Importance of the battery technology value chain increasingly recognised

Policy support has been extended to the development of manufacturing capacity for automotive batteries. This reflects the dynamic development of battery technologies and the importance of EVs to achieve further cost reductions in battery storage for a multitude of applications. It also recognises the strategic relevance that large-scale battery manufacturing can have for industrial development (due to the relevance of its value chain in the clean energy transition).

Examples of policy measures related to battery manufacturing include:

• In China, policy support aims to stimulate innovation and induce consolidation among battery manufacturers, giving preference to those that offer batteries with the best performance.
• In the European Union, the Strategic Action Plan for Batteries in Europe was adopted in May 2018. It brings together a set of measures to support national, regional and industrial efforts to build a battery value chain in Europe, embracing raw material extraction, sourcing and processing, battery materials, cell production, battery systems, as well as reuse and recycling. In combination with the leverage offered by its market size, it seeks to attract investment and establish Europe as a player in the battery industry.
• In countries with a smaller domestic market, as is the case for Japan and Korea, the policy support is to reinforce export markets.

In all regions, increasing attention is being given to solid state batteries. This is representative of the rapid pace of innovation in the automotive battery sector. In addition to optimised technical performance, innovation has a pivotal role in economic development. Strengthening capacities for innovation has played a central role in the growth dynamics of successful developing countries.

Other technology developments are contributing to cost cuts

Other developments to induce continued cost cuts include options to redesign vehicle manufacturing platforms to use simpler and innovative design architecture, taking advantage of the compact dimensions of electric motors and capitalising on the presence of much fewer moving parts in EVs than in ICE vehicles. This is in line with a recent statement from Volkswagen concerning the development of a new vehicle manufacturing platform to achieve cost parity between EV and ICE vehicles. Adapting battery sizes to travel needs (matching the range of vehicles to consumer travel habits) is also critical to reduce cost by avoiding “oversizing” of batteries in vehicles. For example, instruments allowing real-time tracking of truck positioning to facilitate rightsizing of batteries. Close co-operation between manufacturers to design purpose-built EVs are not only relevant for freight transport, but also in order to meet range, passenger capacity and cargo space requirements for vehicles used in shared passenger fleets (e.g. taxis and ride-sharing).

Technology is progressing for chargers, partly because of increasing interest in EVs for heavy-duty applications (primarily buses, but also trucks). Standards have been developed for high-power chargers (up to 600 kilowatts [kW]). There is growing interest in mega-chargers that could charge at 1 megawatt (MW) or more (e.g. for use in heavy trucks, shipping and aviation).

Private sector response confirms escalating momentum for electric mobility

The private sector is responding proactively to the EV-related policy signals and technology developments. Recently, German auto manufacturers such as Volkswagen announced ambitious plans to electrify the car market. Chinese manufacturers such as BYD and Yutong have been active in Europe and Latin America to deploy electric buses. European manufacturers such as Scania, Solaris, VDL, Volvo and others, and North American companies (Proterra, New Flyer) have been following suit. In 2018, several truck manufacturers announced plans to increase electrification of their product lines.

Battery manufacturing is undergoing important transitions, notably with increasing investment in China and Europe from a variety of companies, such as BYD and CATL (Chinese); LG Chem, Samsung SDI, SK Innovation (Korean) and Panasonic (Japanese). This adds to the already vast array of battery producers, which led to overcapacity in recent years, and confirms that major manufacturers have increased confidence in rising demand for battery cells, not least because major automakers such as BMW, Daimler and Volkswagen are looking to secure supply of automotive batteries.

Utilities, charging point operators, charging hardware manufacturers and other stakeholders in the power sector are increasing investment in charging infrastructure. This is taking place in a business climate that is increasingly showing signs of consolidation, with several acquisitions from utilities as well as major energy companies that traditionally focus on oil. This covers private charging at home, publicly accessible chargers at key destinations and workplaces, as well as fast chargers, especially on highways. Examples of investments covering various types of chargers come from ChargePoint, EDF, Enel (via Enel X), Engie (via EV-Box). Some utilities (e.g. Iberdrola), automakers and consortia including auto industry stakeholders (e.g. Ionity) focus mostly on highway fast charging.

Businesses are not only committing to increased EV uptake from a supply standpoint (vehicle availability or charger deployment), but also from a demand angle by committing to add EVs to their vehicle fleets. One of the most ambitious examples may be a pledge made by DHL to reach 70% clean operations of last-mile pick-ups and deliveries by 2025. This is part of a broader effort developed by the EV100 initiative led by The Climate Group.

