storage.