Tesla Supply Chain Survey

In May 2021, when Bitcoin was criticized for its high energy consumption, Tesla CEO Musk immediately stated that he would no longer accept Bitcoin payments, but this rapid response was not reflected in Tesla’s green supply chain in China Management.

Tesla Supply Chain Survey

In April 2021, the environmental protection organization Public and Environmental Research Center (IPE) and the Green Jiangnan Public Environmental Concern Center (hereinafter referred to as Green Jiangnan) released “Tesla: Under the Aura-New Energy Vehicle Environmental Issues Investigation Report 1” (hereinafter referred to as “report”). According to the official report, the “Report” found that since 2017, there have been 30 suspected Tesla suppliers with environmental violation records.

The Southern Weekend reporter contacted the 19 companies mentioned in the “Report”, 11 of which said they were “unclear” or refused to be interviewed. None of the eight companies interviewed clearly explained the reasons for their previous environmental violations. No company said that when a record of environmental violations occurred, purchasers such as Tesla pushed for rectification. Tesla did not accept interview requests from Southern Weekend reporters, nor did it respond to inquiries from environmental organizations.

In the past five years, Tesla has earned a total of $3.3 billion in revenue from the sale of carbon credits in the United States. Some of these carbon credits have been sold to traditional car peers. However, in terms of green supply chain management, many industry observers have not found a significant difference between Tesla and traditional car companies. Even in the face of the same suppliers, some established companies are more proactive.

It is worth noting that new energy vehicles have always been under the green halo of low carbon and environmental protection, enjoying subsidies and other benefits, but Tesla is not the only one who is weak in promoting green supply chain management.

Supply chain investigation triggered by a battery

Stepping on Tesla’s accelerator provides the driver with a silky feeling of power source, which is the “heart” of new energy vehicles-lithium batteries. Tesla’s lithium battery is small in size and resembles a common “No. 5 battery”. A Tesla Model S has more than 7,000 lithium batteries, and the battery panel weighs 900 kilograms.

From raw materials and metal mines to finished batteries, the production of a lithium battery needs to go through multiple links. Each process in the industrial chain, such as positive electrode, negative electrode, diaphragm, electrolyte, battery cell, and packaging, is deeply cultivated by enterprises.

The “Report” originated from a water pollution problem accidentally discovered by a lithium company. On January 12, 2021, Green Jiangnan Director Fang Yingjun and his colleagues surveyed in Xinyu City, Jiangxi Province. While resting in a service area, they flew a drone by the way and went to a lithium company opposite the service area to see the situation.

The picture returned by the drone showed that the water in the ditches in the southwest corner of the company was “a little muddy”. Fang Yingjun, who has been investigating industrial pollution sources all the year round, immediately “feeled a problem here.” They drove around the service area and found that a sewage outlet of the company was connected to a river, and the yellow-brown wastewater was muddy like mud and was flowing.

Fang Yingjun and others judged on the spot that the chromaticity and suspension degree of the wastewater were obviously beyond the standard, and the pH test paper was alkaline. The test results of wastewater and sediment samples by a third-party testing agency showed that the content of lithium metal, a characteristic pollution factor in the sediment, was significantly higher, and the levels of metal manganese and iron were also relatively high.

Afterwards, the Xinyu City Ecological Environment Bureau replied to Green Jiangnan that the alkaline waste water was caused by the failure of some equipment, which caused the commissioning water pollution. In June 2021, Wu Xing, the vice president of the lithium industry company, told Southern Weekend reporters that the company is mainly engaged in lithium salt deep processing business, and it does supply Tesla, BMW, LG Chem (battery manufacturer) and other companies.

The Xinyu City Ecological Environment Bureau also mentioned that although it was an accidental failure, the company did not strictly implement the requirements of emergency environmental accident plans and did not use the accident emergency facilities normally, which led to the discharge of wastewater. The company did not conduct self-monitoring of external wastewater discharge, and failed to discover drainage problems in time.

