We’ve discussed in the past the argument that so-called “green” cars are anything but green when compared to gasoline vehicles due to the destructive process of mining the materials with which to construct the battery cells for electric vehicles and hybrids. Chiefly, a major problem is graphite, most of which is currently mined in China, to the harsh detriment of China’s already troubled environment and air quality.
In conscious efforts to negate further pollution of the region, Tesla Motors (NASDAQ:TSLA) says it will source its raw materials destined for its $5 billion battery Gigafactory from North America out of concerns of “a widespread corporate sensitivity about avoiding the use of industrial minerals from global trouble spots such as central Africa,” Bloomberg reports.
Instead, Tesla will aim to find its graphite, cobalt, and other materials from domestic sources. “It will enable us to establish a supply chain that is local and focused on minimizing environmental impact while significantly reducing battery cost,” Tesla spokeswoman Liz Jarvis-Shean told Bloomberg.
China has already started closing down graphite mines in efforts to curb its rampant pollution issues. Graphite is a key ingredient for EV batteries, and since Tesla has one of the largest battery packs in the industry today, it boasts one of the most voracious appetites for graphite in the auto sector — at least, in some form. Tesla said that the “vast majority” of the graphite it uses right now comes from Japan and Europe and is synthetic, not mined; the company prefers the synthetic variety, Jarvis-Shean said to the news service.
Tesla “is a high-profile company that is entering an age of supply-chain transparency,” Simon Moores, an analyst at Industrial Minerals Data, told Bloomberg.
Sam Jaffe, an analyst at Navigant Research, said to the publication that Tesla’s proposed method of purchasing is quite unique, and to make it work, Tesla may need to look north, to graphite mines in Canada that haven’t yet been built. For cobalt, analysts say that Tesla may have to go beyond existing Canadian output and look at prospective supplies in Minnesota and Idaho, Bloomberg reports.
However, sourcing materials from North America does trigger cost concerns for Tesla’s products, which are already on the north side of expensive. “It’s very patriotic of them to do that, but it costs, and already the costs of these electric vehicles are quite high,” Edward R. Anderson, chief executive officer of consulting firm TRU Group Inc., told the news service.
Tesla’s strategy will reportedly cut the per-kilowatt hour cost of its batteries by more than 30 percent and reduce “logistics waste,” Jarvis-Shean said, per Bloomberg, as sourcing closer to home will greatly cut down on the shipping needed from emerging markets like China or the Philippines, where much of the Tesla’s cobalt is sourced from.
That 30 percent cut in prices is crucial, given Tesla’s goal of one day supporting production of 500,000 units per year, with no small amount of help from its Gigafactory, which is expected to double the world’s production of lithium-ion battery cells single handedly.
But how would moving sourcing and production of these materials to North America in any way help lessen pollution? Wouldn’t it be merely moving the pollution of the process from one region to another? As it turns out, no, it wouldn’t be. America has far more stringent standards and regulations in place that make graphite extraction a much cleaner process than it is in China, where relaxed environmental standards are compounded by virtually no oversight or enforcement.
Tesla’s biggest impact in the U.S. and global economy may one day be in “changing how businesspeople operate, how they make their decisions, and how they approach problems,” Jaffe told Bloomberg.