Elon Musk and the Argentina Government

Tesla CEO Elon Musk has been seen courting and cozying up to Argentine president Javier Milei. Why does Musk want to have relations with the South American country? The answer is lithium, a crucial component of the EV battery. Without the compound, electric vehicles would not exist.

Why is this important?

Argentina has the second-largest lithium reserve in the whole world. With such an important lithium reservoir, it is no surprise that Elon Musk wants a piece of it. The pair met up last month to discuss potential Tesla investment opportunities within the region. Milei reported in December that Musk had called him and was “extremely interested” in the Lithium supply. 

With Musk’s plans for Tesla to build more affordable models, the company needs to find a cheaper method of sourcing lithium. Musk believes that Argentina would be the perfect partner to make this happen. Milei is interested in this collaboration as it would add jobs and strengthen the Argentinian economy, which has struggled with inflation for the past decade. 

Musk’s Ambitious Goal

Musk originally had planned to build this new model in the second half of 2025; however, likely in the interest of keeping Tesla’s stock price alive, has announced last month that the model will launch earlier than expected. 

In order for Musk to succeed in moving up the launch date so ambitiously, he needs Argentina to be on his side. If he is able to get lithium supply at a reasonable price, then he will be able to afford to price the model at a low price for consumers. 

Lithium production can be a major foreign export for Argentina in its quest to retain control over its economy. Production outside the US has risen by 23% in 2023 due to the strong demand in the battery market. Retaining supply has become a major priority for EV manufacturers such as Tesla. 

The conglomerate was able to break ground on a new Texas lithium refinery plant last May, which is said to open sometime this year. Musk has been quoted saying that within a few years, lithium supply will become a fundamental choke point in the advancement of EVs. As of now, electric car batteries require lithium. If there is a shortage of lithium, there is a cap as to how many vehicles can be produced. 

Argentina could be the answer to that problem.