Tesla's battery partner - Panasonic - deals with U.S. sanctions concerns as the company was unable to determine how much of the cobalt for batteries for Tesla cars comes from Cuba.

Because cobalt from Cuba isn't welcome anymore, the Japanese manufacturer was forced to suspend relations with a Canadian supplier.

Panasonic Cell - 18650 for Model S and X

Panasonic Cell - 18650 for Model S and X

"Two sources familiar with the matter told Reuters that some of the cobalt that Panasonic uses to make Tesla’s batteries is mined in Cuba by Canadian supplier Sherritt International Corp (S.TO).

Panasonic said it was unable to tell how much cobalt sourced from Cuba via its Canadian supplier ended up in the batteries it provided to the U.S. market “due to co-mingling of sources by its suppliers in several phases of manufacturing processes”.

“Panasonic has chosen to suspend its relationship with its Canadian supplier,” a spokeswoman said, without naming the supplier. She added that Panasonic had used cobalt from the Canadian supplier for batteries used in the Tesla Model S and Model X, but only after February this year.

“Panasonic has sought guidance from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) regarding its interpretation of the scope of the U.S. ban on Cuban-origin imports,” she said."

Panasonic and Tesla jointly operate at the Tesla Gigafactory in Nevada, producing lithium-ion battery cells that contain cobalt. It's not known how affected production will be, but a manufacturer that's as big as Panasonic probably has multiple suppliers (Sumitomo Metal Mining in the Philippines, for example) around the world so it will resolve this one way or another.

The news provided by Reuters proves however that these days it's not easy to do the battery or electric car business. Tesla needs to pay attention to the U.S.-China situation, there is the U.S.-Europe case on car imports and now also sanctions touching battery materials. The other place under fire is the Democratic Republic of Congo:

"Companies are under pressure to prove that the minerals they consume are sourced from mines that do not employ children or cause major environmental damage. Global cobalt supply is dominated by the Democratic Republic of Congo, which is riven by conflict and political instability."

The only good news here is that Tesla and Panasonic are targeting cobalt-free batteries in the future.

Source: Reuters