Investors were already ditching their Tesla stocks before the universal tariffs announced last week, collectively lopping off more than a third of the share’s value since Trump took office. Tesla car sales are going down too, even as global electric vehicle sales have continued their brisk ascent, up 24% in 2024. Tesla reported a 13% drop in deliveries of new cars in the first quarter of 2025. The numbers are particularly bad in Europe, where the carmaker has sold 42.6% fewer cars so far this year compared to the same period in 2024.

The bad times come on the heels of Musk’s astounding rise to the top of the U.S. government. The CEO’s hard turn to the far right and his vote-buying largesse in the recent election helped launch him to a position of unprecedented power for an unelected official, and he’s been using his ill-defined authority to aggressively dismantle key government agencies.

But Musk’s chainsaw-wielding approach to governance, his close alignment with Trump’s authoritarian rise, and his outspoken support for extreme-right political figures in the United Kingdom and Germany have all together made him extremely unpopular on the left. While traditional investors are looking at the fundamentals and trying to avoid further losses from the brand crisis at Tesla, other investors are eliminating their exposure to Tesla on ethical grounds.

Is Tesla a responsible investment?

Last Wednesday, Toronto-based sustainability-focused financial planner Tim Nash held a webinar to answer the number one question he says he’s been getting from his clients: how to divest from Tesla?

Participants listed multiple reasons for wanting to divest: “Being invested feels morally wrong due to its connection with Musk,” wrote one. “Because Elon is unconstitutionally and illegally dismantling my government,” wrote another. “I’m thinking of USAID,” wrote another.

It’s no secret that Tesla has been a market leader in the green transition for years. But when we can tick off a wide range of problems year after year without any prospect of any improvement – in fact, quite the opposite – it is difficult to argue that we should remain invested.

– Jens Munch, CEO, Akademiker Pension

Cutting funding for the U.S. Agency for International Development has so far been the most consequential action of Musk’s Department of Government Efficiency. Internal USAID memos leaked to The New York Times anticipate two to three million additional deaths each year from lack of vaccinations. More than 130,000 deaths have already occurred as a result of cuts to USAID, according to a tracker by the Boston University School of Public Health.

For his part, Nash looks to the main ratings services for environmental, social and governance issues to make a judgment about whether to include Tesla in a responsible stock portfolio. Sustainalytics rates Tesla a “medium” on ESG factors and gives it a score of 24.8, putting it squarely in the middle of the pack for automakers. Likewise, MSCI’s ESG and climate rating service gives Tesla a BBB rating, well below its EV competitors in China.

MSCI signals issues for Tesla across all 12 of its controversy indicators and raises several ESG-related red flags, including the fact that it lacks a decarbonization target, doesn’t measure its own carbon footprint, and has had problems with product safety and quality. In March, nearly all of Tesla’s Cybertrucks were recalled for using a low-quality adhesive on some of the exterior panels.

Corporate governance is another area where Tesla is considered a laggard. Last spring, The Nation reported on Tesla’s toxic work culture, including sexual harassment and racism on the job. Musk has also been convicted in a U.S. court for violating labour law by using social media to threaten and dissuade workers from unionizing. Sustainalytics has identified 14 controversies that it classifies as moderate or significant.

Two European institutional investors have recently ditched Tesla over its labour practices. The Swedish insurer Folksam dropped its $160-million stake over union disputes, and Denmark’s AkademikerPension announced its decision to divest in March, citing concerns about labour rights and Musk’s behaviour. “It’s no secret that Tesla has been a market leader in the green transition for years,” CEO Jens Munch Holst said in a statement. “But when we can tick off a wide range of problems year after year without any prospect of any improvement – in fact, quite the opposite – it is difficult to argue that we should remain invested.”

Tesla’s ubiquity in U.S.-based mutual funds and ETFs

Tesla has long been a dominant force on the S&P 500, its valuation propped up in part by the anticipation of self-driving cars and robotaxis. Past breakthroughs and controversies surrounding the company have put Tesla’s stock on a rollercoaster of big price swings not dissimilar to the recent spike and sell-off.

Tesla stock prices last started to soar on November 7, the day Trump won the election, and then began falling quickly after Trump took office on January 20. Tesla share prices have stabilized around where they were before the election, perhaps thanks to Trump’s performative purchase of a red Model S at the White House and the promise of patriotic Tesla buyers in the United States. Bloomberg reports that the main group keeping Tesla shares buoyant is fans of Musk. The price is hovering for now in a range not far below the median of the last five years.

RELATED

Are Teslas about to become a Republican status symbol?

Meet the four most sustainable funds on the market for 2025

Why are financial advisers shunning green funds?

With a market capitalization that exceeded US$1 trillion through much of the winter, Tesla’s valuation has exceeded those of GM, Ford, Toyota and other car companies combined. But Tesla has been priced dramatically higher than its competitors since 2020. Shares in the company have a long distance to fall before they would reach even the baseline range of other major carmakers.

Because Tesla is among the largest by market capitalization on the S&P 500 and because its product is EVs, the company is included on many sustainable funds, including the Mackenzie Corporate Knights Global 100 Index ETF, which is based on Corporate Knights’ Global 100 list of the world’s most sustainable companies. Tesla ranked 45th on the 2025 G100 ranking.

“The job of our research department is to be objective as to what the company contributes toward climate change,” says Michael Yow, director of rankings at Corporate Knights. “At the end of the day, what matters with regard to our methodology is sustainable products and sustainable investments that mitigate global warming.” Labour disputes and other legal violations that lead to a proven indictment against the company could trigger an exclusion if the sum total of fines, penalties and settlements in relation to revenue is above 1%, Yow says. But so far that hasn’t happened.

Responsible ETFs that exclude Tesla

For retail investors who aren’t comfortable trading individual stocks, Nash suggests the iShares ESG Balanced ETF Portfolio, or GBAL, an “all-in-one” ETF whose holdings are filtered through ESG considerations. It consists largely of other ETFs, and of those its U.S. holding – where Tesla would normally be included – is the iShares ESG Advanced MSCI USA Index ETF, or XUSR.

XUSR excludes weapons, fossil fuels, for-profit prisons, predatory lending, palm oil, genetically modified organisms, and “sin stocks” like tobacco and adult entertainment. It also filters out companies that are involved in severe controversies. Tesla isn’t listed as a holding. “I think it’s those recalls,” says Nash, on why Tesla might be screened off the fund. Nvidia is the top holding, but other big tech companies like Apple, Microsoft, Amazon and Facebook are excluded. “A lot of those tech companies have controversies that get them screened out,” Nash says. XUSR doesn’t screen for financed emissions, so Canadian banks are included.

GBAL has given an 8.3% return over three years as of March 2025, and compared to XBAL, an all-in-one ETF unrestricted by ESG considerations, GBAL has offered comparable and at times superior returns over the past five years, Nash points out.

GBAL isn’t the only “one-ticket” sustainable ETF that excludes Tesla, Nash says. CI MSCI World ESG Impact Index ETF, or CESG.B, is a diversified global ETF that aligns with the UN Sustainable Development Goals and that does not hold Tesla. Likewise, Tesla doesn’t appear in the top 10 holdings of the CIBC Sustainable Global Equity Fund, or CSGE. For an ETF more focused on clean energy, the AGF Global Sustainable Growth Equity ETF, or AGSG, doesn’t have Tesla as a holding.

Correction: An earlier version of this article included an incorrect designation for Tim Nash. 

Mark Mann is an editor at Corporate Knights. He’s based in Montreal.

