European automotive manufacturers play a crucial role in supporting onshoring efforts, particularly within the electric vehicle (EV) supply chain. New analysis by Transport & Environment (T&E) in May highlights that fully onshoring EV battery production to Europe could reduce emissions by at least 37% compared to a China-controlled supply chain. Leveraging renewable energy for production can double this reduction. Meeting Europe’s battery cell and component demand locally could save an estimated 133 Mt of CO2 between 2024 and 2030, equivalent to the annual emissions of a country like the Czech Republic.
Carmakers can drive this transformation by investing equity in European supply chains and forming partnerships to provide off-take agreements to European companies, crucial support for newcomers competing against established value chains elsewhere.
Ensuring clean, sustainable and responsible supply chains
Automakers must also ensure their supply chains are clean and responsible. The concept of responsible contracting, pioneered in the garment industry, involves shared responsibility across the supply chain rather than burdening the final supplier. Europe’s upcoming due diligence framework and the EU battery regulation will be pivotal in establishing responsible supply chains. This isn’t just about traceability; it’s about engaging with suppliers, formalizing responsible artisanal mining practices and using new technologies to benefit communities. When engagement isn’t possible, disengagement should be considered, but the focus must remain on collaborative risk mitigation and improvement.
Direct engagement with mining companies
Large OEMs requiring significant raw materials volumes can work directly with mining companies to improve responsible sourcing. Promoting responsible suppliers to tier-one status and engaging with them directly allows manufacturers to leverage their purchasing power for positive change. Smaller volume manufacturers can join international certification schemes like the Initiative for Responsible Mining Assurance (IRMA) to signal their demand for responsibly sourced materials.
Harnessing the power of the European single market
Smartly designed policies can attract investors and promote local, cleaner production. While Europe offers one of the largest consumer markets, the current funding framework could be improved by learning from the simplicity and predictability of U.S. policies, such as the US IRA. Europe’s commitment to zero-emission cars by 2035 sends the right signals to investors, but a comprehensive green industrial strategy is needed to reward local manufacturing.
Implementing a strict CO2 per kilowatt-hour criterion for batteries could be an effective industrial measure to reward cleaner local producers. Additionally, a joint commitment by the US, Canada, Australia and Europe to purchase sustainably sourced nickel, using a carbon threshold for market access, would support cleaner Western suppliers.
The role of Governments and regulations
Consumers alone cannot drive these changes as they are at the end of a long chain of B2B decisions. Governments and regulations must implement measures to promote responsible sourcing and local production.
Conclusion
While progress has been made, increased action from automakers and governments is needed in the coming years. The industry must leverage its influence to play a pivotal role in responsible sourcing, and smart regulations should provide the framework for success.
