Tesla relies on Panasonic exclusively for the batteries it uses, and it has come to light that some of the cobalt used in those batteries was sourced from Sherritt International meaning the cobalt is from Cuba. As US sanctions remain in place, such transactions are prohibited.
The booming demand for lithium-ion rechargeable batteries has placed growing pressure on manufacturers to secure sources of the common materials required to make them. Panasonic is one of those manufacturers, and it looks as though the company just screwed up and put Tesla in the firing line with the US Treasury.
The batteries Tesla relies on for its vehicles contain cobalt and are sourced exclusively from Panasonic. Panasonic sources the cobalt it needs from different companies around the world, one of which is Sherritt International Corp. As Reuters reports, Sherritt’s cobalt comes from mines in Cuba, which means it is prohibited in the US.
Panasonic has admitted it doesn’t know how much Cuban cobalt ended up in batteries supplied to the US market, but that Sherritt-sourced cobalt is in Tesla Model S and Model X batteries supplied since February this year.
The Japanese company is now seeking guidance from the US Treasury Department’s Office of Foreign Assets Control (OFAC) to see if the batteries do indeed break the existing Cuban sanctions. If they do, the Tesla batteries could be deemed illegal and further action may be taken.
Tesla looks to be the innocent party in all this. It simply accepted the batteries from Panasonic for use in its vehicles assuming the supplier had adhered to all existing rules and laws regarding material sources. But it could end being Tesla that suffers the most if this situation ends with cars having to be recalled and illegal batteries swapped out for legal alternatives.
For now, Panasonic opted to suspend its relationship with Sherritt so as to ensure no more Cuban cobalt entered its production line. The US Treasury doesn’t comment on open investigations so we’ll just have to wait and see if the cobalt is deemed to come under the scope of the sanctions.