Tesla Motors Inc (NASDAQ:TSLA) is producing lithium-ion batteries to power its environmentally friendly electric cars. But, a new report from ‘The Washington Post’ suggests that instead of doing good, the batteries may be harming the environment.
The report said that Tesla makes use of Panasonic batteries, which are made using graphite derived from the mines in China. These mines are responsible for pouring graphite particles down on the residents of several villages in north-eastern China.
‘Environment friendly’ is it?
Speaking in its own defense, Tesla Motors Inc (NASDAQ:TSLA) claimed that no graphite from the Chinese company BTR is included in its batteries. However, it did not reveal its graphite source. The north-east part of China is the source of graphite for nearly 75% of the global demand. The fact that the US firm has refused to explain where its graphite is produced, could give rise to questions over the ecological soundness of its vehicles, the report notes.
Tesla and other electric car makers market their vehicles as environment friendly alternatives to fossil fuel burning vehicles. But, as per the report, the productive tools used to make their batteries are destructive. The newspaper report states that the mines that the Washington Post visited produced graphite through a flaking process rather than in a kiln. Though the process costs less, it is dirtier and more harmful to the environment and the communities surrounding the mines.
Speaking to reporters, a couple residing near the Russian border in a city called Jixi said that graphite dust covers their corn crops and that even taking a stroll outside leaves their faces blackened. Health experts say that inhaling the particulate matter could cause potential respiratory troubles, the report notes.
Not good for the brand
In the past, Tesla investors have received warnings from tech analysts that the use of lithium batteries might damage its brand name.
Speaking of automakers that rely on lithium-ion production, Matt Stack – the co-founder of tech investment group Devonshire Research Group – told The Daily Caller News Foundation, “It’s a PR and brand disaster waiting to happen. Companies that rely solely on the green image, including Tesla, will see their profit margins suffer, and brand value decline.”
Tesla and other electric car makers have led to a massive increase in the demand for lithium batteries, and this could exacerbate the problem, believes Simon Moores – managing director of Benchmark Mineral Intelligence.
Tesla defends its batteries
Tesla Motors Inc (NASDAQ:TSLA) has Panasonic as one of its largest producer of lithium-ion batteries. The Japanese firm is investing more than $1.6bn in Tesla’s ‘gigafactory,’ which is a massive factory built for making batteries. Tesla believes that its Nevada-based plant will produce about 500,000 electric-car batteries annually.
As expected, Panasonic is unhappy with the report. It told the reporters that on probing the issue, it “found that the operators received an administrative directive from the local authorities in 2014 and have since that time implemented the necessary environmental countermeasures.”
Nevertheless, the report does laid out some of the effects graphite mining has on Chinese communities.