Tesla Inc.
Company Double Materiality Analysis
This one-page analysis examines a company’s products, services and operational practices and whether they positively contribute or detract from sustainability goals. Our analysis relies on quantitative indicators, leading industry frameworks and covers topics most relevant to the company’s industry. A primer describing the Double Materiality approach is available here.
Tesla Inc.
Ticker: TSLA US
ISIN: US88160R1014
Market Cap: US$690 billion
GICS Sector: Consumer Discretionary
SICS Industry: Automobiles
Country: United States
SMS theme: Achieving the Energy Transition
SMS sub-theme: Sustainable Transportation
Contribution to theme: Neutral
Company Description
Tesla, Inc. engages in the design, development, manufacture, and sale of fully electric vehicles and energy generation (solar panels) and storage systems. It also provides vehicle service centers, supercharger stations, and self-driving capability.
Revenue exposure by country/region: USA (49.8%) and China (21.8%).
Contribution to the sub-theme objectives:
Though its product has positive impact, being an operational laggard puts Tesla outside of our investable universe. Tesla is a successful pioneer in the EV business, but it lags behind best practices for labor and governance. The company has low scores in employer ranking frameworks, lacked D, E and I information until recently and Musk's compensation package has been a point of contention.
Operational Performance
(Laggard, Aligned or Leader)
Material Topics for Automobiles: Product quality & safety, Labor practices, Product Design & Lifecycle Management, Materials Sourcing & Efficiency.
Assessment: Laggard
Despite not being a SASB Material element for Tesla’s sector, Governance is nonetheless an issue that comes back often when discussing Tesla’s ESG performance. Musk’s remuneration is one pain points for most ESG investors.
Employee treatment and satisfaction constantly comes up in ESG reports as being one of Tesla’s weaknesses.
Tesla’s safety performance could be damaged by quality issues if the recalls keep coming.
Tesla is the automaker with the most control over its battery supply chain at the moment so despite the intrinsic negative impact of sourcing minerals and metals, it minimizes impacts with leadership in sourcing and recycling.
Controversies: A lot of controversies every year. The most recent ones concern insider trading, investigation over false claims on self-driving, lawsuits on autopilot, workers calling out racism, governance problems, and more.
Product/Service Impact
(Negative, Neutral or Positive)
Assessment: Positive
Electric vehicles is a big part of the energy transition and Tesla was a pioneer in this business. Moreover, Tesla is involved in energy generation and storage systems.
By 2030, Tesla is aiming to sell 20 million electric vehicles per year (compared to 0.5 million in 2020) and plans to deploy 1,500 GWh of energy storage per year (compared to 3 GWh in 2020).
Tesla invests a good amount of money in R&D. In 2022, it’s 3.8% of revenues that were re-invested in R&D. On a per-car-sold basis, it represents $2,131 vs the industry average of about $500.
SDG Alignment:
