The high-end electric carmaker, Tesla, plans to source raw materials for its battery Gigafactory solely from North America to expedite manufacturing and reduce environmental impact. This is a bold move for the automaker, and one that could prompt other producers and suppliers to rethink their strategy. Read on for more on Tesla’s environmental green light and the implications for the supply chain industry overall.This article is for Premium Members only. Please login below to read the rest of this article.
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The Green Reasoning
For years, the auto industry has taken a beating in the media over its environmentally unfriendly machines. Worse yet, alternative vehicles (such as hybrids) still leave carbon tire tracks even before they leave the factory. In fact, in some cases, it’s more eco-friendly to drive an older, high-emission vehicle than it is to purchase a new one that pollutes through production.
According to a report by The Guardian, “Interestingly, the input-output analysis suggests that the gas and electricity used by the auto industry itself, including all the component manufacturers, as well as the assembly plant, accounts for less than 12 percent of the total. The rest is spread across everything from metal extraction (33 percent), rubber manufacture (3 percent) and the manufacture of tools and machines (5 percent) through to business travel and stationary for car company employees.”
Tesla’s Answer to All Auto Emissions
Tesla’s tackling the largest source of auto emissions: metal extraction. As an emission-free vehicle, this aspect of manufacturing remains a major challenge to the company’s green image – especially since Tesla hypes its batteries as a non-toxic alternative.
Green Car Reports states, “All cars require raw materials and energy to produce, use energy during their time as transport, and require energy to recycle–the components that can be recycled, at least. To mitigate such pollution issues and increase supply chain transparency, Tesla Motors has announced it will source raw battery materials from North America only, when it opens its $5 billion battery Gigafactory.”
Cobalt, graphite, and lithium are some of the major materials used in car batteries, and Tesla plans to mine these metals in the U.S. and Canada. Currently, most of the metals used in battery manufacturing are sourced from China.
What Tesla’s Move Means for the Supply Chain Industry
Tesla’s shift toward a more local supply chain puts emphasis on insourcing resources for lesser environmental impact. However, Tesla isn’t the first to rethink its supply chain. Although companies aren’t racing toward homegrown materials, they are considering issues within their global supply chains that create unnecessary waste.
Bloomberg notes that companies, such as General Electric and Wal-Mart, are now developing strategies for consistency regarding environmental compliance across all regions, according to the supplier’s local legislation on emissions and more. Soon, consumers and buyers alike will come to expect a supply chain that accounts for its impact. If a supplier can’t commit to local sourcing, there will still be an expectation of environmentally friendly production standards.
We want to hear from you. How do you think Tesla’s green initiative will shape the supply chain industry? Share your thoughts in the comments below. [/show_to]