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Tesla: A supercharged response to global climate change?

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Do we really understand the ecological impact of so-called "green" industries? Is Tesla a panacea or just another part of the problem?

Ironically, adverse impacts on climate change should be the primary concern of a company that most people consider “green.”

There are myriad articles espousing electric vehicles in general, and Tesla in specific, as major contributors to a transition from internal combustion engines to electric and hybrid vehicles. Indeed, Tesla prepares to launch an electric semi-truck this week, despite the fact there remain significant and insufficiently answered questions with regards to our “electric revolution.” Even as governments around the world provide tax incentives to purchase electric vehicles, we appear to lack a complete understanding of the actual environmental cost of putting these vehicles on the road [1].

We can understand at a high level that mining for things referred to as “rare earths” is most likely a complicated and intensive process. Some of these elements, all necessary to the production of high capacity/yield batteries, exist in percentages less than 1%, even in places where we are mining them [2]. For a metal with an occurrence of .2%, we must mine 500kg of earth for every 1kg of that metal, which is a lot of rock to break through, transport, and most likely chemically treat, to extract a small amount of a resource that is integral to the production of electric vehicles. Since there are many of these types of materials inside of a modern battery, we have so far failed to place an actual carbon emissions cost on the creation of an electric car battery. Not to mention the ecological cost of getting these rare earths to Tesla’s giga-factory. In the accounting world, we utilize activity-based cost accounting to measure the full cost of conducting an activity, and it seems that it is equally necessary in this case to fully account for and understand the ecological impacts of producing the next generation of locomotion. Only after we understand these costs can we truly isolate those areas that warrant additional scrutiny and drive down ecological costs. At the very least, prior to transitioning to a world where electric vehicles become the norm, we should certainly ensure that they are a better alternative to current competition, and we can only do this with a full accounting of the externalities.

Tesla’s current modus operandi with regards to dealing with some of the negative externalities of electric vehicle production and utilization appears to be purchasing companies along the supply chain or with technology that would allow for reduced cost production [3]. With their purchase of SolarCity, Tesla transitioned to a company that has a relatively indirect form of vertical integration- it is easy to imagine a consumer recharging his/her Model 3, using a Powerwall full of stored energy generated from SolarCity solar panels. Moreover, Tesla has attempted to purchase at least one company with a process designed to increase the yield of lithium in a given amount of earth [4]. Regardless of intent, supply-chain management versus reduced ecological impact, the company appears to be heading in the right direction with regards to the procurement of these resources; however, they are in a position to have a much larger and longer standing impact as they attempt to figure out what to do with used batteries.

If Tesla really wants to be a global leader in carbon emissions reductions, as opposed simply being a method of “green” signaling beloved by so many, the company can devote resources over the next 3-5 years in an attempt to figure out how to reuse the rare earths and other high-ecological cost components of their spent car batteries, especially in situations where it may not be economically profitable. After all, as much as Tesla is currently disrupting the American auto industry, they are sure to disrupt the landfill and recycling industries in the very near future, especially if Mr. Musk’s grand vision to sell some 400,000 Tesla Model 3s in 2018 comes to fruition [5]. At this time, there is certainly not a solution with regards to where exactly we are going to dispose of 400,000 expended batteries in the next 5 years when they reach the end of their usable capacity.

 

Is electrification really the answer to our climate change problems?

We can buy a Powerwall from Tesla for less than $5000, but how much do they really cost?

 

 

Sources:

[1] Wade, L. (2016). Tesla’s electric cars aren’t as green as you might think. [online]. Available at https://www.wired.com/2016/03/teslas-electric-cars-might-not-green-think/ [Accessed 12 November 2017].

[2] Lambert, F (2016). Breakdown of raw materials in Tesla’s batteries and possible bottlenecks [online]. Available at https://electrek.co/2016/11/01/breakdown-raw-materials-tesla-batteries-possible-bottleneck/ [Accessed 12 November 2017].