In this regard, Wu Xing also explained to the Southern Weekend reporter that the pollution incident “has some misunderstandings” because the debugging equipment failed and emergency management was not in place. After the discovery, he immediately rectified it. He emphasized that this is an “incidental accident” and is not subjective and deliberately exceeding the emission standard.

The Tesla Experience Store in Tianhuan Plaza, Guangzhou. In April 2021, the environmental protection organization issued a report directly pointing to the pollution problem of Tesla’s suppliers, but Tesla has always remained silent.

The “black history” of 30 Tesla’s suspected suppliers

After the above-mentioned lithium industry companies actively communicated with environmental protection organizations, Tesla entered the focus of environmental protection organizations.

In addition to lithium batteries, behind the cool shells, gorgeous interiors, comfortable seats, and exquisite parts of new energy vehicles are complex production processes, accompanied by environmental risks. If the entire new energy vehicle industry chain is categorized, the upstream is the lithium battery industry chain, the midstream is represented by the new energy vehicle electronic control system, and the downstream is vehicle manufacturing, auto parts, and charging piles.

The environmental protection organization followed the vine and discovered the “black history” of the 30 other suspected suppliers mentioned in the “Report”. Of these official notifications of environmental violations, 9 cases were procedural violations, such as “construction without approval of the environmental review” and “no experience in production”; 21 cases were non-procedural violations, such as “excessive discharge of waste water” and “dust-free” Organize the discharge of “dumping and stacking of hazardous waste without authorization”, etc.

Some corporate environmental violations, such as the above-mentioned lithium companies, are incidental incidents; some companies are “repetitive offenders” of pollution.

A-share listed company Guangdong Wencan Die Casting Co., Ltd. disclosed in its 2020 semi-annual report that it supplies automotive aluminum alloy body structures to Tesla and other manufacturers. According to the penalty records of the Wuxi Municipal Bureau of Ecology and Environment, from 2019 to 2020, Jiangsu Wencan Die Casting Co., Ltd., a subsidiary of Wencan Co., Ltd., had three consecutive environmental violations: “Construction without environmental review approval”, “Excessive discharge of waste water”, and “unorganized dust” emission”. The accumulated fines amounted to 736,800 yuan.

From June 11th to June 21st, the Southern Weekend reporter contacted the 30 companies disclosed in the report and opened the phone calls of 19 companies. Among them, 11 said they were “unclear” or refused to be interviewed. All 8 companies interviewed The reasons for the previous environmental violations were not clearly explained.

The Southern Weekend reporter called Jiangsu Wencan Die Casting Co., Ltd. The operator said that he was in charge of personnel work and did not understand the pollution situation, and refused to provide the phone numbers of other colleagues. On the same day, a staff member of Guangdong Wencan Die Casting Co., Ltd. stated that it belonged to the marketing department and did not know the situation of the subsidiary, and then provided the telephone number of the management department, but the caller of the management department said that he was not responsible for this.

However, Southern Weekend reporters found that some companies denied that they were Tesla’s suppliers. Ding Shanshan, the principal of the “Report” and IPE green supply chain project manager, explained that due to Tesla’s brand effect, listed companies are often willing to disclose their supply relationships with Tesla in their annual reports, but the listed company’s affiliated subsidiaries , It is impossible to confirm whether it is a Tesla supplier through public information, so the expression “suspected supplier” is used.

Silent Tesla, active BMW, LG

Tesla does not care about supply chain management. The “Supplier Code of Conduct” published on its English official website requires that itself and its partners must strive to avoid additional damage to the environment and comply with all applicable environmental laws and regulations.

This promise has not been fulfilled in China. In early 2021, after the above-mentioned lithium industry companies caused environmental pollution, Green Jiangnan and the Public Environmental Research Center wrote to Tesla on February 27, 2021, asking whether this company is a supplier and whether it is aware of the company’s water pollution Problems, and according to Tesla’s own supply chain environmental management commitment to promote its rectification, but so far has not received a reply.

