A logical logistics shift: EV manufacturers should set up shop near mines
In my previous blog ‘Carmakers need to follow in Henry Ford’s footsteps’ I analysed the importance of vertical integration for carmakers. I’d like to move the conversation on now and delve into the transformation of the automotive industry further – with particular reference to material emissions and how to help offset them. As COP26 comes to a close, it’s an opportune moment to have these kinds of discussions.
Material emissions matter
The dawn of the electric vehicle era is peeping well over the horizon now and it’s seen as a panacea for combatting our emissions ‘problem’. However, producing cars – electric or otherwise – is a dirty process. We can’t shy away from that. Every single step in making a vehicle creates emissions. Cleaner electric cars will help solve tail-pipe emissions. And that’s a giant leap forward. But, this fails to address the damage done to the environment while EVs are being made. Attention needs to be turned to material emissions as well – and fast, in my opinion.
A recent Bloomberg article sums this up well: “The challenge goes beyond what comes out of the tailpipe: Every step of making a vehicle’s 20,000 to 30,000 parts, which involves several thousands of tons of aluminium, steel and other materials, produces emissions.”
A reminder: European EV manufacturers are reliant on raw material imports. This we are all aware of. Most raw materials come from outside Europe, mainly South America, Africa, and Australia. While main battery production facilities are in Asia. This has created long supply chains and heavy carbon footprints.
But, according to McKinsey: The automotive industry could abate 66% of emissions from their material production at no extra cost by 2030 – if industry participants work together and start now.
I couldn’t agree more. And I believe this sentiment should extend to a shift in logistics to optimise the industry. And I mean a tectonic shift, proportionally speaking. To help offset the thorny issue of material emissions, supply chains need to be slashed in length and breadth – and more efficient modes of transport need to be reconsidered, wherever possible, to carry around car parts and battery elements. ‘Dirty’ ships and trucks can be replaced by ‘cleaner’ electric railways, for example.
Of course, this means having closer-to-home facilities nearer providers and producers of EU Critical Raw Materials. In the future, it’d make complete sense if battery and car manufacturing facilities are constructed next to mining sites – or at least in the same vicinities. Less cost to the environment, and greater profit to carmakers due to minimised transport fees. It seems like a no-brainer. But it’s not happening. Yet.
Norway: one step ahead
This is where I believe Norway will play an increasingly significant role, as we continue on the road to Net Zero. If you haven’t heard about our large resources of EU Critical Raw Materials yet in the south-west of the country, this podcast is a good place to start. With our vanadium, titanium and phosphorus deposits in mind – all considered critical by the European Union – Rogaland and Agder counties in the south-west region have been dedicated by the Norwegian government as future hubs for the battery industry. It’s clear the country is one step ahead. In my opinion, it’s now up to carmakers to seize this opportunity and properly define their role in – even lead – our decarbonisation journey.