The post How some sustainable investors are getting Tesla out of their portfolios appeared first on Corporate Knights.

“Make no mistake, we are developing a clear understanding of the key levers needed to deliver a more profitable EV rental fleet in a world that is moving toward electrification,” Hertz CEO and Chair Stephen M. Scherr told a shareholder meeting last October, months before the EV sell-off news dropped.

“Transitions of this magnitude are not easy, and there are important factors, including charging infrastructure, the pace of OEM [original equipment manufacturer] production, and the growth of the EV aftermarket that we simply cannot control.”

EVs presented issues for Hertz that the company had not prepared for in its EV adoption projections. For one, Hertz said EVs came with significantly higher repair costs—not from regular maintenance, which executives said was cheaper than for internal combustion engine (ICE) cars, but from collision repair, where costs ran twice as high for EVs as their ICE counterparts.

There was also a higher rate of damaging incidents among EV rental drivers that made the cost difference a more significant issue. As one commentator pointed out, this may be because EV rental drivers who usually drive ICE vehicles may not have had enough time to get used to the differences in driving experience between the two vehicle types.

EVs are “heavier than gas-powered cars and they deliver the sort of acceleration that can slap the back of your head against the headrest, which could explain why Hertz said EVs are involved in more collisions than gas-powered rentals,” David Berman, investment reporter for the Globe and Mail, recounted from his own EV-driving learning curve.

Adding to that, Tesla had cut the list prices of its vehicles since Hertz’s initial investment, so that the company faced significant losses when it sold cars for salvage.

If you are “coming to the conclusion that Hertz’s ‘EV problem’ is, in reality, a ‘Tesla value and repair costs problem,’ you’re not alone,” wrote MotorTrend editor Alex Kierstein. “It’s difficult to draw conclusions about EV suitability for the rental car market when so many cost factors conspired against Hertz’s mostly Tesla fleet.”

Hertz’s executives have said the company still intends to pursue EV rentals as a long-term plan. Indeed, Scherr told shareholders there is “an undeniable transformation under way” as U.S. EV ownership rates rise, and as government and corporate demand for EVs grows.

Every year, EVs are increasingly taking up a larger share of total vehicle sales.

 

– Arthur Zhang, Canadian Climate Institute

“We know the challenges at hand and are working to remedy that, which we can,” said Scherr. “And we will pace ourselves accordingly with an expectation that our in-fleeting of EVs will be slower than our prior expectations, but we will be stronger for having begun the journey when we did.”

Berman said Hertz’s snail’s pace is not indicative of the wider market.

“By 2026, battery electric vehicles and plug-in hybrids will account for 42% of European new passenger vehicle sales and 52% of sales in China,” he wrote, and while the U.S. is “a notable laggard,” EVs will account for 28% of vehicle sales by 2026 even there.

Meanwhile, “by 2026, sales of gas-powered cars will be 39% below their peak in 2017.”

In Canada, ICE vehicle sales have already peaked, writes 440 Megatonnes, a project of the Canadian Climate Institute.

“Every year, EVs are increasingly taking up a larger share of total vehicle sales,” research associate Arthur Zhang says in a new blog post. “EV sales grew at a staggering annual rate of 46%, increasing over eightfold between 2017 and 2023,” and sales in the first three quarters of 2023 surpassed volumes for the entire previous year.

This article was first published by The Energy Mix. Read the original story here.

The post Hertz electric fleet sell-off does not spell doom for future of EVs appeared first on Corporate Knights.

This utility-scale project, several years in the making, will provide backup storage to Canada’s most populous province and is being built by Six Nations of the Grand River Development Corporation (SNGRDC) and NRStor, a storage start-up, with $50 million in backing from the Canada Infrastructure Bank. (Tesla, Northland Power and Aecon are also partners.) SNGRDC CEO Matt Jamieson (of the Tuscarora Nation) rhymes off the benefits: local jobs, cleantech investment, emission reductions and a major boost for the region’s clean energy infrastructure, in which Six Nations is a significant investor. Indeed, the deployment of grid-scale energy storage projects will allow wind and solar farms to operate at full capacity – something that hasn’t happened in recent years because Ontario’s system operator curtailed the use of renewables in favour of gas plants that can be turned on and off as demand requires. 

But for Jamieson, the Oneida Energy Storage facility’s most salient calling card is that it will kick-start a long overdue investment in a critical piece of the energy transition puzzle that has been overlooked for years. “We are the first movers,” he says of the Indigenous-led project. “We’ve created the utility-scale energy storage market in Ontario.”

The energy transition over the next three decades will be possible only with the deployment of huge electricity storage systems, such as Oneida’s that can hold a charge for up to four hours, as well as other longer-duration storage technologies that can hold energy for 10 hours or longer. The International Energy Agency (IEA) has stated that the rapid scaling up of energy storage systems will be critical to bridge the hour‐to‐hour variability of wind and solar electricity on the grid, “especially as their share of generation increases rapidly in the net zero scenario.” As a 2022 MIT Energy Initiative study put it, “Energy storage enables cost-effective deep decarbonization of electric power systems that rely heavily on wind and solar generation without sacrificing system reliability.”

That goal will require electrical utilities to add tens of thousands of megawatts (MW) of energy storage in large-scale facilities as they expand their portfolio of renewables. Over the past few years, according to IEA data, the U.S., China and Europe have driven up investment in short- and long-term energy storage, with about 6,500 MW installed as of 2021. In the U.S., the world leader, much of that investment has been driven by incentives and building code requirements adopted in states like California and Maryland, with others, like New York, establishing ambitious targets for the next decade. 

Ontario is making an especially big bet on storage to help meet the rising electricity demands of electric vehicles and economic growth during the closure of the Pickering nuclear power station. Last year, the province issued a major request for proposals to acquire 2,500 MW in energy storage through 2027; the Oneida project is part of this push – the largest to date in Canada.

Where the sun doesn’t shine

For many years, electricity storage was limited to one technology: pumped hydro. This old-school technique, which requires a lot of civil engineering and dams that have excess generating capacity, uses surplus or inexpensive electricity to run huge pumps that fill hydro reservoirs. The stored energy can be used later when grid operators decide to release the water, thus driving the turbines that generate new power. However, the rapid investment in wind and solar over the past 15 years has raised the stakes for energy storage technologies. Both of these renewables are intermittent, and so it makes sense for utilities or system operators that want to invest in clean generation to figure out how they can store electricity when the sun is shining or the wind is blowing, and then use those stored electrons later, as needed. “There’s a symbiotic relationship between the two,” says Travis Lusney, director of power systems for Power Advisory LLC, a consulting group. 

Storage has another potential climate benefit as well. On very hot afternoons when all the air-conditioning is running flat out, or during other times when electricity demand is particularly high, system operators often rely on natural-gas-fired “peaker plants” to provide top-ups. These facilities can be turned on and off quickly (unlike nuclear plants). If power generated by renewables can be stored and then used when demand surges, the storage technology effectively displaces the burning of fossil fuels, thus reducing emissions.

We are the first movers. We’ve created the utility-scale energy storage market in Ontario.

 

– Matt Jamieson, CEO, Six Nations of the Grand River Development Corporation

Over the past decade or so, a number of energy storage technologies have been piloted, with varying degrees of success. Early wind entrepreneurs thought to run the current generated by a turbine through water, thereby producing hydrogen that can be compressed, stored and used as a fuel. Other approaches include the capture of waste heat or using surplus power in air compressors, with the highly pressurized gas stored and available for later use as an energy source. Justin Rangooni, executive director of Energy Storage Canada, says there are several other short- and long-duration storage technologies in the research-and-development pipeline, many of which rely on various advanced materials, common metals, and chemicals, from sodium to zinc and aluminum. 

