Tesla, the renowned manufacturer of zero-emission vehicles, has weirdly come under scrutiny by the Environmental Protection Agency in the US for supposedly not complying with hazardous air pollutant regulations. Well, this, of course, is not related to tailpipe emissions but is concerned with the surface coating on vehicles after the painting process. The carmaker has allegedly failed to report that its surface coatings comply with hazardous air pollutant regulations, which is why they have come under the eye of the EPA.
This development was revealed by Tesla in its latest quarterly filing, published earlier this week. Listed under Part II, Item 1 “Legal Proceedings,” it reads as follows,
In April 2021, we received a notice from the Environmental Protection Agency (the “EPA”) alleging that Tesla failed to provide records demonstrating compliance with certain requirements under the applicable National Emission Standards for Hazardous Air Pollutants under the Clean Air Act of 1963, as amended, relating to Surface Coating of Automobiles and Light-Duty Trucks regulations. Tesla has responded to all information requests from the EPA and refutes the allegations. While the outcome of this matter cannot be determined at this time, it is not currently expected to have a material adverse impact on our business.
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That said, there is no information as to what specific proof of compliance Tesla has provided to the authorities. Could this be something regarding Tesla's surface coating application process or could this be about certain chemicals used in the coating itself? We do not know as of yet. However, Tesla is adamant that it has been thoroughly communicative with the EPA with each of its enquiries. Paint quality is something that Tesla has recently had problems with, which they particularly noted while accelerating Model 3 production.
In an interview, back in February, CEO Elon Musk admitted,
“One of the things that was happening when we ramped up production was the paint wasn’t necessarily drying enough. So, it’s like if you go faster, you know, it’s just like you discover these things. If we knew them in advance, we’d fix them in advance. But you ramp a line and the paint that had an extra sort of minute to dry or two minutes or whatever, now it doesn’t have that two minutes. And so it was more prone to having issues.”
Tesla, however, does not have any official documentation of its coating process or its composition on its official website. There have been certain speculations that California's regulations limit the use of volatile organic compounds in automotive coatings, which required the company to then use water-based paints instead of solvent-based paints. The former, however, is more susceptible to picking up blemishes, However, with similar regulations in other states, Tesla wouldn't be the only carmaker facing such an issue. We will have to wait for more clarity in this regard.
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