Deeply | the current electric vehicle is actually very "dirty", and the "decontamination" process is a good business

Rare earth metals, waste batteries, coal power generation... Current electric vehicles are actually very "dirty".

Is the electric car a clean car – that's only in the vision of human beauty? From motor magnets with toxic rare earth metals to batteries that use large amounts of fossil fuels to generate electricity, automakers face many challenges in seeking to remove "dirty materials" from their supply chains to meet regulators and investors.

However, these challenges are a business opportunity for companies in the EV ecosystem.

For example, Advance Electric Machines (AEM) in the north of England is working with Bentley and other companies in the automotive industry to develop recyclable electric motors that do not contain rare earth metals, which are often produced using polluting chemicals.

Ceo James Widmer said its approach is cost-effective and sustainable without the need to put pesky rare earth metals into cars.

The European Union announced last year a draft law to implement net-zero emissions targets, considering charging for excess carbon imported, legislation requiring recycling programs for electric vehicle batteries, and therefore increasing scrutiny of supply chains.

Moshiel Biton, CEO of Israeli battery technology company Addionics, said: "The focus on environmental, social and governance (ESG) has become more intense, with the company manufacturing three-dimensional electrodes that are more efficient, making cleaner but less energy-dense battery chemistry commercially viable.

In the fast-moving field of electric vehicle technology, it remains to be seen how many companies developing a clean electric vehicle market will be able to succeed, because today's cutting-edge technologies may be obsolete tomorrow.

Globally, a tax on carbon emissions is looming, costing technologically backward automakers dearly, while investors are increasingly favoring companies with ESG certificates.

MacMurray Whale, environmental sustainability strategist at Cormark Securities in Toronto, said any project that is not advanced enough risks losing the opportunity given the fierce competition.

A roadmap to zero carbon

Automakers face the daunting task of turning raw materials such as steel and aluminum into cars using cleaner manufacturing processes, in addition to finding battery chemistries that are less environmentally damaging.

Andy Palmer, CEO of Switch Mobility, a British electric vehicle maker owned by Indian commercial vehicle maker Ashok Leyland, said: "We are only doing new business with suppliers who have a roadmap to achieve zero carbon emissions. ”

Switch Mobility buys credits to offset the carbon produced for manufacturing metal parts and takes this cost into account when evaluating new parts, he added.

Thomas Becker, BMW Group's vice president of sustainability, said removing carbon from the supply chain was an "important part" of BMW's carbon reduction strategy.

Becker said at a conference in London in March that BMW had consulted with all battery suppliers, as well as many steel and aluminum suppliers, to ensure its materials were made from renewable energy.

At present, the problem with electric vehicles is that their manufacturing process is quite "carbon-intensive", and their "environmental protection" is only reflected in the use of less carbon emissions than fuel vehicles. But it must travel tens of thousands of kilometers before it can be offset by the carbon emissions it produces in the production process.

BMW has calculated the CARBON dioxide footprint of its entire supply chain. According to the automaker, if no action is taken, co2 emissions per vehicle will reach 18 tons in 2030, compared with 12 tons per vehicle in 2019. But its carbon reduction plan should reduce that figure to 9 tonnes by 2030.

Pepi Maksimovic, director of applied engineering at Pennsylvania-based engineering firm Ansys, which develops modeling software for various industries, said automakers are looking to model surges in demand for cars and parts with greener or lighter materials, such as replacing steel with aluminum. She added: "To address these issues, we are stepping up our efforts ... Bring better, cleaner, greener technologies to market faster and earlier. ”

A carbon tax is coming

Costa Caldis, chief operating officer of supply chain tracking company SAFE, said automakers are moving in the right direction, but not fast enough. "Stakeholders demand visibility into the effectiveness of supply chain carbon reductions, not just on the statement."

Douglas Johnson-Poensgen, CEO of Circulor, which maps supply chains for companies such as BMW and Volvo, said investors' fundraising orientation is increasingly tied to ESG goals. "They need to know where automakers are sourcing from and what they're improving from their supply chains."

Makram Azar, chief executive of London-based investment group Full Circle Capital, said companies in the auto industry that are growing in strict accordance with ESG goals should be easier to raise capital.

Makram Azar said: "Large asset managers that have set aside huge sums of money to invest in companies that meet ESG requirements have found that there are not many such companies. ”

More carbon taxes could help change that.

Recently, Full Circle Capital invested in an electric vehicle battery factory that uses only renewable energy, called Britishvolt, a British startup. Britishvolt executive chairman Peter Rolton said governments would need to collect fuel taxes and that only "fines" would force the auto industry to truly implement carbon cuts.

Mining companies' voice soared

AEM in the north of England has developed a recyclable motor for electric vehicles, using electrical steel and aluminium instead of copper and magnets to remove rare earth metals. CEO James Widmer said AEM's motors will be cheaper than conventional ones, with efficiencies improving by 15 percent in automaker tests.

In addition to environmental considerations, many automakers and suppliers want to reduce their reliance on China, which controls 90 percent of the world's supply of rare earth metals.

China's dominance extends to graphite, a key material for the anodes of electric vehicle batteries, often produced using coal power.

NextSource, a Canadian-listed mine developer, plans to commercialize mass production of graphite in Madagascar starting in 2023 to meet the needs of companies looking to diversify their supply chains.

Brent Nykoliation, executive vice president of NextSource, said contracts with automakers should be profitable and long-term. Over the past 12 months, the position of automakers in their engagement with mineral developers has changed subtly – apparently the former has a desire for the latter.

Conclusion

In the process of changing from fuel to electricity, the automobile industry is only from refueling to powering for consumers, but it is a subversive change in discourse power for the industrial chain.

In terms of energy and resources, traditional automakers are no longer on top, and their car-making costs depend on chipmakers, battery suppliers, and even mineral developers – which will only intensify under the tide of intelligence and electrification.

In the technology sector, they are constrained by the huge amount of money required for transformation, and they have to cooperate with cutting-edge technology companies in various fields to improve the efficiency of technological progress. This will also weaken their original dominance in the automotive industry chain.

Back to the beginning of the article, how can you build a truly clean vehicle? Every company in the industry chain cannot answer this question on its own. They can only look for business opportunities based on their unique expertise, and find new ways out in constant competition and cooperation.