This is not the first attempt by the two environmental organizations to communicate with Tesla. As early as June 2019, they contacted Terrass regarding the environmental violation records of nine suspected suppliers, and they also fell to nothing. On June 15th, a Tesla public relations officer declined an interview with a reporter from Southern Weekend, saying that “there is no more information.”

Wu Xing recalled that Tesla routinely entrusted third-party companies to evaluate and manage the environmental performance of suppliers. After the environmental violations in early 2021, third-party companies also called to inquire about the specific situation, but Tesla did not come to ask.

In the list mentioned in the “Report”, most companies said in an interview with Southern Weekend that when signing supply agreements with Tesla and other car companies, there are relevant requirements for environmental compliance; but no company said that when After the occurrence of environmental violations, the purchaser has promoted rectification.

Not all buyers remain silent. Wu Xing gave an example. Regarding the pollution incident found in Green Jiangnan, BMW sent them an e-mail inquiry on March 1, asking for an explanation of the cause of the pollution and a rectification plan. On March 1 and 4, BMW also held two conference calls with the company to further communicate. LG Chem also wrote to inquiries. The lithium company is a supplier of LG Chem, which in turn supplies batteries for Tesla.

The internal standard processes of auto companies are rarely disclosed to the outside world

In the process of pushing suppliers to rectify environmental violations, it is not only Tesla, a new energy vehicle company, that has almost “muffed up”.

An employee of Tianjin Automobile Mould Co., Ltd. told the Southern Weekend reporter that the company provides mold development and manufacturing services for many car companies, including Tesla, and production needs to comply with the environmental protection standards of various car companies and industries. However, after the environmental violation, there is no car company to promote its rectification. “(We) comply with regional regulations and pass system certification. (Car companies) have not put forward any special environmental protection requirements.”

The “Report” mentioned that some companies that have encountered environmental violations are also suspected suppliers of many other new energy vehicles. BYD, Ideal, Weilai, and Xiaopeng did not accept further interviews with reporters from Southern Weekend.

BYD said that the company has a dedicated department responsible for supply chain management, but the relevant content is in a silent period within the company and it is inconvenient to make it public. A staff member of Weilai said that the company continues to promote green supply chain management, but currently it has limited materials and is being sorted out, so it is not suitable for public announcement.

In fact, there is a set of standardized procedures within auto companies, but they are rarely disclosed to the outside world. Wu Xing introduced that the current supply chain management of major auto companies in the world is in compliance with the international automotive industry technical specifications, called “Quality Management System-Organization and Implementation of ISO9007 Requirements for Auto Industry Production Parts and Related Service Parts (IATF16949).”

In actual operation, car companies often entrust third-party agencies to conduct on-site review and scoring. “Several teachers will come at a time, each in charge of a piece of equipment, finance, environment, safety, employment and other fields. First look at the scene, then check your ledger, and then interview.” Wu Xing said, the auditor will give opinions. The supplier then rectifies accordingly. When signing the supply agreement with LG Chem, it was approved four times before and after audits. “They will put forward higher requirements each time, and it took more than half a year.”

“It was really painful at first.” Wu Xing said frankly that the pressure of the customer’s request was not small. But after the painful period, the benefits to the sustainable development of the company are obvious. “If you don’t want to make rectifications or if the rectifications are not in place, customers will not buy your things, and no matter how cheap they are, it is useless.”

In the view of IPE founder and director Ma Jun, only internal management standards are not enough. “To build a supply chain management responsibility system for the automotive industry, we can’t just say that we have an internal system. Don’t worry. It must be disclosed to the society.”

Guo Peiyuan, general manager of SynTao, has been studying corporate social responsibility for a long time. He believes that the third-party audit mechanism has some drawbacks, such as fraud and collusion. Who pays for the review is also a contradiction. In many cases, it is the payment that is reviewed. It is inevitable that there will be conflicts of interest. “For example, the reviewer says, if I give you more money, you will pass it to me; conversely, the review agency may also say, “You If you don’t give me more money, I won’t pay you.” If the information is made public, the possibility of gray areas and dark box operations will be greatly reduced.