As the technology and the market mature over the next few years, the choice of the mode of energy storage used by utilities or institutions like hospitals will be determined by the application. “What storage is saying is ‘What do you need [and] what are you trying to achieve?’ and then looking at the menu of options in terms of energy storage technology,” says Rangooni.

Growing battery farms 

Battery farms, using large-scale versions of an EV power pack, turn out to be the most scalable solutions for grid operators, and also the most mature from a commercialization perspective. Six Nations’ Jamieson says that during the Oneida planning process, he went to San Francisco to see the plant where Tesla makes the Megapack, and his team also vetted other vendors. “There’s a lot of considerations around emergency-response planning, fire suppression, exposure, protection, earthquake, floods, and all sorts of mitigation tactics have gone into this technology,” he says. “It comes down to the bankability of performance that we’re looking for, to ensure that all stakeholders are satisfied.” Tesla has installed hundreds of megawatts of battery storage capacity in Australia as part of the country’s push to enable utilities to use more renewables without destabilizing grids. 

Six Nations had another crucial perspective that informed its decision to pursue the battery farm deal. For several years, the First Nation has invested heavily in solar and wind farms in southwestern Ontario, including on the site of a huge and now decommissioned coal-fired generating plant. But Jamieson says the income from the renewables has ebbed because of a policy called “curtailment,” which means these facilities may be temporarily taken off-grid because the power they’re producing isn’t needed at that moment. “There’s a deferral of compensation, which doesn’t help the ratepayers,” says Jamieson. 

Six Nations certainly isn’t the only renewables producer that has faced this problem, which occurs specifically because this clean power can’t be stored until it’s needed. Investments in large-scale battery storage will effectively have a double benefit because they’ll enable those wind and solar farms to generate more revenue for the community, Jamieson points out. “We look at this from [the perspective of] where’s the opportunity to enhance the positioning of renewables in the province? Without some sort of an energy storage solution, we will be continually facing this [issue because] of the intermittent nature of how renewables function.”

The sprawling new Oneida battery farm, as he puts it, “is a new tool in the tool kit.”

Toronto journalist John Lorinc writes about cities, sustainability, and business. 

The post Six Nations leading the charge on Canada’s largest battery farm appeared first on Corporate Knights.

It feels almost fashionable to bash responsible investing these days. 

Most of the criticism targets the acronym “ESG,” which stands for “environmental, social and governance.” ESG is used alongside traditional financial analysis to account for previously ignored “externalities” such as carbon emissions, boardroom diversity and employee satisfaction. Unfortunately, some circles erroneously refer to ESG as some sort of “woke” form of investing that pushes a “socialist agenda” into capital markets.

These misguided attacks are increasingly coming from people in high places. Elon Musk recently tweeted that “ESG is a scam” after Tesla got removed from a major ESG index for a lack of disclosure around key environmental and social issues and allegations of racism on the factory floor. Noted venture capitalist and PayPal founder Peter Thiel said in an April speech that “ESG is a hate factory” and equated it to the Chinese Communist Party. Even former U.S. vice-president Mike Pence joined the attack, saying “liberal activist investors are forcing private companies to abide by ESG investing principles, elevating left-wing environmental, social, and corporate governance goals over the interests of the business.”

Most of these hit jobs seem intended to score political points with a specific audience. Musk’s comments align closely with his recent embrace of right-wing politics. Thiel’s speech was made at a Bitcoin conference where attendees must have been upset about cryptocurrencies coming under fire for their heavy carbon footprint. Pence was speaking at an oil and gas conference where executives are being asked tough questions by investors looking to decarbonize their portfolios. Investors in unsustainable assets are feeling the heat, so we shouldn’t be surprised that they would fight back with anger against a movement that makes them accountable for the pollution they are generating.

But it’s not all broad-brushstroke political attacks. I’m seeing more nuanced critiques from industry insiders. Tariq Fancy, former BlackRock chief investment officer for sustainable investing, in a recent TEDx talk called fossil fuel divestment a placebo, equating it to giving wheatgrass juice to a cancer patient. Stuart Kirk was suspended from his job as head of responsible investing at HSBC after dismissing climate risk at a conference and telling us what he really thinks: “Who cares if Miami is six metres underwater in 100 years? Amsterdam has been six metres underwater for ages and that’s a really nice place.”

These comments have understandably caused quite a stir. They show that many large financial firms are just paying lip service to sustainable investing, and we shouldn’t kid ourselves to think that they are in it to change the world. Profit maximization is still the end goal, so sustainable investors need to expect greenwashing and do their homework before buying in.

These comments also show that there is a massive skills gap in the sustainable investment industry. Fancy and Kirk have no background in environmental studies, systems thinking or sustainability, and it shows. We are fooling ourselves if we think that a profit-first worldview will help us solve sustainability challenges. Fancy and Kirk have done a great job calling out problems in the responsible investment industry, but they offer little in the way of solutions.

Are these critiques a good excuse to dismiss all responsible investment funds and companies? Of course not. If anything, the political attacks show that we’re on the right track – we’ve got their attention. The more nuanced critiques are an opportunity for us in the responsible industry to step up our game, and fight back. We need better communication and explanation of what ESG is and what it isn’t. We need rigorous academic research to back up our claims. We need to be leaders in disclosure and transparency, opening up the curtain for anyone who asks. And we need change-makers and social innovators to learn finance so that we have people with the right worldview in positions of power at our large financial institutions.

The post ESG isn’t a scam. Here’s why. appeared first on Corporate Knights.

“That’s a fact,” barks Jerry Dias, national president of Unifor, which represents workers in Canada’s automotive assembly sector.

Dias doesn’t drive an electric vehicle but is quick to add, “I will get one when my members build one.”

That day is approaching.

This past fall, Dias and his team finalized agreements to bring EV production to Oakville and Windsor, Ontario. In a wide-ranging interview, the head of the country’s largest private-sector union tells me how he lobbied key players to secure deals worth $1.95 billion at Ford and up to $1.58 billion at Fiat Chrysler.

Dias relishes telling the story. He stresses that the investments were the product of a remarkable alignment. “You had the federal government looking at major infrastructure spending, you had a pandemic, [and] the whole discussion of what does ‘build back better’ really look like.”

Unifor had long supported electric cars, but not all decision-makers were receptive. “[In 2018] you had Trudeau talking about greening the economy and you had Doug Ford saying the total opposite.” But in spring 2020, word leaked that Ford Oakville was planning to discontinue the Edge SUV. “So I contacted Dearborn [Ford’s headquarters in Michigan] and said, ‘What’s going on?’” Dias discovered the Edge would indeed be phased out in Canada.

“So then we really started to push the narrative,” he recalls. “I spoke with the Prime Minister’s Office, with [Infrastructure Minister] Catherine McKenna, with [Industry Minister] Nav Bains.” Dias told them EVs are the future. “About 3% of the world market is electric vehicles, but by 2040 it will be 50%.”

He believes Ford had little choice. “They weren’t going to close the only assembly plant in Canada. There would have been a war!” he says. “I got a call from Jim Hackett, who was the outgoing CEO from Ford, and then I got a call from Jim Farley, the incoming CEO, telling me [that] we’ll find a solution.”

While the Ford and Fiat Chrysler deals are seen as environmental victories, Unifor’s agreement with the third of the Big Three is problematic. In November, GM announced it will invest up to $1 billion in its Canadian operations to build traditional pickup trucks. I ask Dias how this squares with his climate commitments.