[3] Benchmark Materials.com (2016). Elon Musk: Our lithium ion batteries should be called Nickel-Graphite [online]. Available at http://benchmarkminerals.com/elon-musk-our-lithium-ion-batteries-should-be-called-nickel-graphite/ [Accessed 12 November 2017].

[4] Roth, S (2016). Tesla offered $325 million for Salton Sea startup [online]. Available at http://www.desertsun.com/story/tech/science/energy/2016/06/08/tesla-offered-325-million-salton-sea-startup/84913572/ {Accessed 12 November 2017].

[5] Korosec, K (2017). Tesla Model 3 Production Is 84% Lower Than What Elon Musk Promised [online]. Available at http://fortune.com/2017/10/02/tesla-model-3-production/ [Accessed 12 November 2017].

 

 

11 thoughts on “Tesla: A supercharged response to global climate change?

  1. Lucas, this article makes for a very interesting read. The proverbial ability for us to solve one problem whilst creating another. I like your suggestion of an activity based costing (ABC) methodology to account for carbon emissions. Perhaps businesses like Tesla should begin to adopt ABC to accumulate carbon emissions along the supply chain from all materials purchased in addition to those processed as this would allow for better comparability across different sourcing and operating models. I believe however, that you enter muddy waters when you extend Tesla’s realm of accountability/responsibility beyond their span of control in their supply chain.

    1. I agree that we enter potentially muddy waters, but I would posit to you the following:
      We are currently giving large tax credits for purchasing an electric vehicle. This means that the government is actively encouraging the purchase, ostensibly to lead consumers away from other alternatives. If the public is going to make this investment, then I believe that we should ensure that these companies internalize the current externalities, such as pollution required to create the product that we are encouraging the production of (by encouraging the consumption).
      Also, Tesla is attempting to vertically integrate (battery manufacturing, lithium production) and are likely to rapidly become the largest user of the rare earths, which leads me to believe that they should bare some of the responsibility that they are produced in a responsible way. This is not unprecedented- such as DeBeers and blood diamonds in Africa.

  2. Lucas, quite an interesting take unsurprisingly. I’m not sure I totally agree, however. I think many of the assertions you reference are true. But the argument hinges on two assumptions I take issue with. First, you assume the material composition of batteries and the processes required to generate them are fixed and will not improve as the demand for the resources increases. I fundamentally believe not only the efficiency of batteries, but the actual raw materials required to produce them will decrease as technology advances. Secondly, I think your argument lacks an apples-to-apples comparison to the technology electric cars are displacing. By simply citing the resource requirements and ecological impacts of electric cars, I’m not sure we get a true sense of how the carbon footprint of electric vehicles compares to their fuel counterparts over their lifetime. When viewed through that lens, my hunch would be electric vehicles would be undeniably more “green.”

    1. I actually completely agree with you that an apples to apples comparison is necessary; indeed, it is the entire crux of my argument that an apples to apples comparison does not currently exist- and before we jump wholesale into massive infrastructure and manufacturing investments to change our current way of doing business, we NEED an apples to apples comparison to ensure that we aren’t making a massive mistake.
      Also, I agree that the process will improve for withdrawing rare earths, but they will remain rare. Indeed, I cited instances where Tesla is attempting to invest in processes to increase yields of these materials.
      That said, a Cat Dump truck burns a lot of fuel and as I noted in my paper, they run an awful lot just to yield small amounts of material. To the extent that more than one dump truck has to move to yield each car production, you are dealing with years worth of potential carbon savings for each material. In contrast to your opinion, I would not be surprised to learn that an electric car is grossly less “green” than current vehicles, insofar as the vehicles used in the production of batteries, in particular, are grossly inefficient. Maybe we’ll make them electric too though.

  3. This article brings up a really interesting point I hadn’t considered about the criteria the public uses to determine if a company is “green.” You rightly point out that that description is almost universally applied to companies that produce sustainable products, with very little consideration of whether the company’s processes for manufacturing that product are truly sustainable.

