{"id":22270,"date":"2017-11-14T14:44:31","date_gmt":"2017-11-14T19:44:31","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/teslas\/"},"modified":"2017-11-14T14:44:31","modified_gmt":"2017-11-14T19:44:31","slug":"elons-missing-ingredient-the-human-and-political-challenges-of-teslas-supply-of-cobalt","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/elons-missing-ingredient-the-human-and-political-challenges-of-teslas-supply-of-cobalt\/","title":{"rendered":"Elon\u2019s missing ingredient: the human and political challenges of Tesla\u2019s supply of Cobalt"},"content":{"rendered":"

“If you\u2019re trying to create a company. It\u2019s like baking a cake. You have to have all the ingredients in the right proportion.”<\/em>\u00a0\u2013 Elon Musk<\/p>\n

In the Fall of 2017, as Tesla prepares its ambitious rollout of the Model 3, the reality of mass market electric vehicles (EVs) seems closer than ever. To tackle climate change \u2013and pollution\u2014many countries (e.g., France, UK, India, Norway, China) have adopted bans on fossil fuel cars in the coming decades1<\/sup>. Although these policies changes are promising for EVs, the sudden rush for the metals used in lithium-based batteries is, paradoxically, threatening the viability of Tesla\u2019s supply chain and its dream to deliver a mass market electric car. The sourcing and supply of Cobalt \u2013a crucial component of Tesla\u2019s current batteries\u2014is a particular area of concern driven by two key unique factors:<\/p>\n

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  1. ~50% of the world\u2019s cobalt production comes from the Democratic Republic of<\/strong> Congo (DCR), a country with huge supply chain risks<\/strong>\u2013 A recent report by Amnesty international concludes that the Cobalt rush has, and is expected to continue being a major driver of conflict, corruption, and child labor in DCR, with about 40,000 children laborers2<\/sup>. Tesla will, therefore, struggle to find ethically sourced Cobalt which creates a risk for a PR nightmare headline: \u2018Is your $60k car built on the backs of children?<\/em>\u2019. Beyond that, political instability and warfare add further supply chain risk.<\/li>\n
  2. Chinese companies currently control over 60% of the world\u2019s Cobalt mines<\/strong> \u2013 in the past few years, Chinese companies have purchased control of around 60% of the world\u2019s mines.3<\/sup> China has also shown willingness to use its position in the market to ban access of competitors to necessary materials (e.g., ban on rare metal exports to Japan amid trade dispute). This creates added risks for Tesla\u2019s supply chain and competitive position vs. Chinese car manufacturers.<\/li>\n<\/ol>\n

    Tesla has taken a number of actions to address these challenges. In the short term:<\/p>\n