“We needed to get people back to work. If it’s 50% EV by 2040, it’s still 50% [internal combustion] … the key thing is to have your hands in both pots. This was about a short-term solution with a vision to the long-term.”

Dias is a bridge between conflicting worlds. He calls himself an environmentalist but represents oil workers. He acknowledges the planet is moving away from fossil fuel but thinks a complete transformation in 20 years is “too aggressive.” He sees values in nuclear power as a climate solution but feels the technology gets a free pass while wind is unfairly criticized.

“We have a wind turbine on our education centre [property],” he says. “There is not an issue that creates more dissent with our union in the community than that wind turbine. You’ve got a nuclear power station 10 miles down the road that if it went sideways would blow up the entire community. But there’s no debate on that; the debate is about my one turbine.”

Dias was born into a union family in 1958. His father worked at De Havilland Aircraft, becoming president of the local in 1967. Dias began his own career at De Havilland, spent a year at York University (“I hated it”), then returned to the company in 1978 and became shop steward. “My parents come from Guyana,” he explains. “In Canada they say, ‘The apple doesn’t fall far from the tree.’ In Guyana they say, ‘Goats don’t make sheep.’”

Perhaps Dias’s leadership is best demonstrated by his participation in a January 2020 picket line at Regina’s Co-op oil refinery. There to support locked-out workers fighting for pensions, he was arrested for mischief and sent to jail – a situation no Canadian labour leader had faced since postal workers’ president Jean-Claude Parrot rejected back-to-work legislation and went to prison in 1980. “I would never expect our members to stand up to the police on a picket line without doing it myself,” Dias says. “You have to lead from the front.”

Dias’s worldview is, finally, pragmatic. In 2024, Fiat Chrysler’s Windsor plant will indeed produce electric vehicles – but also internal-combustion vehicles. “This is all about options,” he argues. “You can fly two kites at the same time.”

None of this detracts from his role in launching Canada’s entry into the major leagues of EV manufacturing.

Dias doesn’t drive a Tesla. He’s driving something greater.

Gideon Forman is a transportation policy analyst at the David Suzuki Foundation.

The post Jerry on the job appeared first on Corporate Knights.

For a start, there still isn’t sufficient supply of EVs getting into Canada to meet consumer demand. According to a report prepared for Transport Canada by Montreal-based Dunsky Energy Consulting, just one in three Canadian car dealers had an electric vehicle in stock in the first half of February 2020 (before the pandemic prompted showrooms to close for two months). That figure fell to less than 20% outside of Quebec, B.C. and Ontario, with an average of two- to three-month wait times. “That means many Canadians struggle to find an EV to test drive, let alone buy,” Clean Energy Canada said in a statement.

For those who manage to find the EV of their choice, here’s the kicker: even with the rock-bottom borrowing rates being offered on conventional internal combustion engine (ICE) vehicles during the pandemic, the costs of both financing and leasing remain higher for EVs than for similar ICE vehicles, in some cases by as much as 3.5%. As a result, monthly payments and total cost of borrowing are disproportionately high. For consumers who are already cost-conscious in the current economic climate and find higher EV sticker prices a stretch, their higher leasing and financing rates are likely to be a deterrent.

Why are EVs being left out in the cold?

Since the era of Model Ts, banks have been offering loans for car purchases on the assumption that if the borrower couldn’t repay a loan, the bank could seize the car and sell it for a residual value.

The hitch for EVs is that there’s not a lot of historical data available to establish reliable residual values. That leaves banks working with worst-case scenarios for depreciation. While that means higher financing rates, EV leasing rates are most significantly impacted because of the need to estimate buyout rates.

Corporate Knights looked at the purchase price of the Nissan Leaf, Chevy Bolt and Hyundai Kona, factoring in each province’s available rebates and delivery charges, to examine the differences between leasing and financing rates offered for EVs and ICEs. The calculations are based on having no trade-in vehicle and making no down payment, which would be unusual, and some automakers would require the latter, but doing so equalizes the represented figures as much as possible. The rates shown are promotional and subject to a credit check, meaning they may not be available to every customer. Estimated lease buyouts are calculated based on a 24,000-kilometre annual allowance. These quotes were provided by real dealerships and don’t factor in any negotiating that customers might do.

Bolt best on financing

Through our research, we found that Nissan offered the most extreme example of financing disparity. With the Nissan Leaf Plus, financing rates across Canada were quoted at 3.9% as of late August for both 60- and 84-month terms. In Ontario, where the amount to be borrowed is highest, at $52,571, including taxes and the $5,000 federal iZEV rebate, this equates to a monthly cost of $716 over 84 months, with a total cost of borrowing of $7,587. Reduce that term to 60 months at the same rate and the cost to borrow naturally goes down to $5,377, with a higher monthly charge of $966.

By contrast, in late August it was possible to finance a Nissan Murano ICE SUV for a much more enticing 1.9% over 84 months and 0% over 60 months. Were those same rates available to a Leaf Plus buyer, the 84-month monthly payment would be nearly $50 less, at $669, and the cost of borrowing goes down by more than half, to $3,615. At the 60-month term, where 0% financing means there’s no cost to borrow at all, the monthly payment goes down by $90 to $876.

Hyundai wasn’t much better. While the automaker was offering 0% financing for up to 84 months on many ICE vehicles for much of the summer, the Kona EV rates were quoted at 2.79%. A customer financing a Kona EV in Ontario would borrow a total of $50,356.44 with sales taxes, resulting in a payment of $660.61 per month. This is $54 more than if that same customer opted for a Hyundai Santa Fe Luxury, a much larger gas-guzzling SUV that’s very close on price, at $50,949.44, but with cheaper monthly payments thanks to the 0% financing available over the same term.

If Hyundai’s EV and ICE rates were on par, the monthly payment for the EV would be reduced by $62 a month in Ontario and $52 a month in Quebec. In B.C., financing rates were slightly higher for the ICEs we looked at; at a rate of 1.49% over 84 months, the difference in the monthly payment is $27 per month, and the cost to borrow is reduced by nearly half.

In contrast, General Motors was running a promotional financing rate of 1.99% on 2020 Bolt EVs in August, which was more on par with the ICE.

For reference, Canada’s most popular EV, the Tesla Model 3, can be financed at around 2.15%, with a required down payment of $2,500 and a usual wait time of two to three months.

Leasing lead

For leasing, 48 months is a common term. Again, Nissan had significantly higher rates than GM for the EVs in our research, with the Leaf Plus at 4.9% (monthly cost of $716 and a total of $6,413 in interest paid). Contrast that with the 1.9% lease rate over the same term on a Nissan Murano; a Leaf Plus at that rate would cost $636 per month and only $2,461 in total interest.

At Hyundai, the gap in lease rates is in some cases greater than with the Nissan Leaf Plus, but the monthly rates remain lower because of the lower up-front cost of the vehicle. A customer leasing a Kona EV in Quebec would pay $560 a month over 48 months at 4.99% for a total interest payment of $5,036; if that same buyer opts for an ICE Santa Fe, the rate goes down to 1.49%. Had the Kona EV customer been given that rate, the monthly cost becomes $488 (a $72 savings), while the overall interest paid would be significantly lower, at $1,486.

As of August, Tesla is finally offering leasing options to Canadians, at least in Alberta, B.C., Ontario and Quebec. The Model 3 requires a $2,500 down payment and comes with a leasing rate of 3.85%, which is higher than similarly priced ICE competitors such as the Mercedes-Benz C-Class, offered at a lease rate of 2.99%.