Outlooks indicate a rising tide of electric vehicles

Dynamic developments in policy implementation and technology advances underpin the projections to 2030 in the New Policies Scenario, which aims to illustrate the consequences of announced policy ambitions. Projections in the EV30@30 Scenario are underpinned by proactive participation of the private sector, promising technology advances and global engagement in EV policy support. It is aligned with the goal of the EVI EV30@30 Campaign to achieve a 30% market share by 2030 for EVs in all modes except two-wheelers (where market shares are higher)

In the New Policies Scenario, China leads with the highest level of EV uptake over the projection period: the share of EVs in new vehicle sales reaches 57% across all road transport modes (i.e. two-wheelers, cars, buses and trucks), or 28% excluding two/three-wheelers. It is followed by Europe, where the EV sales share reaches 26% in 2030*, and Japan, one of the global leaders in the transition to electric mobility with a 21% EV share of sales in 2030. In North America, growth is particularly strong in Canada (where EV market shares reach 29% by 2030), as well as in California and US states that have adopted zero-emissions vehicle (ZEV) mandates and/or have stated an intention to continue to improve vehicle fuel economy. Other parts of the United States are slower to adopt EVs, bringing the overall EV sales share to 8% of the US vehicle market in 2030.

In the EV30@30 Scenario, EVs make up 70% of all vehicle sales in China in 2030 (42% excluding two/three-wheelers). Almost half of all vehicles sold in 2030 in Europe are EVs, 37% in Japan, more than 30% in Canada and United States, 29% in India and 22% in other countries, taken together.

The electric car targets announced by automobile manufacturers align closely with the stock projections in the New Policies Scenario in 2020. In 2025, the auto industry targets range between the projections of the New Polices Scenario and of the EV30@30 Scenario (Figure 3).

*Some individual European countries, such as Norway and Sweden, reach higher market shares than any other country or global region.

Expansion of automotive battery manufacturing capacity will largely depend on the evolution of electrification in car markets. This is due to the number of electric cars sold that far exceeds sales volumes of other modes (except two-wheelers), and the size of their battery packs, which are much larger for cars than for two-wheelers. There is growing consensus that the electrification of cars will be a pivotal pillar to reduce unit cost of automotive battery packs. Thanks to their instrumental role to facilitate the availability of energy storage at lower costs, EVs are also likely to be a crucial step for the transition to a cleaner energy system.

Electric cars save more energy than they use

Projected growth of EVs across all modes will impact growth in oil demand for road transport. In the New Policies Scenario, the projected global EV stock is estimated to avoid 127 million tonnes of oil equivalent (Mtoe) (around 2.5 million barrels per day [mb/d]) of oil product demand in 2030. In the EV30@30 Scenario, the EV stock displaces 215 Mtoe (4.3 mb/d) of oil product demand in 2030.

On the other hand, electricity demand to serve EVs is expected to experience significant growth. In the New Policies Scenario, electricity demand from the global EV fleet is projected to reach almost 640 TWh in 2030 (Figure 4). This is more than a ten-fold increase compared to 2018 levels (58 TWh) and, altogether, it is equivalent to the combined final electricity consumption of France and Spain in 2016. In the EV30@30 Scenario, the larger volume of the global EV fleet leads to 1 110 TWh of electricity demand in 2030, nearly double the amount of the New Policies Scenario.

In the New Policies Scenario, light-duty vehicles become the largest electricity consumers among all road modes, surpassing two/three-wheelers in 2020. In 2030, LDVs account for about 60% of the total, followed by buses (26%), two/three-wheelers (12%) and trucks (2%). In the EV30@30 Scenario, LDVs represent the lion’s share of electricity demand from EVs in 2030 (65%), followed by buses (20%).

Electricity demand projected in both scenarios suggests that EVs are going to be much more relevant for power systems than they have been in the past. With uncontrolled charging, EVs could drive incremental needs for peak power generation and transmission capacity. Understanding the extent to which power systems can be impacted depends on total annual electricity demand EVs, the impact of daily charging patterns on load profiles, location power levels used for charging.

Slow chargers (mostly private LDV chargers) account for more than 60% of the total electricity consumed globally to charge EVs in both the New Policies and the EV30@30 scenarios (shares differ region-by-region, as they depend on the extent of the uptake of EVs across transport modes). This is beneficial to power system management, since slow charging comes with opportunities for EVs to provide flexibility services to power markets, provided that controlled EV charging is in place. As fast charging demand is highest for buses in both scenarios, concentrating these charging events at night when electricity demand is lower could help flatten the overall shape of a power demand curve.

