Just the two of us, we can make it if we try?

Musk, Milei and Argentina's economic future.

In a surprising turn of events, Argentine President Javier Milei has hailed Elon Musk as “an icon of freedom in the world.” The unexpected alliance between a libertarian-leaning president and the tech mogul hints at potential synergies in economic philosophies and technological innovation that could reshape Argentina’s economic landscape. 

Milei’s admiration for Musk transcended mere words, manifesting in concrete actions before the Davos summit in 2023. The president green lit Musk’s Starlink to enter the Argentine market, showcasing a willingness to embrace innovative technologies. Simultaneously, Milei championed legislation in Congress to permit the operation of self-driving cars, a move aligned with Musk’s interests and Tesla’s ambitious ventures. 

However, Musk embarked on building a lithium refinery in Texas in May 2023, recognising the impending importance of lithium in sustaining his electric vehicle (“EV”) business. Acknowledging Argentina’s business-friendly lithium extraction framework, Musk’s interest in the country underscores its potential as a strategic partner. “The truth is that this whole issue of the relationship between Milei and Elon Musk was a very one-off issue, which had some impact because of what was written on X [former Twitter],” confided a public affairs consultant. 

“The truth is that this whole issue of the relationship between Milei and Elon Musk was a very one-off issue, which had some impact because of what was written on X [former Twitter].”

Public affairs consultant, Argentina

Argentina’s federal governance structure grants provinces authority over mineral resources, with Catamarca’s Governor, Raúl Jalil, expressing openness to Musk’s potential lithium investments, provided local regulations are adhered to. Political authorities seem receptive, but “there are virtually no references to how Musk is perceived by the business community,” commented the consultant. 

Argentina’s well-established car manufacturing industry, producing vehicles for global giants like Toyota, Fiat, Chrysler and Volkswagen, positions the country as a potential hub for Tesla’s first South American manufacturing facility. “Musk’s priority is undoubtedly lithium, as part of his strategy to develop Tesla’s electric cars.” An advisor to companies on public agenda and communications continued, “The production of batteries, will almost certainly not happen in Argentina, since the battery manufacturing market is almost entirely based in Asian countries.” An economist also agreed, “I personally do not believe that Tesla will start manufacturing electric vehicles [in Argentina], at least in the short term.” 

The relationship between President Javier Milei and Elon Musk has sparked media excitement, however insights from sources suggest that within Milei’s team, there is a lack of concrete and uniform views on Musk’s potential investments. An associate of a leading local macroeconomic firm highlighted that “obviously, the government is going to open the doors wide for any investment Musk wants to make in Argentina, and all the declarations will be along those lines. But today it is not the issue that should be occupying the government, the opposition or the media,” clearly having limited day-to-day relevance.

There is an intention to expand the national road network and increase the number of electric chargers across the country, a venture still in its early stages but considered essential for fostering a larger portion of electric cars in the car fleet. Unfortunately, “the idea of expanding the road network clashes with the government’s announcement that public works would be slowed down.” The economist explained, “The question is how the expansion of the road network will be financed, especially on those roads that cannot be repaid by a private investor.” 

“The idea of expanding the road network clashes with the governments announcement that public works would be slowed down.”

Economist and associate of a leading local macroeconomic firm, Argentina

The approval and sustainability of proposed fundamental changes are uncertain, as political dynamics and future governments may impact the envisioned pro-market reforms. “What guarantee do investors have that the government that comes in 4- or 8-years time will sustain these changes?” questioned the public affairs consultant. “Whether it is an investment to bring Tesla to the country, whether it is an investment in a lithium deposit or whether we are talking about combined investments, in electric vehicles and lithium, but also anything to do with Starlink or Space X.” Both sources agreed that “it’s not going to happen.” 

Perceptions of Elon Musk within the Argentine business community vary, “The Argentinean business community does not have a single voice, or even a single position.” The macroeconomic firm associate continued, “It depends on each sector, some are more open, others more closed, it depends on the interests of each sector.” 

Favourable views are anticipated in the lithium and SpaceX sectors, where substantial investments are considered essential. However, “Starlink’s possible arrival in Argentina was highly criticised by an important part of the political sector, and I think that this was rightly so,” expressed the associate. Musk’s ventures could significantly alter existing dynamics and potentially disadvantage some companies.  

Argentina, under Milei’s presidency, faces a critical juncture, where the alliance with Musk could either redefine the nation’s economic trajectory or remain a speculative venture. As transformations unfold, the Musk-Milei partnership continues to captivate attention, leaving observers eager to witness its impact on Argentina’s economic future. 

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