Bridging the gap

Fitting monthly payments into customer budgets is key to closing deals. The current higher financing and leasing rates for EVs, the on-paper difference in monthly payments and overall cost of borrowing between EVs and ICEs is wide enough to turn away all but the most determined EV shopper.

How can we start to narrow that gap? A Corporate Knights Building Back Better report proposed a government-led system of guaranteeing EV auto loans over three years. Doing so could be just as critical as rebates to meeting Canada’s EV sales targets of 10% of light-duty vehicles per year by 2025, 30% by 2030, and 100% by 2040, by making it possible for Canadians to purchase or lease EVs with monthly payments that are on par with their ICE-driving counterparts.

Advocates say that if Canada also implements a zero-emission vehicle standard that requires a gradually rising percentage of vehicles sold to be zero-emission (as Quebec does), more Canadians could start driving away with EVs, all without being taken for a ride.

Stephanie Wallcraft is a multiple-award-winning automotive journalist based in Toronto and is the president of the Automobile Journalists Association of Canada (AJAC).

The post The electric car you can’t buy or lease appeared first on Corporate Knights.

Longer-range capabilities and the new federal incentive program, iZEV, are combining to make battery electric vehicles a more appealing and attainable option than ever. But if you’re looking for even more motivation to choose an EV, consider the lower total cost of ownership.

EVs don’t have oil to change or sparkplugs to replace, and that means fewer trips to the shop. According to current estimates, EV owners can expect to spend roughly a third less on maintenance over the life of their vehicles as compared to their internal combustion engine (ICE) equivalents.

Add in the fuel savings and the differences can be stark. Here, we’ve analyzed the popular Nissan Qashqai subcompact crossover against a similarly sized battery electric, the Kia Niro EV, and we’ve compared the Mercedes-Benz C-Class Sedan to the Tesla Model 3. As was the case when Corporate Knights conducted faceoffs with the Nissan Leaf, Chevy Bolt and Hyundai Kona Electric, the numbers show the benefits of choosing electrons over emissions.

Here’s an explanation of the figures we’ve used in this analysis:

• As of this writing, fuel prices are at historic lows due to the market forces at play during the COVID-19 pandemic. However, these prices are not expected to last. Since we’re assuming a 10-year period of ownership in our estimates, and prices over the past 10 years have swung anywhere from the current $0.75 to as much as $1.50 per litre in some markets, we’ve chosen a median average per-litre (L) cost of $1.25, understanding that this is the most volatile variable. For power rates, we’ve used a figure of $0.10 per kilowatt-hour (kWh). The published range and efficiency figures are as rated for each model by Natural Resources Canada (NRCan), (population-weighted average electricity bill per province, including taxes, assuming majority of charging occurs during off-peak hours).
• We’ve assumed the EV buyer would be a new owner, so we’ve factored in the purchase and installation cost for a Level 2 charger, using the total cost for a FLO Home unit of $1,745.
• We’ve made our calculations using the national average Canadian sales tax of 11.075%.

Kia Niro vs. Nissan Qashqai

Crossovers have become wildly popular with Canadians, and several EVs sporting this body style have hit the market to compete with mainstream equivalents.

One is the Kia Niro EV, the battery electric version of this subcompact crossover, which is also available in ICE and plug-in hybrid variants. The EV has an impressive 385-kilometre (km) range and comes in two models, or trims; here we examine the SX Touring trim, which is more expensive, at a manufacturer’s suggested retail price (MSRP) of $54,995 and a total cost of $55,929 with fees. Since the base model is priced under $50,000, this trim also qualifies for the iZEV program, and yet it adds features owners won’t want to live without, such as a heated steering wheel, front and rear heated seats, and a heat pump, which not only make it more suited to Canadian life but also make in-cabin comfort significantly more efficient (heated seats use less energy than cabin heaters and therefore less electricity, increasing the EV’s range). NRCan doesn’t account for these differences in efficiency in its ratings, which show the Niro EV averaging a combined 18.6 kWh/100 km.

Nissan’s subcompact Qashqai is a popular player in this growing segment. The SL Platinum grade carries an MSRP of $34,133 – slightly higher than advertised because there are no zero-cost paint colours – and a total of $36,213 with fees. This model matches the Niro EV SX Touring closely in features but offers one significant difference: it comes with all-wheel drive (AWD), which is desirable in winter driving and on imperfect roads but drives up its fuel use. According to NRCan, a Qashqai AWD averages 8.4 L/100 km combined, as opposed to the 8.2 L/100 km average seen in front-wheel-drive models.

We calculated based on both vehicles needing to be financed in full, less a $1,000 deposit, and used a 2.9% interest rate over a 72-month term, which are common numbers for each of these vehicles.
After running these through our estimator using the assumptions outlined above, the Niro EV ends its 10 years of ownership with a total cost of $86,264.50, which is $833.72 less than the Qashqai’s $87,098.21 – and all while producing 45.3 tonnes less in CO2 emissions over its life.

Tesla Model 3 vs. Mercedes-Benz C-Class

To look at this comparison fairly, we need to assess the Tesla Model 3 against the only four-door, non-performance variant of the Mercedes-Benz C-Class sold in Canada: the C-Class 300 4MATIC (AWD). This model has an MSRP of $46,400 and costs $48,575 after fees, and has a combined fuel efficiency rating of 9.4 L/100 km.

Longer-range models are available, and a lower-cost, “million-mile” battery has been announced that will debut in the Model 3 in China late this year or early next. For now, we presume for the purposes of this comparison that the buyer wants a Model 3 variant that qualifies for the iZEV program, making the best match the Standard Range Plus. This strikes a good balance between price and capability, with an estimated range of 402 km and an advertised price of $55,990, which includes destination charges and delivery fees. However, it comes equipped as rear-wheel drive only; to get the two-motor, AWD version, it’s necessary to pay $10,000 more for the Long Range model and give up the rebate, for a total hit of $15,000. The trade-off is in efficiency, which in the Standard Range Plus model is the best in the Model 3 lineup, at 14.9 kWh/100 km combined. This variant has heated 12-way front seats and includes the autopilot feature, but it doesn’t come equipped with self-driving features like autopark and summon, which are available only as a post-delivery, added-cost option.

We’ve also factored in a deposit of $5,000 since luxury brands typically request a down payment of 10%. In preparing this comparison, we found different interest rates on offer: Mercedes-Benz advertises a rate as low as 1.9% on the C-Class for qualified buyers, while Tesla’s website shows 4.6%.

Even in doing so, our model estimates the total cost of ownership for the Model 3 at $90,866.90 over 10 years versus $102,475.95 for the C-Class, for a savings of $11,609.06 over 10 years – and 50.9 tonnes less CO2 being pumped into the atmosphere.

According to a study cited recently by incoming Honda Canada president Jean Marc Leclerc, Canadians are currently willing to spend up to $700 more to buy EVs, which doesn’t cover the difference in production cost. Would more effective communication of the total cost of ownership, which clearly demonstrates savings of much more than $700 over the long-term, help car buyers mentally bridge the gap and tolerate higher up-front vehicle prices? Perhaps incorporating these figures into window stickers and engaging in education programs would help push electric vehicles into the consciousness of everyday consumers and bring this technology into the mainstream.

Stephanie Wallcraft is a multiple-award-winning automotive journalist based in Toronto and is the president of the Automobile Journalists Association of Canada (AJAC).

The post Assume EVs are pricier? Our latest showdown proves otherwise appeared first on Corporate Knights.

