Dive Brief:
- Panasonic, which manufactures batteries for Tesla, suspended its supply chain with a Canadian supplier, Sherritt International, because the company is unable to determine how much cobalt was sourced from Cuba, which is still under a U.S. import ban, The Bull reports.
- Panasonic is seeking advice from the U.S. Treasury Office of Foreign Asset Control regarding a potential violation of the import restrictions. U.S. import restrictions on imports from Cuba have been in place since the 1960s.
- Tesla says 3% of the batteries are made of cobalt now, and the company is working with Panasonic to eliminate cobalt almost completely.
Dive Insight:
While Sherritt would not address the Panasonic supply chain specifically, the company did confirm that it sourced cobalt and nickel from Cuba and processed it in Canada before shipping to customers in Europe and Asia.
The company said it could not determine how much of the cobalt from Cuba was used in the U.S. market "due to co-mingling of sources by its suppliers in several phases of manufacturing processes," Reuters reported.
The Panasonic batteries are used only in a fraction of Tesla Model S and Model X cars manufactured in February 2018 or later. The cells were not used in the mass-market Tesla Model 3 sedan produced at the Tesla gigafactory in Nevada.
Electric vehicle and battery makers face challenges in procuring ethically sourced minerals. Besides Cuba, another major source of cobalt is the Democratic Republic of Congo, which may also engage in unethical practices such as child labor and environmental damage.
The price of cobalt has more than doubled in the past year as demand for electric vehicles grows, according to the Financial Times. The Democratic Republic of Congo supplies about half of the world demand, and Cuba supplies about 4%.
The low Cuban market share suggests Panasonic will be able to replace the Cuba-sourced mineral by tapping other sources in its supply chain.
