Tesla Racks Up Pollution Violations
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Welcome to Tech News Briefing. It's Wednesday, November 27th. I'm Belle Lin for The Wall Street Journal. Tesla CEO Elon Musk is considered a champion of the environment for his role in pioneering the electric car industry.

But a new WSJ investigation uncovers an account of environmental problems across his companies, especially at Tesla's Gigafactory in Austin, Texas. Some of the issues reported there include the treatment of wastewater and air pollution at the plant, which is one of the biggest car factories in the world, roughly a mile long and more than 10 million square feet.

Our reporter Susan Pulliam tells us about Tesla's alleged environmental violations and how the company and regulators have responded.

Susan, in spring of 2022, production of Tesla's new Model Y SUV was ramping up at its Gigafactory in Austin. Sources told the journal that some environmental engineers and others at Tesla were concerned about a roughly six-acre, triangular-shaped evaporation pond that the company built to hold wastewater. What happened there? Yes, so there were a couple of issues having to do with wastewater in Austin.

One was what they called an evaporation pond, where they were basically dumping water from construction and other areas of the plant. For instance, the paint shop. Certain chemicals were being put in the pond and the issue was,

with the pond was that they didn't tell the city water authority that they were discharging the water from the pond into the city's sewer system without having treated it. If they'd taken out the pollutants or accounted for them, it would have been a different story. But they were sending it through to Austin Water Untreated.

They self-reported this to the city. Separate from the evaporation pond, which was kind of like a dumping ground for stuff from the plant, there was also this other big wastewater treatment effort that all companies have. They were required to treat the industrial wastewater that they produce through their manufacturing process every day. At Tesla, that amounts to about 500,000 gallons of water a day, according to Austin Water.

they have a permit that says exactly what they have to do to make sure that it's safe for that water to be sent to Austin Water and then out into the sewer system. But the problem is,

at Tesla was that as 2022 went on, there were some violations where they sent large amounts of water with higher levels of zinc, and all this went out into the Austin sewer system. So sources also told you about this giant casting furnace door at the Gigafactory that wouldn't quite close. What was the issue there? So it's a roughly 30-foot tall furnace that was custom made for Tesla.

And the way it was supposed to operate was basically an elevator would take the aluminum that was going to be melted to make car parts up to the top of the furnace, and then it would drop the aluminum in.

Then after that, as the elevator went back down to the floor of the factory, the door is supposed to close, but it didn't close. So it was left open much of the time during 2022 when they were scaling up production. And what was the result of having that door partially ajar or just not being able to close it all the way? The environmental problem was that it's sort of like trying to bake with your oven open. You would need to crank the temperature up pretty high.

So they were using high temperatures and more fuel. And so that meant that more pollution was going out of the stack from the casting shop into the environment. How did you find out about all of this? We found out from a former employee who brought these issues to the attention of the EPA in a long and very detailed memo. And then we confirmed the account with other former employees and regulatory documents.

It's an interesting story that would be hard to tell without somebody who can take you inside what the plant looks like, what the individual issues are, because they're very detailed and hard to conceptualize. And it's hard to understand why they even matter. Okay, so how has Tesla engaged with various regulators in Texas? There's a lot of back and forth between the regulators and Tesla despite the violations.

And despite the fact that they weren't necessarily fixing the problems as quickly or as efficiently or completely as maybe they should have, this is according to documents the regulators shared with us under public information requests. But they engage with the regulators. We saw the emails and the documents that go back and forth there. And one of the interesting things is that it falls to the state environmental regulators to monitor companies'

for their compliance with the big daddy environmental statutes, the Clean Air Act and the Clean Water Act. And what have Tesla and Elon Musk said about these alleged violations in Texas? As is typical for Tesla, they haven't responded to our extensive requests for comment from them, and they haven't responded publicly to these violations in general. But after our reporting published, Elon Musk posted on X saying...

quote, legacy media is a sewage pipe of lies. Coming up, Tesla's pollution violations didn't just happen at its Austin plant. After the break, we'll look at a journal analysis of EPA data at its Fremont, California facility. Stay with us. You want a straightforward path to your goals, but at Merrill, we know things may get in the way.

