Tesla to Conduct Third-Party Audit of its Battery Material Suppliers

Tesla will conduct a third-party audit of its battery material suppliers, despite the fact the company’s shareholders rejected the proposal. Tesla is careful to ensure child labor is not used to mine materials for production.

Tesla will conduct a third-party audit of its battery material suppliers

During Tesla’s Annual Shareholders’ Meeting, some shareholders asked the company to conduct a third-party audit of the company’s cobalt suppliers. Investor Advocates for Social Justice (IASJ), which also represents several other organizations, urged investors to support its proposal. It cited issues such as child labor in the Congo and the forced labor of Uyghurs in China as examples.

The company’s shareholders rejected the IASJ’s proposal. Despite this, taking into account the concerns of the organizations, Tesla CEO Elon Musk announced that the company will conduct a third-party audit of its suppliers. Moreover, he is ready to put a webcam in the mine so that people can make sure that children do not work there.

“I heard a question raised about cobalt mining. And you know what, we will conduct a third-party audit. In fact, we’ll put a webcam on the mine. If anyone sees any children, please let us know,” Musk said.

Tesla is working to phase out the controversial cobalt

Cobalt mining is one of the most controversial issues facing EV makers. Therefore, Tesla has been working for many years to eliminate its use in their batteries. The company has already achieved significant success in this. For example, for the production of mass-produced cars, Tesla uses iron-based batteries. Other batteries are nickel-based, and cobalt is used in a minimal amount as a binder.

“I don’t want to go too off tangent on that front, but it’s important to appreciate that most of our battery packs are iron-based. Majority of our battery packs are iron-based. Our other battery packs are nickel-based, not cobalt. The nickel batteries use a little bit of cobalt as a binder, but only a tiny amount,” Musk said.

Batteries for consumer devices use a lot of cobalt

While Tesla’s electric vehicle batteries use negligible amounts of cobalt, the situation is different for consumer devices. Musk noted that phones use 100% cobalt. For those who are particularly concerned about the cobalt supply chain, it makes a lot of sense to voice their concerns to phone makers.

“In contrast, your phones all use 100% cobalt. I recommend complaining to phone manufacturers. But even for the small amount of cobalt that we do use, we’ll make sure six weeks to Sunday that no child labor is being exploited. Obviously, we’re a company that cares a lot about doing the right thing, and we don’t want to delude ourselves or delude anyone else,” Musk said.

Tesla is making great efforts to control its supply chain

Tesla joined the Customs Trade Partnership Against Terrorism (CTPAT) program in July 2019. CTPAT members are required to have a documented social compliance program in place that, at a minimum, addresses how the company ensures goods imported into the United States were not mined, produced or manufactured, wholly or in part, with prohibited forms of labor, i.e., forced, imprisoned, indentured or indentured child labor.

Through CTPAT, Tesla has engaged with the CBP and the Department of Homeland Security’s Center for Countering Human Trafficking to educate them on sourcing patterns for commodities at high risk for forced or trafficked labor. In CBP’s February 2023 Validation Report, CBP commended Tesla for “commit[ting] significant resources to ensure that their supply chains and business partners meet ethical sourcing and labor requirements” and recognized the processes the company has in place to screen business partners as a best practice—”outstanding in both scope and depth.”

Tesla engages with multi-stakeholder working groups, such as those within the Responsible Business Alliance and its associated Responsible Labor Initiative.

A Tesla team visited industrial and artisanal mine sites in the Cobalt Production Region in DCR and met with local stakeholders and NGOs working on issues like health, safety, and child labor remediation in the Democratic Republic of Congo (DRC) in November 2022. The trip focused on community engagement and artisanal-industrial mining relations, as well as environmental conditions and occupational health and safety at industrial cobalt mines.