VW, Ford and Tesla Batteries Linked to Indonesian Nickel Deforestation
An investigation traces nickel from Sulawesi mines, which have been tied to rainforest loss on Tolaki lands, into battery supply chains for the carmakers
By AXY Business Desk ·
Key points
- An investigation published by The Guardian on 16 October 2026 links nickel from Indonesian mines to battery supply chains of Volkswagen, Ford and Tesla.
- The mines in question are tied by satellite analysis to widespread deforestation of primary rainforest on land inhabited by the Tolaki people in Sulawesi.
- The investigation traces ore through Huayou's Morowali smelter and Chinese cathode plants, but says public filings do not show the volumes needed to link specific ore to specific car batteries.
- Huayou confirmed group-level supplies to CATL in response to a 2024 Shanghai Stock Exchange inquiry, and European and US scrutiny of battery sourcing is likely to grow.
Nickel mined on Indonesia's Sulawesi island may have ended up in batteries powering electric vehicles made by Volkswagen, Ford and Tesla, according to an analysis published on 16 October 2026 by The Guardian in partnership with Voxeurop and other European media partners. The investigation links the battery supply chains of these carmakers to mines that satellite analysis associates with widespread deforestation of primary rainforest on land inhabited by the indigenous Tolaki people. The findings expose a difficult problem for the auto industry. Electric vehicles generally produce fewer emissions in use than petrol and diesel cars, but the raw materials in their batteries can carry serious environmental and social costs at the point of extraction.
What the investigation found
According to the report, corporate disclosures and trade flows from the past two years connect mines in the battery supply chains of major automakers to the loss of trees in Sulawesi, a wildlife hotspot that holds the world's largest nickel deposits. Ore from the Cahaya and Hengjaya mines was traced through regional smelters and Chinese processing plants run by Zhejiang Huayou Cobalt, a cathode manufacturer that supplies CATL, the world's largest battery maker. Huayou's corporate reports list US and European carmakers as end-users. Additional corporate files and trade data show a separate route from Huayou to LG, a South Korean group that also supplies battery products to leading carmakers, via Poland.
The investigation does not claim that every battery from these supply chains contains Sulawesi nickel. Public filings do not disclose the specific volumes or timings of sales from Huayou to CATL, which would be needed to connect individual ore shipments directly to individual car batteries. Huayou did confirm group-level supplies to CATL in response to a regulatory inquiry by the Shanghai Stock Exchange in 2024. Chengdu B&M, a downstream subsidiary of Huayou, has also confirmed the supply of 'large quantities' to CATL. The report's central finding is therefore that the supply links are real and documented at the corporate level, while the exact path of a given vehicle's nickel remains unproven.
The investigation also traced shipments from the cathode factories and CATL battery plants to the assembly lines of carmakers in the United States and Europe. In one example cited in the reporting, Volkswagen's facility in Braunschweig, Germany, received a shipment in October 2024 of 24 tonnes of cell modules worth about $390,000, according to data from Volza, a trade data platform.
Why nickel matters for batteries
Nickel is a metal widely used in the cathodes of lithium-ion batteries. The cathode is one of the two electrodes that store and release electrical energy inside a battery cell. Nickel-rich cathode chemistries increase energy density, which means a battery can store more energy for its weight and size. For carmakers, that translates into longer driving range from a battery pack of a given size, which is why nickel has become central to the industry's push toward electric vehicles.
That demand has created enormous pressure on the countries that produce the metal. Indonesia has become one of the world's leading nickel producers, and Sulawesi contains some of its most important deposits. The ore that feeds this industry is often laterite, a type of weathered, iron-rich rock. The nickel-bearing form described in the investigation is limonite, which is typically processed through a series of steps before it becomes a material usable in batteries.
From Sulawesi mines to Chinese battery plants
The investigation describes a multi-step supply chain. Ore from the two mining concessions is sent to a nickel smelter in an industrial complex in Morowali, on Indonesia's eastern coast. A smelter is a facility that heats and chemically treats ore to extract metal. The Morowali plant is operated by Huayou's local subsidiary, where limonite is refined into mixed hydroxide precipitate, an intermediate material that is the primary raw material for making battery cathodes.
Trade figures cited in the report show that $606 million worth of mixed hydroxide precipitate was shipped from the Morowali plant to ports in China in 2024, followed by a further $470 million in shipments in 2025. From there, the processed material was transported overland to Huayou cathode manufacturing sites in Quzhou, near Shanghai, and Yulin, near the border with Vietnam. Because the cathode plants then supply battery makers, the shipments show how a single source region can feed several links in a global chain that ends in vehicles sold in Europe and the United States.
The Tolaki people and the forest
The human cost of the mining expansion is central to the investigation. The Tolaki are an indigenous people of the Sulawesi region, and the report says the mines have been built on lands they inhabit. A Tolaki elder named Wadimula, whose home sits on the edge of the 21,000-hectare Cahaya mining concession, described the relationship between his community and the forest. A mining concession is a government-granted right to extract minerals from a defined area. 'We used to ask the forest for protection in return for our offerings,' Wadimula said. 'Destroying it means destroying our own life.'
For indigenous communities, the loss of primary rainforest is not only an ecological problem. Forests supply food, water, medicine and cultural and spiritual identity. When land is cleared for mining, these links can be severed quickly, and the disruption often falls hardest on people who have had little say in the decisions that shape their territory.
Why it matters for drivers, investors and regulators
For ordinary drivers, the findings raise a question about what an electric vehicle's environmental credentials really include. Electric cars typically produce no tailpipe emissions, and the investigation notes that they are less environmentally harmful than fossil-fuel engines that foul the air and add to heating of the planet. But the batteries depend on critical minerals sourced from Africa, Asia and South America, and the impacts of mining do not disappear simply because the car is electric. Environmental groups warn that the continued growth of material-hungry sport utility vehicles, or SUVs, increases the quantity of minerals that must be mined, which in turn adds pressure on forests and communities.
For investors and carmakers, the story highlights the reputational and regulatory risks of opaque supply chains. Analysts following the sector would expect that scrutiny of battery sourcing will grow, particularly as European rules on battery supply chain due diligence require companies to identify and manage environmental and human rights risks in their supply chains. This could make it harder for companies to rely on general assurances and push them toward more detailed traceability, including mine-level and smelter-level disclosure.
For regulators in Indonesia and China, the findings put a spotlight on how mining permits are granted and monitored, and on how processing facilities report their customers. The Shanghai Stock Exchange inquiry that prompted Huayou's confirmation of supplies to CATL shows that corporate disclosure rules can be a route to clarity, but the investigation suggests that more granular data would be needed to trace individual batteries.
What to watch next
Several developments will determine how far this story reaches. The first is how the named companies respond to the findings and whether they disclose more detailed sourcing information. The second is whether regulators in China, Indonesia or Europe open formal reviews of the supply links or the deforestation claims. The third is whether satellite monitoring and independent field research can confirm the scale of forest loss tied to the Cahaya and Hengjaya concessions.
Readers should also watch for changes in how battery makers report their upstream suppliers. Greater transparency about smelters, refiners and mines would allow investigators and buyers to test supply claims more directly. Until then, the investigation makes a clear point: the environmental record of an electric vehicle depends not only on what happens on the road, but on the forests, communities and factories far upstream where its battery begins.
Topics: Volkswagen, Ford, Tesla, Indonesia, Sulawesi, Nickel mining, Battery supply chain, Tolaki people
Sources: The Guardian Business