    I think the used battery point will be particularly important for Tesla as it grows. If the company is able to find a way to reuse the materials in its batteries, it will represent a huge win for the environment, both in terms of reducing the amount of rare earth materials that need to be mined and reducing waste overall. Fortunately it seems like this is a situation where Tesla’s incentives are well aligned with planet Earth’s – reusing these batteries would save the company a tremendous amount of money, so it’s likely they are already investing significantly to determine the feasibility of such a program.

  4. Lucas – interesting article. First, I think there may be some hope as it relates to lithium-ion battery recycling. Currently, the vast majority of car batteries are lead-acid batteries (normal car batteries) and they are one of the most recycled consumer products in the United States. As I am sure you have done, when you get a new car battery, Autozone or the shop you go to takes your old car battery and is mandated by law to give it to a licensed recycling facility/handler. Good news is, the infrastructure is already in place for turning in batteries and having them recycled [1]. Also, there are some pretty cool companies out there doing work around making battery-recycling a more environmentally-friendly process itself [2][3].

    One other major question I have is that while some Tesla owners charge their vehicles using power generated from renewable sources, the majority of electricity in the United States is still generated from Natural Gas, Coal etc. So, while the vehicle may not be emitting carbon, the process by which the power was created to run the car likely did. If we can ever move to a fully decentralized power grid (assuming the utility company lobbyists no longer hold all the cards) and/or renewable power grid then charging Teslas will be truly emission-free.

    [1] https://www.batterysolutions.com/recycling-information/how-are-batteries-recycled/
    [2] https://www.youtube.com/watch?v=c2jaopiMZvE
    [3] https://www.youtube.com/watch?v=GRljRX3exkg

  5. When a product conceived to be so ostentatiously “green” becomes a contributor to the environmental problem, the irony is palpable. As a sometimes-skeptic of technology, I think it is important we question where our technological advances are taking us. Sometimes, technology has advanced so far that we ironically find ourselves one or two steps behind our starting position. Progress isn’t linear. The Tesla S battery is somewhere between 75-100 kwh (I think). As you say, knowing how much CO2 the car has released before being driven could readily outweigh the benefit of being the ‘green’ alternative on the road. Unfortunately, Tesla’s incentives may not be directly aligned to address this issue – because the marketing benefit of having a “green” final product (and not necessarily “green” production process) might be the end goal. That being said, if a more efficient battery results in a decrease in costs, we might find Tesla driving towards a more environmentally friendly outcome. An interesting parallel is the criticism against air dryers. Originally conceived as a tree saving alternative to paper towels, air dryers require so much electricity to function that many argue we are better off using paper towels. This might be the case for Tesla.

  6. Lucas, I thought it was pretty honorable of you to take a view here that is a bit out of “favor” with most people’s perceptions of Tesla and Mr. Elon Musk. To your first question, I do think electrification is a solution and that some of the kinks in the system (largely the non-environmentally-friendly sourcing this article refers to) will work themselves out as this issue becomes more mainstream. While there are issues with the current waste impacts from electronic vehicles – I think it’s hard to argue with the evidence that EV is a more eco-friendly answer to combustion vehicles. With that said, it is on consumers to hold Tesla and other EV manufacturers responsible for the years to come.

  7. Thanks for exploring this topic. I would have liked to see some mention of the specific names of the rare earth components that you were referencing, so I could more easily read more about them. Have you considered also looking into how most electric energy used to charge the batteries is produced? For example, in many parts of the country, fossil fuels are still predominately used to produce electricity. I would have liked you to include that consideration as the shift to electric cars may have negative externalities on that front as well.

  8. Thanks for exploring this topic. It would have been helpful to hear more about Unilever’s reaction and strategy as a proportion of the word count. I am curious to hear how the government did the analysis weigh the benefits and negatives to banning import items and how the actual outcome differed from their expectations. Was there a lead time to the ban to give companies time to alter their sourcing process?

  9. ^please ignore the above

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