Report: EV Manufacturers Must Be Careful As Demand Grows To Retain “Clean” Label

While China is currently the key supplier for many of the components (~86%) found in automotive lithium-ion batteries, as electric vehicle production and sales pick up, this reality will be changing — potentially leading auto manufacturers to ultimately source from disreputable companies and countries involved in environmental destruction and/or human rights abuses (slavery, etc.). That’s according to a new report from the UK-based risk analysis firm Verisk Maplecroft.

To put that a different way, if the “clean” image of plug-in electric vehicles is to be maintained with mass adoption, then auto manufacturers will need to be very careful where key commodities are ultimately being sourced from, and also what the working conditions are like as regards extraction and refining.

As it stands, of course, human slavery and environmental destruction already pervade much of the world’s resource extraction industries, and the broader automotive market certainly doesn’t have clean hands — the mining of industrially and electronically important minerals, in particular, stands out as an area where bad practices as regards the environment and human rights is pretty much standard.

So, while there’s truth to the findings of the report, the situation in the broader automotive industry is already pretty bad. The mass adoption of electric vehicles likely would add to this (cobalt, etc.), if great care isn’t taken by auto manufacturers in procurement. … We’ll have to wait to see how that plays out.

“Increased exposure to human rights abuses, environmental degradation and less-than-savory governments is therefore going to be inevitable as the industry’s growth accelerates,” argued Maplecroft researcher Stefan Sabo-Walsh in the report.

“But tracing the raw materials was only one problem in the complex supply chain with an elaborate network of suppliers and transporters involved, adding risks at every stage,” Reuters reports.

Commenting on the moves made by many governments and cities in recent times to set a date (not too long into the future) when diesel and petrol/gas-powered cars are to be banned — or, alternately, when the sale thereof is to be banned — Sabo-Walsh stated that what this means is that businesses will find it necessary to “seek new source countries with reserves of key materials such as the Democratic Republic of Congo, Russia, the Philippines and South Africa,” as reported by Reuters.

Continuing: “But in some countries it was hard to trace if their raw materials came from legal, commercial mines or from illegal smallholder mines where forced and child labor are rife. The risks associated with lithium-ion batteries were of particular concern. The Democratic Republic of Congo is the leading global producer of cobalt used in these batteries, but has faced global criticism for human rights abuses.

“The United Nations children’s agency (UNICEF) estimates 40,000 children work in the warn-torn central African nation’s cobalt mines in dire conditions.”

“This should provide an instant red flag for the industry operators who will increasingly face brand damage or regulatory penalties from the slew of emerging legislation addressing supply chain issues,” Sabo-Walsh stated.

In addition to issues relating to human rights abuses, there’s the ever present reality of environmental destruction to contend with, as well as the corruption often found in proximity to both.

“As well as potential slavery, other risks range from corruption associated with overland transport to east African ports to potential natural hazards disrupting smelting in Indonesia. Sabo-Walsh said a big problem for the industry and electric vehicle companies is that no laws or significant initiatives exist for the majority of the raw materials they use.”

I’ll note here that the potential for “brand damage” is probably largely dependent upon the image of electric vehicles as being “green” or “clean,” rather than “high tech” or better/faster. As electric vehicle (EVs) adoption continues, it may well be the case that public image shifts so as to associate EVs with “the future,” or as an extension of the modern worship of “smartphones” and automation. If that occurs, then the potential for brand damage is likely to be greatly reduced.

The reality is that practically everything that people purchase nowadays is tied up with environmental destruction and human slavery and abuse to an intimate degree, and how many people care? Why would this change to any notable degree?

I’ll end this article here by saying that I’m somewhat skeptical of the report’s warning, though I certainly wouldn’t object to efforts to reduce abuses along the supply chain. As an example, how many people care at all about the effects of palm oil (which pretty much everyone eats, one way or another) production on the world’s remaining rainforests? And, for that matter, how many people care that the mica that makes the paint on their cars “sparkly” is often mined by debt slaves and child labor?