Blockchain technology is (in the simplest way I can think of to describe it) a time-stamped series of transactions that are linked together, mathematically, to form a “chain.” Each transaction in the chain is a “block,” and they’re tied together using
a cryptographic algorithm fancy math in a way that makes it impossible for the chain to be modified. Blockchains have been used by digital currency markets to ensure transparent and secure transactions — but now, Volvo is using it for something else: to guarantee that the batteries in its EVs aren’t made from “conflict minerals.”
“We have always been committed to an ethical supply chain for our raw materials,” said Martina Buchhauser, head of procurement at Volvo Cars. “With blockchain technology we can take the next step towards ensuring full traceability of our supply chain and minimizing any related risks, in close collaboration with our suppliers.”
That kind of warm, happy sentiment may seem like simple PR-speak, but it’s very real. Real enough, at least, that Volvo’s been named to Ethisphere’s list of World’s Most Ethical Companies for the last three years in a row — and the company’s extremely proud of that fact. “Responsible business is a fundamental part of our culture and our way of doing business,” explains Maria Hemberg, who acts as the Senior Vice President of Group Legal, General Counsel, and Chair of Volvo Cars’ Sustainability Board. “That is why we actively promote this, both towards our employees and our partners. An ethical approach to business is not only the right thing to do, but it also makes business sense and helps us to attract and keep the best people to the company.”
So, how does it work? Volvo’s suppliers use blockchain to track a mineral’s origin (in this case, cobalt), each sample’s physical attributes (like weight and size), the chain of custody for each sample as it passes from mine to truck to warehouse and beyond, and information that’s used to help establish that participant’s behavior — information like how long it takes to get a sample into a truck and to a given warehouse, for example, so that any suspicious delays can be tracked and, ideally, accounted for.
You can check out Volvo Cars’ official press release, below, then head down to the comments section at the bottom of the page to let us know if this changes your outlook on cars like the Polestar 1 or new XC40 Recharge. In case you’re curious, it just made me want ’em more!
Volvo Cars to Implement Blockchain Traceability of Cobalt Used in Electric Car Batteries
Volvo Cars will become the first carmaker to implement global traceability of cobalt used in its batteries by applying blockchain technology. The announcement follows the reveal last month of the company’s first fully electric car, the XC40 Recharge.
Traceability of raw materials used in the production of lithium ion batteries, such as cobalt, is one of the main sustainability challenges faced by car makers. Volvo Cars is committed to full traceability, ensuring that customers can drive electrified Volvos knowing the material for the batteries has been sourced responsibly.
Blockchain technology, which establishes a transparent and reliable shared data network, significantly boosts transparency of the raw material supply chain as the information about the material’s origin cannot be changed undetected. Volvo Cars has now reached an agreement with its two global battery suppliers, CATL of China and LG Chem of South Korea, and leading global blockchain technology firms to implement traceability of cobalt starting this year.
Technology firms Circulor and Oracle operate the blockchain technology across CATL’s supply chain following a successful pilot earlier this summer, while the Responsible Sourcing Blockchain Network (RSBN), together with responsible sourcing specialists RCS Global and IBM, is rolling out the technology in LG Chem’s supply chain.
“We have always been committed to an ethical supply chain for our raw materials,” said Martina Buchhauser, head of procurement at Volvo Cars. “With blockchain technology we can take the next step towards ensuring full traceability of our supply chain and minimising any related risks, in close collaboration with our suppliers.”
A blockchain is a digital ledger containing a list of records linked to each other via cryptography. Within supply chains, the technology creates records of transactions which cannot be changed, while also enforcing a common set of rules for what data can be recorded. This allows participants to verify and audit transactions independently.
In this particular case, data in the blockchain include the cobalt’s origin, attributes such as weight and size, the chain of custody and information establishing that participants’ behavior is consistent with OECD supply chain guidelines*. This approach helps create trust between participants along a supply chain.
Volvo Cars last month launched the XC40 Recharge, the first of an upcoming family of fully electric cars under the Recharge banner. By 2025, it expects half of its global sales to consist of fully electric cars, with the rest hybrids.
Last month, Volvo Cars also launched an ambitious climate plan, which includes a radical reduction of carbon emissions by 40 per cent per vehicle by 2025, as well as a continued commitment to ethical business across its entire operations and supply chain.
CATL and LG Chem are renowned battery manufacturers, both with long and successful track records supplying lithium ion batteries to the global automotive industry. They fulfil Volvo Cars’ strict sourcing guidelines in terms of technology leadership, responsible supply chains, reduction of carbon emissions and competitive cost models.
The agreements between Volvo Cars, CATL and LG Chem cover the supply of batteries over the coming decade for next generation Volvo and Polestar models, including the XC40 Recharge.