The brawny marketing stunts carried a simple message: electric cars aren’t just for tree-hugging Leaf, Prius and Bolt lovers anymore. The message is timely, with global leaders (including Prime Minister Justin Trudeau) committing to carbon pollution targets of “net zero” by 2050, tough new emissions standards coming out of Europe, and a smattering of governments following Norway’s early lead on banning gas-powered-car sales as soon as 2025. For the vast majority of automakers that have cautiously dipped their toes in the EV market, the race to net zero is officially on. But environmental and human rights advocates, along with international heavyweights at the World Bank and World Economic Forum, say there’s an elephant in the showroom. The EV revolution has been racking up a whole supply chain of trouble around the globe (including a recent lawsuit) related to an onslaught of often-contentious new mines opening to meet surging battery-metal demand, not to mention the coming tide of e-waste from old batteries.

If we want to fix this before e-cars take over the roads (30% of car sales should be electric across the EU and North America by 2030, analysts forecast), the time to ensure it’s done right is now. A handful of companies are trying to get out ahead of looming environmental and social risks. So who will be the first to develop a fully ethical battery, and can car companies ensure the EV revolution is green from end to end?

Lithium mines in Chile, Open Commons

The clean-energy mining boom

The transport sector is currently the fastest-growing contributor to the climate crisis, according to the World Resources Institute (with road, rail, air and marine transport accounting for 24% of global CO2 emissions in 2016). Electrified transport – powered by low-carbon grids – could help clear deadly air pollution and cut millions of tonnes of greenhouse gas emissions per year. In the shift from burning planet-cooking fossil fuels to generating and storing clean energy in batteries for our cars and, increasingly, our homes, one thing is certain: batteries are driving demand for more minerals in the low-carbon transition.

Bloomberg New Energy Finance predicts that by decade’s end the battery market will be worth $116 billion annually (not including investments in supply chains), up from $14.6 billion in 2017. Trailblazing EV manufacturer Tesla and others have warned that underinvestment in the mineral supply chain will lead to a shortage of nickel and other EV battery minerals down the road. In its 2017 report The Growing Role of Minerals and Metals for a Low Carbon Future, the World Bank forecasted that global demand for low-carbon-economy minerals such as lithium, graphite and nickel will skyrocket by 965%, 383% and 108% respectively by 2050. But two years later, as the World Bank noted that growing demand for minerals offers an “opportunity for mineral-rich developing countries to develop,” it cautioned that “significant challenges will likely emerge if the climate-driven clean energy transition is not managed responsibly and sustainably.”
But those challenges were already lurking.

Cobalt mining, Congo. Image courtesy of Amnesty International

The dark side of green minerals

Amnesty International first thrust the dark side of mining for car- and smartphone-battery minerals into the spotlight in 2016 with a damning investigation into the child labour-plagued cobalt mines of war-torn Congo (home to 60% of global cobalt reserves). Then in late 2019, the issue hit the front pages again when a landmark lawsuit was launched against Tesla and a handful of tech giants on behalf of 14 Congolese families who say their children were seriously injured or killed working in cobalt mines earlier in the year.

With cobalt dubbed the “blood diamond of batteries,” Tesla and others have been slashing their use of the controversial mineral and replacing it with nickel in a move that’s said to prolong range per change. Not that cutting and running from the Congo will help those mining in poverty, say activists, and without tough responsible mining standards in place, other EV minerals end up being called out for bad behaviour, too. The Washington Post recently reported that nickel mines in Indonesia are turning the oceans there red. The draining of water reserves for vast lithium mines in the salt plains of Latin America has been fingered for fuelling water wars, social unrest and mine strikes in Chile, Bolivia and Argentina. And a new frontier of destructive deep-sea mining for several green economy minerals has prompted the nation of Fiji, along with Greenpeace and others, to call for an immediate moratorium on the nascent practice.

At a MiningWatch conference in Ottawa in November, the human and environmental implications of this new extractive rush were front and centre. Representatives from Chile, Peru, Papua New Guinea, Congo and northern Canada took the stage one by one, concerned about the green transition being used as justification for running roughshod over their ecosystems and human rights. “The floor is dropping on standards in Peru,” said Ana Leyva Valera, executive director of CooperAcción, through a translator. With increased demand for green technology minerals, she said, “we have to make sure there are not more sacrifice zones.”

The International Institute for Sustainable Development (IISD) has studied what it calls “green conflict minerals” (cobalt, nickel, lithium, rare earths and aluminum). The problem with green economy minerals, says IISD analyst Clare Church, is that they’re often found in countries with fragile governments, making their extraction prone to violence, conflict and human rights abuses. But like nearly every other speaker at the conference, Church goes out of her way to make one point clear: “This is not to say the transition [to a clean economy] can’t happen – it must happen.”

The question, say the IISD and others, is whether green economy minerals – and the companies that source them – can help fuel thriving, peaceful and sustainable development in communities with key mineral reserves – rather than exacerbating local unrest.

It’s a challenge Amnesty threw at carmakers at an EV summit in Norway last spring: can the auto industry develop the world’s first fully ethical battery within five years? In a statement, Amnesty’s secretary general, Kumi Naidoo, said car companies “have the resources and expertise to create energy solutions that are truly clean and fair.”

Perhaps because cars need such a large volume of minerals compared to, say, a smartphone (EV batteries weigh in at roughly 500 kilos per car), and perhaps because EV owners tend to be a fairly conscientious bunch, EVs – and the companies that make them – are now driving demand for more ethical mineral sources.

CAR COMPANIES (FINALLY) BET BIG ON EVS

A Reuters analysis found that global automakers plan to spend a combined US$300 billion on EVs over the next decade. In the last year, carmakers made some major cash commitments:

Audi is accelerating EV spending to €12 billion by 2024 and plans to offer 30 electrified (20 fully electric) vehicles by 2025.

BMW is funnelling €10 billion into new battery-cell contracts for its upcoming electric cars. It hadn’t launched a new all-electric car in seven years, but three new ones are coming online by 2021.

Hyundai just committed US$17 billion for electric and driverless cars by 2025 (less than half of that will go to EVs, so roughly US$8 billion).

Fiat Chrysler has committed to investing €9 billion to launch more than 30 electrified cars by 2022.

Volkswagen plans to spend €60 billion on rolling out 75 fully electric models and 60 hybrid vehicles over the next five years.

GM announced a US$2.3 billion joint venture with South Korea’s LG Chem to build an EV battery factory, in addition to spending US$3 billion to build an electric pickup factory in Detroit as part of its plan to add 20 new battery-electric and fuel-cell vehicles by 2023.

Ford in 2018, said it plans to spend US$11 billion by 2022 to produce 40 new electrified cars.

Nissan is pumping US$9 billion into China alone to bring more EVs to that country and plans to introduce more than 20 electric models by 2022.

Toyota earlier in 2019, said that by 2025 all models will have electrified versions. It’s spending US$2 billion on developing EVs in Indonesia alone through 2023.

Daimler in 2018, announced plans to buy €20 billion worth of battery cells for its EVs by 2030. Its entire Mercedes product range will be electrified by 2022.

Volvo will launch a new electric car every year through 2025, when it will phase out gas-only car sales entirely. Volvo told Corporate Knights it doesn’t disclose its spending on EVs.

So, which car companies are coming clean?

One route to cleaner EVs involves boosting transparency. A few leading car companies – BMW, Daimler and Renault, as well as Samsung and Apple – have started publishing supply chain data. (While Tesla doesn’t disclose cobalt suppliers, it does publish lists of its tungsten, tantalum and tin suppliers, as mandated by California law regarding officially designated conflict minerals.)

