Tesla released interesting and rare details about its approach to sourcing lithium, nickel, and cobalt directly from mines instead of through its cell suppliers. This approach is going to be critical as companies fight to secure those minerals for battery production to support electric vehicle growth.
While Tesla sources the vast majority of its battery cells from suppliers, it actually sources a large part of the materials used to build those batteries directly from mines.
This approach enables Tesla to have direct relationships with miners of critical minerals and helps secure supply while allowing the company to monitor quality closely and ensure responsible environmental and social sourcing.
Tesla explained in its latest Impact Report:
While cobalt, nickel, and lithium go through multiple processing steps by different companies, some of the more important environmental and social risks in this supply chain are present at mine sites. Direct sourcing from mining companies allows Tesla to engage directly in local contexts instead of having to rely on multiple midstream companies that typically sit between EV makers and mining. It also enables more transparent and traceable supply chains and better environmental and social data.
Tesla even released some very rare and interesting details about the effort.
The automaker says that it had directly sourced over 95% of the lithium hydroxide, 50% of the cobalt, and more than 30% of the nickel used in its high-energy density cells (NCA and NCM) in 2021. The rest came from deals between the battery cell manufacturers and their own material suppliers.
As we previously reported, Tesla also released a list of the nine mining companies that are supplying those minerals.
Another, less discussed aspect of the company’s Impact Report is that it makes it clear how aware Tesla is that mining and its environmental and social impact are going to become more significant challenges for EV adoption in the future.
The automaker wrote:
Cobalt, lithium and nickel are also “minerals” – in that they are raw materials that are produced through different methods of mining around the world, often concentrated in countries that face socio-economic and environmental challenges. As known global reserves are depleted, these minerals are becoming increasingly scarce, and companies look to access resources in more remote and challenging locations to meet global demand. Cobalt, lithium and nickel are also classified as critical minerals by the United States, European Union and Canadian governments because they are essential in enabling a transition away from fossil fuels to a low-carbon economy. As a result, the impact of mining activity on the environment and local communities lends itself to greater environmental and social scrutiny from civil society, policymakers and investors.
In response, Tesla has joined the Initiative for Responsible Mining Assurance (IRMA), and the company’s direct-sourcing approach also helps ensure the implementation of those standards.
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As an enthusiast deeply immersed in the field of electric vehicles, renewable energy, and sustainable sourcing practices, my expertise extends to the intricate details of Tesla's innovative approach to securing essential minerals for battery production. I've closely followed Tesla's initiatives, including their recent revelations in the Impact Report regarding the direct sourcing of lithium, nickel, and cobalt from mines.
Tesla's strategy of obtaining minerals directly from mines rather than relying solely on cell suppliers is a strategic move that addresses the growing demand for these resources in the electric vehicle (EV) industry. This approach provides Tesla with a competitive edge by establishing direct relationships with miners, ensuring a secure supply chain, and maintaining a keen focus on environmental and social responsibility.
In its Impact Report, Tesla emphasizes the significance of direct engagement with mining companies, highlighting the environmental and social risks associated with mine sites. By sourcing minerals directly, Tesla gains greater control over the entire supply chain, enabling the company to monitor and ensure the quality of materials used in its batteries. This level of control contributes to more transparent and traceable supply chains, fostering better environmental and social data.
The rarity of the details shared by Tesla further underscores the company's commitment to transparency and sustainability. According to the report, Tesla disclosed that in 2021, it directly sourced over 95% of lithium hydroxide, 50% of cobalt, and more than 30% of nickel used in its high-energy density cells (NCA and NCM). This level of direct involvement in material sourcing showcases Tesla's dedication to reducing dependencies on intermediaries and creating a more streamlined supply chain.
Additionally, Tesla revealed a list of nine mining companies supplying these critical minerals, providing stakeholders and the public with unprecedented insight into the specific sources of their raw materials. This transparency aligns with Tesla's broader efforts to address the challenges associated with mining and its environmental and social impact.
Furthermore, the Impact Report sheds light on Tesla's awareness of the evolving landscape in the mining industry and the potential challenges it poses to the widespread adoption of electric vehicles. Recognizing the socio-economic and environmental challenges associated with mining, Tesla acknowledges the importance of responsible practices and has joined the Initiative for Responsible Mining Assurance (IRMA). This affiliation demonstrates Tesla's commitment to adhering to industry standards and mitigating the impact of mining on the environment and local communities.
In summary, Tesla's approach to directly sourcing lithium, nickel, and cobalt from mines reflects a well-thought-out strategy aimed at ensuring a sustainable and responsible supply chain for electric vehicle batteries. This comprehensive and proactive approach positions Tesla as a leader in the pursuit of environmentally conscious and socially responsible practices within the automotive industry.
