Tesla to be fined millions: Violation of recycling requirements under German Batteries Act
The German Federal Environment Agency (UBA) intends to fine Tesla in Germany millions of euros. The reason for this is Tesla’s apparent failure to comply with the applicable regulations on taking back and recycling batteries.
According to a report in German broadsheet Welt am Sonntag, US electric car manufacturer Tesla will have to pay more than twelve million euros in Germany.
This was revealed in a report on the third quarter of the financial year submitted to the US Securities and Exchange Commission (SEC). The report is publicly available at https://www.sec.gov/Archives/edgar/data//1318605/000156459020047486/tsla-10q_20200930.htm.
Front page of the “QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934” for Tesla, Inc.:
Although the exact reasons for the UBA’s decision to fine Tesla in Germany are not yet clear, essentially the authority seems to have taken issue with the company’s failure to fulfil its obligations under the German Batteries Act (BattG).
Information about the fine on page 49 of Form 10-Q
The German Batteries Act (BattG) is based on Directive 2006/66/EC of the European Parliament and of the Council of 6 September 2006 on batteries and accumulators and repealing Directive 91/157/EEC (Batteries Directive). It obliges car manufacturers to ensure that defective batteries in electric cars sold are taken back or to appoint a disposal partner.
Overview of the obligations under the Batteries Act according to official information from the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety
Obligations of the manufacturers
Batteries containing harmful substances have to be labelled. Batteries may only be placed on the market by manufacturers if they have previously notified the Federal Environment Agency of their participation in the market and made return options available to the consumer. Manufacturers can ensure this either by joining a common return system or setting up and operating their own approved return system in line with Section 7 of the Batteries Act. Regarding requirements for return and disposal, every system is subject to the same requirements as the common return system.
Obligations of distributors:
Retailers have to take back used batteries from consumers free of charge and hand them over to the manufacturers for recycling or disposal. Distributors have to inform consumers about the options for returning batteries. Distributors of automotive batteries (starter batteries for vehicles) are obligated to charge a deposit of 7.50 Euros including value-added tax from end consumers if they do not return a used battery when purchasing a new one. The deposit will be paid back when the automotive battery is returned. Distributors offering automotive batteries using distance communication will be given the option of returning the deposit by accepting a proof of return instead of the actual used battery. The proof must document the proper disposal, for example through a public waste management utility or a local retailer. Distributors who offer batteries of the same kind are obligated to take back used automotive batteries free of charge and provide proof to the consumer.
Obligations of consumers
Consumers are obligated to return used batteries to retailers or to collection points set up by public waste management authorities (for example mobile pollutant collection centre or recycling centers).
Just recently, the German government renewed the Batteries Act and replaced the existing solidarity-based system with a “market-driven approach”
The technology trade magazine heise.de reported on 18 September 2020:
“In order to ensure uniform standards, the tasks of registering manufacturers and approving the return systems are to be performed by a single authority. The legislator has abandoned its previous approach of setting up and operating a common return system. In this way, it hopes to take ‘new market conditions’ into account.”
According to the report filed with the SEC, Tesla is alleged to have breached its take-back obligations.
Tesla states in its report to the SEC that the allegations relate primarily to “administrative requirements” and that Tesla has continued to take back battery packs from its vehicles.
According to unconfirmed industry sources, Tesla has allegedly refused, among other things, to take back batteries destroyed in car accidents. Damaged batteries may only be disposed of by specialist companies, which can cause the costs of disposal to skyrocket in individual cases.
According to its own report, the company has filed an objection to the decision and is unable to predict the outcome of the matter, including the final amount of any fine. No material adverse impact on the business is expected. Tesla and the UBA have both yet to comment on the matter.