An electric car is a clean car, right? If this was just a simple matter. From motor magnets with a toxic history to batteries produced using a lot of fossil fuels, the many challenges automakers face as they seek to remove dirtier materials from the chain. their offering to please regulators and investors.
These setbacks represent an opportunity for a growing group of companies in the electric vehicle (EV) ecosystem to bet that they can capitalize on that demand.
They include Advanced Electric Machines (AEM) in northern England, which is working with luxury car brand Bentley and others in the automotive industry to develop recyclable electric motors that do not contain rare earth metals , which is often produced using polluting chemicals.
“Our customers need ways to get rid of the internal combustion engine in a cost-effective and sustainable way without putting tons of these nasty rare earths into their cars,” said CEO James Widmer.
Increasing scrutiny of supply chains comes as the European Union, which published draft legislation last year to enforce net zero emissions targets, considers charging excess carbon on imports. , as well as legislation requiring ethical sourcing and recycling schemes for EV batteries.
Globally, the prospect of a national carbon tax could cost the lagging carmakers dearly, while investors and financiers increasingly favor companies with strong credentials. environment, society and governance (ESG).
“The focus on ESG has become more intense,” said Moshiel Biton, CEO of Israeli battery technology company Addionics. produces three-way electrodes that Biton says are more efficient, making cleaner but less energy-intensive battery chemistries commercially usable.
“But it’s nothing compared to what’s to come.” However, it remains to be seen how many companies looking to tap the electric car cleaning market will succeed in the rapidly growing field of EV technology; What is advanced today may be obsolete tomorrow.
With competition fierce, any project that doesn’t make enough progress at the right time runs the risk of missing out, according to MacMurray Whale, chief environmental sustainability strategist at Cormark Securities in Toronto.
“You won’t be able to attract investor interest because there’s a lot of them and they’re all trying to argue that they’re the best,” he said.
‘ROAD MAP TO NET ZERO’
However, the demand is real, from automakers, who face the daunting task of navigating the challenges of making everything from steel to aluminum using cleaner processes, to find battery chemistries that are less harmful to the environment.
Andy Palmer, an electric vehicle pioneer who is now the CEO of Switch Mobility, a UK-based electric vehicle maker owned by Indian commercial vehicle maker Ashok Leyland, said. : “We only source new business with suppliers that have a route to net zero.
Switch buys credits to offset the amount of carbon used to make metal components and factors into that cost when evaluating new parts, he added.
Reducing carbon from the supply chain is a “critical part” of BMW’s carbon reduction strategy, said Thomas Becker, vice president of sustainability.
The German carmaker has negotiated with all of its battery suppliers and many of their steel and aluminum suppliers that their materials be produced using renewable energy, Becker said at a conference in London on Wednesday. March.
The problem with electric cars is that they take a lot of carbon to produce, they have to drive thousands of miles before they are less harmful to the environment than a gas-guzzling saloon.
BMW has measured CO2 emissions throughout its supply chain. According to the automaker, without action, emissions per vehicle will be 18 tonnes of CO2 in 2030, compared with 12 tonnes per vehicle in 2019. But its carbon reduction plans will cut it. reduce that number to 9 tonnes by 2030, it said.
Demand for greener electric cars has prompted some automakers to return to the drawing board.
Pepi Maksimovic, application engineering manager, said that Pennsylvania-based engineering firm Ansys, which develops modeling software for various industries, has seen increased demand from developers. Automakers are looking for ways to emulate cars and components with greener or lighter materials, such as aluminum instead of steel, says Pepi Maksimovic, application engineering manager.
“There is an increased effort to address these issues in terms of … bringing cleaner, greener, simpler technology to market faster, sooner,” she added.
‘CARBON TAX IS COMING SOON’
Past corporate sustainability efforts were often derided as vague and “washed out”. Costa Caldis, chief executive officer of supply chain tracking company SAFE, said automakers are moving in the right direction, but not fast enough. “Stakeholders are demanding supply chain visibility, not just claims.”
Douglas Johnson-Poensgen, CEO of Circulor, the supply chain mapping company for BMW and Volvo, said that financing from investors is increasingly tied to ESG targets.
“Everybody realizes that they need to know where they’re sourcing everything from and what they’re inheriting from their supply chain.”
Makram Azar, CEO of London-based investment group Full Circle Capital, said companies in the automotive sector “tick all the appropriate ESG boxes” will find raising capital easy. easier.
“Major asset managers that have allocated huge amounts of money to invest in ESG compliant companies have found that there is not enough of it,” Azar said.
More carbon taxes could help change that.
Full Circle has invested in Britishvolt, a British startup that is building an EV battery plant that runs solely on renewable energy.
Peter Rolton, Britishvolt’s executive chairman, said national governments would need alternatives to fuel taxes that add up to huge sums, and that taxing carbon would help remove it from the supply chain.
He added: “A carbon tax is an inevitable part of the 2050 net-zero vision. “You can see that one is coming.”
MINING IN MADAGASCAR
AEM, based in Washington, a city with roots in northeastern England’s industrial history, has developed a recyclable motor for electric vehicles that uses electric steel and aluminum instead of copper and magnets. , thus eliminating rare earth metals. Widmer CEO said that AEM’s engines will be cheaper than conventional engines and in tests by automakers have shown up to 15% more efficiency.
Along with environmental considerations, many automakers and suppliers want to reduce their reliance on China, which controls 90% of the global supply of rare earth metals.
China’s dominance extends to graphite, crucial for the anode for EV batteries, which are typically produced with electricity from coal.
Canadian-listed mine developer NextSource plans to start commercial production of graphite in Madagascar from 2023 to capitalize on demand from companies looking to diversify supplies.
Executive vice president Brent Nykoliation said contracts with automakers should be lucrative and as long as they find a way to lock in supplies tailored to their requirements.
“The conversation has changed dramatically over the past 12 months,” Nykoliation said, referring to automakers’ involvement with mineral production.
Date of first publication: April 4, 2022, 11:15 AM IST