The Little-Known Truth About The Carbon Footprint For The Tesla Model 3 And Other BEVs

Summary

• Every BEV comes with a heavy “baggage” - the carbon footprint of its battery production. We review what factors influence how long it takes for a BEV to neutralize it.
• We calculate the drive distance needed to recoup the battery's carbon footprint for a wide range of possible scenarios, and present the results in an easy-to-review, easy-to-digest table.
• Finally, we draw some investment conclusion from the above analysis, and conclude that Tesla seems undervalued at today's valuation.

Introduction

There's no shortage of articles that try to convince us about the heavy CO₂ footprint of battery electric vehicles. John Petersen just wrote one recently, concluding that the Tesla (NASDAQ:TSLA) Model 3 has a heavier CO₂ footprint than Toyota’s (TM) Camry Hybrid. Although that might be true, I will show in my analysis that it does not matter much. Battery Electric vehicles have not only better driving characteristics and economics, but also a lot more favorable environmental footprints -hence they are destined to win over. And Tesla is leading the way in that segment.

It is true, every BEV comes with a heavy “baggage” - the carbon footprint of its battery production. For instance, it has been calculated that the Model 3 battery comes with a 12.75 metric ton CO₂ footprint. However, if we look at the greenhouse gas emissions from passenger vehicles on the EPA site, we find that "a typical passenger vehicle emits about 4.6 metric tons of carbon dioxide per year.” A battery baggage of 12.75 metric tons does not seem so insurmountable now. But what about other cars/models in other countries?

In order to understand if BEVs are really helping the environment, I would frame the question a bit differently: How long does it take for an electric vehicle to “recover” the CO₂ baggage of its battery production?

As it turns out, there are only four major factors that influence the answer if we want to calculate the mentioned distance:

1. What size is the battery’s CO₂ emission baggage?
2. What's the energy consumption of the BEV per mile?
3. In which country/grid is the energy produced and what is its CO₂ footprint per kWh?
4. What is the fuel economy and CO₂ emission of the comparable gasoline car per mile?

Since it would be quite difficult (and convoluted) to

Analyst’s Disclosure: I am/we are long TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.