Brazil sends love letters to Tesla

The installation of a giant electric car factory could give new impetus to the Brazilian automotive industry.

In Brazil, Jair Bolsonaro’s government has received harsh criticism for its poor environmental policies. These criticisms have reached worldwide, in such a way that the Brazilian government is accused of being responsible for the most recent devastation in the Amazon, where fires have consumed much of the world’s largest rainforest.

Also, oil represents an integral part of the Brazilian economy. Therefore, it is a bit surprising that it is the Bolsonaro government that wants to bring a factory of electric cars Tesla, the company founded by the South African Elon Musk.

Like oil, the automotive industry has a high weight in Brazil but has lost momentum in recent years. In the first months of 2018, Mexico surpassed Brazil as the largest producer of cars in Latin America, with 600,000 armed units in just two months. Although in Mexico, the acquisition of vehicles has slowed, the export has been increasing, which has allowed it to be imposed on Brazil in this sector.

The installation of a giant electric car factory could give new impetus to the Brazilian automotive industry. However, this South American country will have a challenging competition. Currently, Tesla has factories in the United States and China, and next year they expect to open another factory in Germany. Other countries will want to convince Tesla to settle in their country.

In Latin America, Brazil also has competition from Mexico, not only as a car producer. In the Mexican state of Sonora, the recent discovery of the world’s largest lithium reserve – an essential component of rechargeable batteries – could make it a more viable option for the manufacture of electric cars.

Another attraction that Mexico has over Brazil is its proximity to the United States, in addition to trade agreements with this country that facilitate the importation of vehicles. Also, there are already auto parts companies in Mexico that are preparing for a higher demand for this type of vehicle. From 2015 to 2018, companies such as Condumex, Nemak, Rassini, and Metalsa together invested around 1,642 million pesos in research and development to create parts for electric cars to establish themselves as major suppliers of the industry in the short term.

Special Mission: taking Tesla to Brazil

While Mexico could be a more logical option for the installation of a Tesla factory in Latin America, Brazil will do its best to present the benefits it has in its territory for technological innovation: from special economic zones such as the one in Minas Gerais to the high productivity of the state of Santa Catarina, going through the growing startup scene of Saô Paulo.

Tesla cars are not yet traded in Brazil, but for a couple of years, Elon Musk expressed in a tweet his interest in entering one of the largest economies in Latin America.

While Musk sends Brazil indirect, Bolsonaro tells the company that his intentions are serious. The president of Brazil recently created a committee – made up of people related to the automotive industry: businessmen, officials, and legislators – to present these and other virtues that Brazil has for the manufacture of electric cars.

The group of experts will be led by Brazilian deputy Daniel Freitas, who has the support of businessmen from the automotive industry and belongs to the same political party of Jair Bolsonaro – the Social Liberal Party.

Daniel Freitas is originally from Santa Catarina, a state that has been characterized by high productivity. In fact, according to some media, some talks raise the possibility of installing the Testa factory on a site near Florianápolis, the capital of the state of Santa Catarina. There is also a BMW plant under construction.

Freitas has recently promoted a law that offers tax benefits to electric car factories in Brazil, which in Brazil is known as the “Tesla Law.” In the opinions of some in Brazil, this law is mostly a love letter for the company founded by Elon Musk.

“Tesla is one of the most valuable automotive companies in the world and will be able to open one of its factories in South America within a period of up to three years,”

Daniel Freitas, deputy of Brazil

Meanwhile, the Minister of Science and Technology, Marcos Pontes, met with Anderson Pacheco, engineer of Tesla, to install a factory in the country, according to several Brazilian media. Rumors indicate that Pachecho, who has been working for the electric car manufacturer for four years, returned to the United States with the mission of seducing Tesla executives.