Supplier disclosure is an important first step in shedding light on shadowy supply chains – something leading sneaker and clothing brands started doing years ago in response to sweatshop scandals.

Following the unveiling of Volvo’s first fully electric car, the XC40 Recharge, this past fall, the Swedish carmaker announced that it will begin using a blockchain platform (essentially a decentralized digital ledger) to trace its cobalt. Volvo Canada’s Matt Girgis tells Corporate Knights that while Volvo has long been marketed as the safest car in the world, it’s now trying to position itself as the safest car for the planet. Making sure its minerals are “clear and safe from unethical issues,” as its blockchain partner put it, is particularly pressing now that, as of 2020, all new Volvo models will be hybrids or plug-ins, with gas-only vehicles phased out by 2025.

It’s a sign of the times that the world’s largest cobalt miner, Glencore, announced in December that it too will start using blockchain for better traceability (days before it was named as the main supplier in the Congolese lawsuit). Glencore and Fiat Chrysler are now the newest members of the Responsible Sourcing Blockchain Network, joining Volvo, VW and Ford.

Not that blockchain alone will solve human rights or environmental violations. “Blockchain is a powerful tool for tracking,” says Aimee Boulanger, executive director of the Initiative for Responsible Mining Assurance (IRMA), “but only if the information going in is quality” – that is, independently verified so that responsible practices are met throughout the supply chain.

There’s a hustle right now to show we can do this right, with mines that better respect communities and the environment near those mines.

–Aimee Boulanger, IRMA

Up-and-coming IRMA positions itself as the most rigorous third-party mining standard to emerge. It aims to do for mining what Forest Stewardship Council certification has done for forestry by creating a trusted standard for sustainable paper and wood products. Microsoft, Tiffany and Anglo American are already IRMA members; BMW is the first carmaker to sign up. To date, most mine certifiers have been industry-run and/or lacked teeth. Case in point: the World Bank’s recently launched Climate-Smart Mining Facility fund was slammed by a coalition of more than 50 NGOs (including Earthworks, Greenpeace and IndustriALL Global Union) for having weak performance standards and minimal oversight.

IRMA is just coming online, so don’t expect to see a car with 100% IRMA-certified battery minerals any time soon, says Boulanger. “There’s a backlog of demand for responsible mining materials,” she says. “There’s a hustle right now to show we can do this right, with mines that better respect communities and the environment near those mines.”

First world problems: bringing battery production home

In the race to ramp up EV production, a growing number of companies are looking to lock down a steady and sustainable battery supply by wresting production away from coal-heavy China – which currently dominates global battery manufacturing – and bringing production home. Literally.

Swedish battery developer Northvolt’s ambition has been to build a battery industry on European turf – from mining and refining to manufacturing and recycling. “Our mission,” it says, “is to build the greenest battery in the world with a minimal carbon footprint and the highest ambitions for recycling to enable the European transition to renewable energy.” Northvolt has teamed with Volkswagen to create the European Battery Union (EBU). BMW is also an investor.

They’re not alone. A separate 200-member European Battery Alliance (EBA) just announced that its seven EU states would contribute €3.2 billion to finance a supra-national farm-to-fork-style initiative – but for minerals – with new pilot plants to be built in each country. Estimates by the European Institute of Innovation and Technology suggest the entire battery value chain in Europe – mining, refining, cell manufacturing, battery packs and recycling – will be worth €250 billion by 2025. Northvolt predicts that by 2030 Europe will be home to at least 10 gigawatt-scale battery production plants.

Industry players say Natural Resources Canada has been aggressively laying the groundwork for a comparable boom on Canadian soil. Last summer, the feds launched a $4.5 million Impact Canada challenge aimed at accelerating made-in-Canada battery innovation. The Canadian CEO of one leading cathode supplier to EV battery producers around the world, BASF Canada’s Marcelo Lu, says that Canada has all the right ingredients to become a major battery hub: “Canada is one of the few countries that has all the elements to produce a lithium-ion battery for electric vehicles.” For instance, he says, Canadian nickel, like that found in Sudbury, is naturally rich in cobalt (Canada has 3% of known cobalt reserves).

Refining those minerals locally in provinces with low-carbon grids and shifting more mining, refining, manufacturing and recycling to Canada is on the vision board for many. But activists are quick to point out that Canadian mines aren’t beyond reproach. At the MiningWatch conference, residents and Indigenous leaders flagged water contamination and concerns about Indigenous consent in regard to various proposals in northern Quebec and around the country.

Which is why the secret to unlocking the EV revolution’s greenest potential may lie not in mine shafts but under the floorboards of aging cars.

Tesla launching closed-loop battery recycling at its Gigafactory in Nevada. Photo: Planet Labs, Inc.

Can the transition economy join the circular economy?

The International Energy Agency, which has perennially underestimated the march of green technology, estimates that annual EV sales will reach 23 to 43 million by 2030, and there should be up to 250 million electric passenger vehicles on the road, up from just five million today. As millions of EVs near retirement age, with that will come a flood of e-waste. As little as 5% of lithium-ion batteries are currently recycled, but tapping into the half tonne of metals and minerals in each and every EV battery will be key to breaking away from a linear (mine it, make it, trash it) value chain to a greener and, ideally, cheaper circular one. Refurbishing and reusing aging car batteries as energy storage packs for solar panels is one exciting innovation (after eight to 10 years of use, most batteries retain 80% of their capacity), and some are finding new life providing off-grid power to homes, businesses, streetlamps, stadiums, factories – you name it.

Recycling insiders say they’d rather see old batteries increasingly recycled into new batteries. Though, at this point, Nissan has been refurbishing its LEAF batteries rather than recycling them because it’s just plain cheaper.

A recent study in the journal Nature, by researchers at the University of Birmingham, says that car companies need to start designing batteries for easy disassembly, reuse and recycling. The EU and China already require battery makers to finance the costs of collecting, treating and recycling used batteries. Ontario is finalizing similar regulations.

So far, Tesla, Toyota and European car companies have taken an early lead on recycling. In its 2019 environmental-impact statement, Tesla announced that it will stop outsourcing recycling and will soon launch a closed-loop battery recycling process at its Gigafactory 1 in Nevada.

Keeping battery recycling close to home is one way to minimize the human rights and environmental hazards that have dogged e-waste recycling overseas. One Canadian start-up co-founded by a University of Toronto engineering grad has figured out a way to recover 80 to 100% of all lithium-ion battery components. After a $2.7 million injection from the Canadian government, Li-Cycle is now recycling batteries for several major car companies at its plant just outside Toronto. Lithion Recycling, a Quebec start-up with $3.8 million in federal backing, says it will be able to recycle 95% of a battery’s components at its Montreal pilot factory by early 2020.

However, even if recycling and reuse are mandated, academics say, there won’t be enough minerals above ground in old EVs to make fully recycled batteries for years to come.

NGOs say that we can take pressure off the planet’s scarce mineral resources if we prioritize investments in electric-powered public-transit infrastructure over pushing everyone to buy a new electric car.

Regardless, stringent standards ensuring that batteries are socially and environmentally responsible – from mining to manufacturing to end of life – need to be nailed down. The World Economic Forum’s Global Battery Alliance – a coalition of car companies, battery makers such as BASF and organizations such as the World Bank and UNICEF – is meeting in Davos in January to firm up strategies. BASF’s chair, Martin Brudermüller, issued a statement ahead of the meeting: “The time to change the trajectory of the value chain is now.”

