STREET CRED — As electric vehicle adoption grows, governments and car buyers are increasingly want assurances that their batteries aren’t tied to child labor in the Congo, open-pit mines in Indonesia or coal-belching factories in China.
Enter the battery passport: a digital identifier that allows companies and regulators to trace critical minerals from source to auto dealers, simplifying a task that has been largely impossible up to now.
Governments and automakers on both sides of the Atlantic are moving to embrace the emerging technology. Volvo announced in June that its flagship EX90 SUV will become the first vehicle with a battery passport tracking the origins of its minerals and carbon footprint. That move was spurred by an EU regulation that will require EVs to include that data by 2027.
In the U.S., automakers need to trace the origins of their minerals to qualify for the Inflation Reduction Act’s EV tax credit, which is tied to escalating requirements for domestic sourcing of battery minerals.
The technology is gaining steam amid broad consensus in Washington and Brussels around the need to reshore manufacturing and minimize reliance on adversaries like China, your hosts report.
“There is a genuine concern as to origin and process and standards that accompany the suppliers out there,” Rep. Paul Tonko (D-N.Y.), who introduced a bipartisan bill this spring that would launch a program to develop the identifiers, said in an interview. “This is an effort to create a sustainable, environmentally friendly, worker-positive, consumer-enhancing outcome.”
Battery passports have the potential to reward car buyers with tax credits and an assurance that their EV isn’t supporting environmental degradation or human rights abuses far from home. They would also make it easier for manufacturers to show compliance with EU and U.S. rules, and advance those governments’ trade goals to increase domestic production.
“Being able to show that parts of your battery didn’t come from China is going to be hugely important,” said John Helveston, an assistant professor of engineering management and systems engineering at George Washington University. “It’s either going to mean a massive tariff or not, or it might mean whether you get part of an incentive or not in the U.S.”
Ellen Carey, chief external affairs officer at the U.K.-based startup Circulor, which developed the passport for Volvo, said it will add about $10 of cost per car, but will pay itself back by allowing Volvo to sell in the EU and access incentives in the U.S..
Even as policy starts to reflect the momentum toward transparency, it’s not certain that battery passports will become widely adopted in the auto industry.
Helveston said companies are likely to be hesitant to willingly share information like the carbon intensity of their facilities with other firms in the supply chain, creating the need for “trusted third parties” to validate the data. And Inga Petersen, executive director of the Global Battery Alliance, an Belgium-based initiative of the World Economic Forum, said cost is likely to be a barrier.
Another potential complication for companies lies in how they would deal with adverse information if battery passports are adopted, said Duncan Wood, president and CEO of the Pacific Council.
“Once you have greater supply chain transparency, what do you do with it?” he said. “Let’s say along the way you find forced child labor or horrible environmental extraction. Do you then say, ‘OK, we’re not going to buy from that place’ and interrupt the supply chain to considerable economic consequence? My understanding is that companies run screaming from these kinds of confrontations.” "
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