Or if new opportunities can put you at a crossroads, with the bull at your back, you get a personalized plan and a clear path forward. Go to ml.com slash bullish to learn more. Merrill, a Bank of America company. What would you like the power to do? Investing involves risk. Merrill Lynch Pierce Fenner & Smith Incorporated. Registered broker-dealer. Registered investment advisor. Member SIPC. A wholly owned subsidiary of Bank of America Corp.

And we're back with WSJ reporter Susan Pulliam. Susan, the Journal reported that when Elon Musk moved Tesla's headquarters from California to Austin in 2021, he cited tax incentives, lesser regulatory oversight, and the general political climate. So let's talk about Tesla's facility in Fremont, California. What were some of the biggest environmental violations there, according to regulators?

So the Bay Area Air Quality Management District is the air pollution regulator near the Fremont factory. They filed an abatement order, which is basically in order to fix the problem this year against testers.

Tesla noting that the Fremont factory had 112 violations over the last five years and these were all violations similar to the potential violations in Austin where they were sending more pollutants out into the air than they were allowed. The Bay Area air regulators made note that Tesla said it was going to fix the problems but didn't over a period of five years and so those 112 violations

are the second largest number of informal violations that a company facility has received in California. And so that makes them second only to Chevron, which is an oil and gas company, of course. Got it. What else have regulators tried to do in California to really take action? In terms of the 112 violations relating to air pollution in the Bay Area, there were no fines or any penalties associated with that.

Basically, they're just putting their foot down and saying, please fix this in a court proceeding. And to what extent were Tesla bosses aware of these problems at the plants? Our reporting shows that Tesla bosses were aware of the problems, but sometimes they took short-term fixes to avoid slowing production. That's what former employees say, and also according to the memo written by one former employee.

Some former police also said that there was fear among staffers that they might get fired if they drew attention to potential environmental hazards because senior managers didn't consider those issues to be mission critical. Okay. And what did your sources tell you about why Musk and his companies are allegedly flouting these environmental rules?

Musk has been very public about his attitude about regulators and regulatory agencies. He said repeatedly that regulators are strangling his businesses and the U.S. So Musk sets the tone in terms of how the company reacts when a problem comes up.

Susan, your reporting suggests that Tesla tried to hide its rule-breaking. This is from a memo to the EPA written by a former staffer who alleges that in the casting shop, there was an effort to attempt to pass the inspection by changing dials on burners of the furnace.

so that they would release less pollutants into the air. So that was one of the efforts that was described to us to sidestep regulators. Got it. So one of the ideas that's at the heart of your story is that Musk is considered this champion of the environment for his role in the EV industry.

How exactly does his reputation square with Tesla's alleged environmental rule breaking, according to your sources? Well, he helped pioneer the electric car business, which is a important green goal and initiative and good for the environment. But when it comes to details of how the environment is protected at the state level and

And location by location, at least his company records suggest that those things aren't as important to him. And Susan, what would you say was your biggest takeaway out of doing all this reporting? It takes about 10 years for the EPA to regulate a new chemical from the time they decide to review it to putting a rule on the books.

And at the state level, you've got these regulatory agencies that are trying to get companies to comply, but they don't really have an ax to wield. And so that means that companies have a lot of leeway when it comes to how their manufacturing processes influence the environment.

That was our reporter, Susan Pulliam. And that's it for Tech News Briefing. Today's show was produced by Julie Chang with supervising producer, Catherine Milsop. Logging off, I'm Belle Lin for The Wall Street Journal. We'll sign back in this afternoon with TNB Tech Minute. Thanks for listening. You want a straightforward path to your goals. But at Merrill, we know things may get in the way.

Or if new opportunities can put you at a crossroads, with the bull at your back, you get a personalized plan and a clear path forward. Go to ml.com slash bullish to learn more. Merrill, a Bank of America company. What would you like the power to do? Investing involves risk. Merrill Lynch Pierce Fenner & Smith Incorporated. Registered broker-dealer. Registered investment advisor. Member SIPC. A wholly owned subsidiary of Bank of America Corp.