In 20 years, will fair-certified cars with recycled-content logos be as commonplace as fair-trade coffee and Forest Stewardship Council–certified paper, scrutinized by third-party auditors and stamped with sustainable seals of approval? With so many batteries driving the clean energy transition, it’s hard to see how we can have a sustainable electric future unless it’s ethical to its core.

The post The EV revolution will take batteries, but are they ethical? appeared first on Corporate Knights.

Volkswagen is Germany’s largest automaker and runs neck-and-neck with Toyota to be the world’s largest automobile company. In addition to its lower priced VW models, the company also owns brands like Audi, Bugatti, and Porsche. (Yes, this article is a great excuse to spend time ogling the new electric Porsche Taycan.)

The company took a major hit when it was caught cheating by the U.S. Environmental Protection Agency. The scandal cost VW €26 billion, and there may be more penalties to come. Volkswagen is still under investigation by the U.S. Securities and Exchange Commission, and former CEO  Martin Winterkorn was charged with fraud in Germany. Investors should be cautious—more bad news is almost surely on the way.

It’s understandable that Volkswagen wants to turn the page on this story, and it seems like its strategy is to leap frog over internal combustion engines by investing €30 billion over the next four years to launch fifty different electric cars. As CEO Dr. Herbert Diess said in the company’s 2018 sustainability report, “On the road to emission-free mobility, we are putting all our weight behind the electric car.”

VW is betting that the future of mobility is electric, and hoping that people will forget about their dirty diesel history. We got a taste of the new branding with this week’s unveiling of an updated logo and the new ID.3 electric model. I’m not a car expert, but it looks pretty good in this early review. European deliveries will start in the middle of next year in with a base model priced at under €30,000. By comparison, the Tesla 3 starts at €57,000.

If you put the scandal aside, Volkswagen’s underlying financial situation looks fairly good. They’ve had growth in the top line (revenues) and the bottom line (profit) each year since 2015. The stock hasn’t been doing well, so investors looking to bet on electric vehicles might do better to invest in Volkswagen rather than pricey Tesla stock. But some people just won’t forgive Volkswagen for its past sins, so let’s take a look at Toyota, Volkswagen’s main rival.

Toyota launched the first Prius hybrid in 1997, and it has dominated the market for hybrid cars ever since. But it’s no surprise that you’ve never heard of a fully electric Toyota because it doesn’t exist. Toyota has made a strategic decision to sell hybrid vehicles for now and to develop zero emission hydrogen fuel cell vehicles in the future.

My concern with hydrogen fuel cells is that they require the construction of a whole new distribution network. Gas stations need to be replaced by hydrogen stations, whereas electric vehicles can be plugged in to the existing grid. This makes perfect sense for centralized vehicles, like buses and forklifts, but it’s hard to imagine that it’ll become mass market anytime soon. Really, it comes down to how rapidly consumers start adopting fully electric vehicles. Toyota will be behind the curve if we see exponential growth, but would likely win the long game if the internal combustion engine ends up experiencing a long, slow death or hydrogen fuel cells emerge as the most popular zero emission option.

While Toyota was a pioneer of hybrid electrics, and Volkswagen is betting big on the future of all-electric, both companies are trying to make sure a switch away from internal combustion vehicles doesn’t happen too quickly. They’d like to squeeze out as much profit as possible from the billions they have poured into their internal combustion production lines before they become obsolete.

According to InfluenceMap, a U.K.-based non-profit that maps the extent to which corporations influence climate policy, Toyota is the bigger obstacle to progressive policies. The company scored a D–, which is at the bottom end of the range of major automakers. InfluenceMap cited Toyota’s apparent support of the U.S. Administration roll back of fuel efficiency and greenhouse gas standards, its opposition to phasing out conventional vehicles in India and the U.K., and its lack of support for zero-emission vehicle mandates in China and the EU.

Volkswagen is not much better. The company scored a D+, which is the top end of the range of automakers. According to InfluenceMap, the company didn’t appear ready to support more ambitious CO2 targets in Europe despite a 2017 leaked internal document suggesting that it was. Conversely, in 2018, Diess strongly criticized EU proposals to tighten vehicle CO2 targets for 2030, arguing that they would negatively impact the sector’s international competitiveness. In 2018, Diess also warned against an ambitious transition towards electric vehicles in the transport sector and opposed bans on specific vehicle types, namely diesel.

Toyota’s financial statements are, understandably, in a better place than Volkswagen’s right now. Investors have seen more growth and less volatility with no major scandals beyond the odd product recall. With a higher clean revenue score, Toyota wins the Sustainable Stock Showdown for now, but Volkswagen is picking up speed in the race to all-electric vehicles. I’ll be keeping a close watch on these companies. If the market shifts quickly towards electric vehicles, Toyota could start eating Volkswagen’s zero-emissions dust.

Beta is a measure of a stock’s volatility in relation to the market. By definition, the market has a beta of 1.0, and individual stocks are ranked according to how much they deviate from the market. A stock that swings more than the market over time has a beta above 1.0. Lower beta means less risk.

Have a company in your portfolio that you want to replace with a more sustainable option? Write us an email or send us a tweet.

Tim Nash blogs as The Sustainable Economist and is the founder of Good Investing.

The post Is Volkswagen’s stock charging up or still sputtering toxic fumes? appeared first on Corporate Knights.

Billionaire entrepreneur Elon Musk is disrupting the establishment – again. The chief executive of Tesla Motors said Thursday that other companies and organizations are free to use and build on Tesla technology patents without fear of being sued.

It’s tough to say what caveats Musk may be attaching to such openness, but the decision could prove a pivotal point in the history of modern electric vehicles.

Writing on the company’s blog, Musk made clear that his decision was in the spirit of the open source movement.

“Tesla Motors was created to accelerate the advent of sustainable transport,” Musk wrote. “If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal.”

So to instead further that goal, Musk made an unconventional pledge: “Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”

Wow. Double wow.

In Musk’s view, aggressive patent protection has only served to stifle progress and “entrench the positions of giant corporations and enrich those in the legal profession.” He equated the receiving of patents as “a lottery ticket to a lawsuit.”

During its early years Tesla took patent protection seriously out of concern the big carmakers would try to copy its technology and then use their manufacturing, sales and marketing power to crush Tesla. Upon reflection, Musk said it was the wrong approach to take. The reality, he pointed out, is that major automakers are not dedicating enough resources to electric car development and that is hurting us all.

“Given that annual new vehicle production is approaching 100 million per year and the global fleet is approximately 2 billion cars, it is impossible for Tesla to build electric cars fast enough to address the carbon crisis,” Musk wrote. “By the same token, it means the market is enormous. Our true competition is not the small trickle of non-Tesla electric cars being produced, but rather the enormous flood of gasoline cars pouring out of the world’s factories every day.”

The bottom line, he added, is that there’s more than enough market opportunity to go around that Tesla doesn’t need to jealously guard its patents.

“We believe that applying the open source philosophy to our patents will strengthen rather than diminish Tesla’s position,” he said.

The proof, however, is in the puddin’. What Musk means, exactly, by “in good faith” leaves a lot open to interpretation. Is Tesla really giving up control or is Musk talking about a kind of managed open-source movement – open-source lite?

More clarity will be needed. Big carmakers – more precisely, the lawyers of big car companies – won’t simply take Musk at his word. CK expects Tesla will release more details of its newfound openness over the coming weeks and months.

The post Tesla embraces open source? appeared first on Corporate Knights.