WASHINGTON, England, April 4 (Reuters) – An electric car is a clean car, right? If only it were that simple.
From motor magnets with toxic histories to batteries made from vast amounts of fossil fuels, automakers face many challenges as they seek to eliminate the dirtiest materials from their supply chains to satisfy regulators and regulators. investors.
These hurdles represent opportunities for a growing group of companies in the electric vehicle (EV) ecosystem that are betting they can capitalize on this demand.
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They include Advanced Electric Machines (AEM) in the north of England, which works with Volkswagen (VOWG_p.DE) luxury brand Bentley and other auto industry players to develop recyclable electric motors free of rare-earth metals, which are often produced using polluting chemicals.
“Our customers need ways to ditch internal combustion engines that are cost-effective and sustainable without putting tons of those nasty rare-earth things in their cars,” CEO James Widmer said.
The increasing scrutiny of supply chains comes as the European Union, which last year announced bills to enforce net-zero emissions targets, plans to charge for excess carbon on imports, as well as legislation requiring ethical sourcing and a recycling plan for EV batteries.
Globally, the prospect looms of national carbon taxes that could cost lagging automakers dearly, as investors and financiers increasingly favor companies with strong environmental, social and sustainability credentials. governance (ESG).
“The focus on ESG has become more intense,” said Moshiel Biton, CEO of Israeli battery technology company Addionics, which manufactures three-dimensional electrodes that Biton says are more efficient, making commercially viable chemistries. cleaner but less energy dense batteries.
“But that’s nothing compared to what’s to come.”
Still, it remains to be seen how many companies looking to tap into the electric car cleaning market will succeed in a rapidly changing EV technology arena; what’s cutting edge today might be obsolete tomorrow.
Given fierce competition, any project that isn’t far enough along at the right time risks missing out, according to MacMurray Whale, environmental sustainability strategist at Cormark Securities in Toronto.
“You won’t be able to attract investor interest because there are a lot of them and they’re all trying to make the case that they’re the best,” he said.
‘ROADMAP TO NET ZERO’
The demand is real, however, from automakers who face the daunting task of meeting the challenges of manufacturing everything from steel to aluminum using cleaner processes, to find battery chemistries that are less harmful to the environment. ‘environment.
“We only seek new business from suppliers with a roadmap to net zero,” said Andy Palmer, an electric vehicle pioneer who is CEO of Switch Mobility, a British electric vehicle manufacturer owned by the Indian automaker. of Ashok Leyland commercial vehicles. (ASOK.NS).
Switch buys credits to offset the carbon used to make metal components and takes that cost into account when evaluating new parts, he added.
Removing carbon from the supply chain is a “vital part” of BMW’s carbon reduction strategy, said vice president of sustainability Thomas Becker.
The German automaker has negotiated with all of its battery suppliers and many of its steel and aluminum suppliers to have their materials made from renewable energy, Becker told a conference in London in March.
The problem with electric vehicles is that they burn so much carbon that they have to travel thousands of miles before doing less harm to the environment than a gas-guzzling sedan. Read more
BMW has measured the CO2 footprint throughout its supply chain. If it did not act, its footprint per vehicle would be 18 tonnes of CO2 in 2030, compared to 12 tonnes per vehicle in 2019, according to the manufacturer. But its carbon reduction plans are expected to reduce that number to nine tonnes by 2030, it says.
The need for greener electric vehicles has sent some automakers back to the drawing board.
Ansys, a Pennsylvania-based engineering company (ANSS.O)which develops modeling software for various industries, has seen growing demand from automakers looking to simulate cars and components with greener or lighter materials, such as aluminum instead of steel, Pepi said. Maksimovic, Director of Application Engineering.
“There’s an intensification of efforts to address these issues in terms of…bringing cleaner, greener, meaner technology to market faster, sooner,” she added.
“THE CARBON TAX IS COMING”
Past corporate sustainability efforts have often been called vague and “greenwashing”.
Costa Caldis, chief operating officer of supply chain tracing firm SAFE, said automakers were moving in the right direction, but not fast enough.
“Stakeholders demand supply chain visibility, not just statements.”
Douglas Johnson-Poensgen, CEO of Circulor, which maps supply chains for BMW and Volvo (VOLCARb.ST)said investor funding is increasingly linked to ESG objectives.
“Everyone recognizes that they need to know where they are sourcing from and what they are inheriting from their supply chain.”
Makram Azar, CEO of London-based investment group Full Circle Capital, said auto companies that “tick all the right ESG boxes” should find it easier to raise capital.
“Large asset managers who have allocated huge sums of money to invest in ESG-compliant companies have found that there is not enough,” Azar said.
More carbon taxes could help change that.
Full Circle has invested in Britishvolt, a UK startup that is building an EV battery factory that will run solely on renewable energy.
Peter Rolton, executive chairman of Britishvolt, said national governments would need alternatives to fuel taxes which generate huge sums of money, and that taxing carbon would help drive it out of supply chains.
“Carbon taxation is an inevitable part of a net zero vision for 2050,” he added. “You can see that one coming.”
MINING IN MADAGASCAR
AEM, based in Washington, a town steeped in North East England’s industrial history, has developed a recyclable motor for electric vehicles using electrical steel and aluminum instead of copper and magnets , thus eliminating rare earth metals. CEO Widmer said AEM’s engines would be cheaper than conventional engines and automakers’ tests were up to 15% more efficient.
In addition to environmental considerations, many automakers and suppliers want to reduce their dependence on China, which controls 90% of the world’s rare earth metal supply. Read more
China’s dominance extends to graphite, crucial for electric vehicle battery anodes, which is typically produced using electricity from coal.
Canadian Listed Mining Developer NextSource (BESIDE) plans to start commercial graphite production in Madagascar from 2023 to capitalize on demand from companies looking to diversify their supplies.
Executive Vice President Brent Nykoliation said contracts with automakers are expected to be lucrative and long as they seek to secure supplies that match their needs.
“The conversation has changed dramatically over the past 12 months,” Nykoliation said, referring to automakers’ commitment to mineral production.
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Reporting by Nick Carey and Barbara Lewis; Assembly Pravin Char
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