Tesla VS Apple, the environmental performance is “the difference between cloud and mud”

Steel, glass, paint, leather… the production process of a car cannot avoid pollution and high energy consumption. It stands to reason that the automotive industry should pay more attention to the environmental performance of the whole life cycle, but the fact is just the opposite. In the green supply chain CITI index developed by IPE and the Natural Resources Conservation Association (NRDC), data in 2020 show that the average score of the automotive industry is among the lowest in the industry, with a full score of 100, and the score of most car companies Only single digits.

“The selling point of new energy vehicles is that they are environmentally friendly. In theory, more attention should be paid to the environmental management of the supply chain. But at present, I have not seen a significant difference with traditional energy vehicles.” Guo Peiyuan was a little disappointed.

In 2020, Tesla earned US$1.58 billion from the sale of carbon credits in the United States. This revenue has allowed Tesla to achieve full-year profitability. “Tesla has obtained real business benefits by relying on the green halo, but it cannot even guarantee basic supply chain environmental compliance.” Ma Jun said, “Moreover, in the face of doubts, Tesla has always refused to respond and lacks environmental responsibility. Responsible.”

In fact, whether new energy vehicles are more environmentally friendly than fuel vehicles is still controversial. The entire life cycle of a car includes design, production, distribution, use, repair and maintenance, recycling and disposal. From the perspective of the entire life cycle, there are institutional calculations that the production of a new energy vehicle does not emit less carbon than a fuel vehicle.

According to data from the new energy vehicle sales statistics website EV Sales, as the sales hegemon, the sales of all Tesla models in 2020 accounted for 16% of the total global sales of new energy vehicles. In Ma Jun’s view, Tesla’s problems are also a common phenomenon in the new energy automobile industry. “If the leading companies refuse to act, it may be difficult for the entire industry to really improve.”

It is not the first time for Ma Jun to promote the actions of leading enterprises. “Enterprises are not the government, so how come there are so many regulatory responsibilities?” When Ma Jun began to promote the green supply chain ten years ago, he was questioned by many people.

In auto companies, the social responsibility department is the weaker side compared to the production and marketing departments, and supply chain management is often done on a face-to-face basis. “When business and environmental protection conflict, it is obvious who has the right to speak.” Ma Jun said.

A car company may involve thousands of suppliers, and it is difficult to check who has environmental violation records one by one every day. As far as brand owners are concerned, even if they are willing to monitor the real-time environmental performance of their suppliers, they are often “powerless”.

The environmental protection organization hopes to encourage brand owners to use the free Azure map database and the Azure ecological chain system to pay attention to suppliers. Environmental supervision records, rectification information, automatic monitoring data, etc. can be pushed in real time in emails and mobile apps. After monitoring the record of environmental violations, brand owners should also promote supplier rectification and disclose the improvement to the public.

Today, the Azure Map database has entered the adverse environmental records of more than 1.2 million suppliers, and has promoted more than 14,000 sub-suppliers to communicate or disclose the violation records. Many brand owners have even included the improvement of suppliers in their annual reports.

Tesla is often compared to the “Apple” of the new energy vehicle industry. However, the “Report” believes that the environmental performance of the two companies is “the difference between cloud and mud.”

When talking about green supply chains with others, Ma Jun always likes to cite the example of Apple. In the past ten years, he has witnessed the change of Apple’s attitude, from the initial avoidance, to gradually focusing and proactive. For six consecutive years, Apple has been among the best in the green supply chain list. Apple’s suppliers’ requirements have already exceeded the “no environmental violations” threshold, and they have also been required to commit to 100% renewable energy.

Ma Jun hopes that Tesla and other new energy vehicle companies can also learn from other industries,

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