Tesla

Tesla invests highly in low-carbon innovation. In 2020, Tesla invested USD 1.49 billion in research and development (R&D), equivalent to 47% of the company’s capital expenditure. All of Tesla’s R&D expenditure can be classified as low-carbon, given its business model is focused on developing electric vehicles, renewable and energy storage products.

Since its founding Tesla has only sold electric vehicles and therefore has no tailpipe emissions. This means Tesla’s business model has avoided creating the largest source of emissions associated with road vehicles. Tesla has seen significant growth in sales, with just under half a million sales in 2020, a 36% increase on 2019. The company is aiming to sell 20 million electric vehicles per year by 2030, a fortyfold increase. If achieved, Tesla would sell more than double the light duty vehicles of Toyota in 2020, which was the largest auto manufacturer in that year. This would represent a true transformation of the automotive sector.

Tesla is seeking to reduce barriers to EVs and renewable energy through developing EV charging, energy storage and solar products. Its EV Supercharger network is of a significant size at 2,500 locations in 2020. This is currently accessibly only to Tesla vehicles, although the company is piloting opening to all EVs in the Netherlands. The company’s energy generation and storage segment contributed 6.3% of total revenue and was profitable in 2020 and 2019. Tesla is targeting very high growth in the energy storage it deploys, from 3 gigawatt hours (GWh) a year in 2020 to 1,500 GWh by 2030. Tesla can improve by disclosing detailed plans to expand these low-carbon activities.

Tesla has not yet disclosed its total scope 1 and 2 emissions. These emissions are direct emissions from Tesla’s manufacturing, so the company should seek to reduce and limit them, particularly as Tesla expands its manufacturing operations to produce more electric vehicles. Tesla has stated that it plans to measure and report scope 1, 2 and 3 emissions at the enterprise level starting in its 2021 impact report, which would be a significant step towards transparency. Tesla has committed to setting a 1.5°C aligned science-based target for scope 1 and 2 emissions and has set out 7, unquantified actions to reduce its manufacturing footprint.

Tesla has begun to take action to reduce emissions in its supply chain, though these could be enhanced. The company’s supplier code of conduct requires suppliers to publicly report scope 1 and 2 emissions and look for methods to reduce them. Tesla is focusing on collecting information on CO2 in the cathode supply chain, though it is also partnering with BHP to use blockchain to track CO2 in the nickel supply chain. It is also aiming to develop more efficient in-house cell manufacturing and cathode manufacturing to reduce emissions, as well as battery and metals recycling and lithium refining. Tesla could go further by encouraging suppliers to set science-based targets or by making purchase commitments for low-carbon products like green steel.

Tesla has committed to setting a 1.5°C aligned science-based target for its scope 1 and 2 emissions. By 2030, it is aiming to sell 20 million EVs per year, as well as to deploy 1,500 GWhs of energy storage per year.

Tesla’s short-term strategic focus is the expansion of its manufacturing facilities in Shanghai, Berlin and Austin. The company is aiming to half battery cost per kWh, as well manufacture an affordable passenger car by 2023-2024.

Tesla sold just under half a million vehicles in 2020, all of which were EVs. It invested 47% of its capital expenditure in 2020 to research and development.

In 2015, Tesla was selling less than 50,000 EVs and has increased this number by ten times. The company has not disclosed its scope 1 and 2 emissions, so it was not possible to determine a trend in its emissions intensity.

Tesla’s product portfolio is compatible with a low-carbon economy and it is taking steps to reduce manufacturing and supply chain emissions. The company is not a member of any trade association that has lobbied against climate policy.