Controlled EV charging is well suited to contribute to increased flexibility in power systems. This feature has positive implications for the increasing contribution of variable renewable energy in a power generation mix and can also address grid stability issues. Features include:

• EVs can minimise impacts on load profiles of power systems by managing their charging patterns to coincide with low demand periods.
• EVs have potential to provide ultra-short-term demand response to a power system when required (e.g. frequency control), leverage the properties of EV batteries to allow very fast and precise response to control signals, as well as the ability to shift demand across time periods.
• EV batteries can store energy that may be used for other purposes than powering the vehicle, thanks to the opportunities offered by vehicle-to-grid and similar technologies (e.g. vehicle-to-home).

Electricity markets should facilitate the provision of ancillary services such as grid balancing in which EVs are among the potential participants, and allow for the participation of small loads through aggregators. To participate in demand response in the electricity market, it is important to minimise the transaction costs (including not only fees, but also other regulatory, administrative or contractual hurdles) to make it easier for aggregators to pool small loads.

EVs avoid GHG emissions if the electricity mix is not carbon-intensive

The well-to-wheel (WTW) GHG emissions from the EV fleet are determined by the combined evolution of the energy used by EVs and the carbon intensity of electricity generation. Today, based on the global average carbon intensity of power generation, WTW emissions from a global average EV are lower than from a global average ICE vehicle powered by liquid and gaseous fuel blends. In the New Policies Scenario, GHG emissions by the EV fleet are projected at roughly 230 Mt CO2-eq in 2030, but would be almost double (450 Mt CO2-eq) if the equivalent vehicle fleet was powered by ICE powertrains. In the EV30@30 Scenario, in which the accelerated deployment of EVs is coupled with a trajectory for power generation decarbonisation consistent with the IEA’s Sustainable Development Scenario, the projected EV fleet emits around 230 Mt CO2-eq in 2030, while an equivalent ICE vehicle fleet would emit about 770 Mt CO2-eq. The rapid decarbonisation of power generation envisioned in the EV30@30 Scenario is important to limit the increase of GHG emissions from the rapid growth in the EV stock in the EV30@30 Scenario. Without these measures, WTW GHG emissions from the EV fleet in the EV30@30 Scenario would be around 340 Mt CO2-eq by 2030.

Whether or not EVs deliver net benefits in terms of GHG emissions savings ultimately depends on the emissions that occur throughout the entire value chain, i.e. over the life cycle of EVs compared with other options. Overall, when accounting for the scale-up of battery manufacturing facilities (compatible with state-of-the-art plants, and in line with those that are assumed to be scaled up in the New Policies and EV30@30 scenarios) and assuming the current global average carbon intensity of power generation (518 g CO2/kWh, including losses), a mid-sized global average BEV and a plug-in hybrid electric car emit less than an average global ICE vehicle using gasoline on a life-cycle basis (Figure 6)*. The extent of the impact differs depending on the size of the ICE vehicle.

Net savings are larger for BEV cars with smaller batteries and therefore lower driving ranges. GHG emissions of BEVs using electricity characterised by the current global average carbon intensity are similar to those of fuel cell electric vehicles (FCEVs) using hydrogen produced from steam methane reforming and to those of hybrid electric vehicles (HEVs) using gasoline. On average, the capacity of BEV cars to deliver net GHG emission savings in comparison with plug-in hybrid cars depends on the size of the battery pack.

In the large vehicle segment, EVs save more GHG emissions compared to ICE vehicles having similar characteristics. This is due to the higher fuel economy penalty related to the heavier weight of ICE vehicles in comparison with EVs.

*This assessment considers 150 000 km over ten years of vehicle life.

The biggest emissions reduction potential over the vehicle life cycle of EVs is in the decarbonisation of power generation systems. Today, net savings are higher in countries where the carbon intensity of the generation mix is low. Moving forward, this can be a significant advantage for BEVs and PHEVs over other powertrain technologies if electricity generation decarbonises at a rapid pace. Nevertheless, as carbon intensities vary across power systems and regions, the capacity of EVs to deliver significant net GHG savings against competing technologies is not uniform across the world. In regions that largely rely on coal for electricity production, transitioning towards a lower carbon generation mix is essential to deliver GHG savings from the electrification of road transport.

Electric mobility increases demand for raw materials

Increasing electric mobility and the ramp-up of related battery production imply increased larger demand for new materials in the automotive sector. The type of materials will vary according to advances in battery chemistry technologies. Assuming a mix of battery chemistry categories of 10% NCA, 40% NMC 622 and 50% NMC 811 for 2030, in the New Policies Scenario, the demand for cobalt increases to about 170 kilotonnes per year (kt/year), lithium demand to around 155 kt/year, manganese to 155 kt/year and class I nickel (>99% nickel content) to 850 kt/year. In the EV30@30 Scenario, the larger scale uptake of EVs implies volumes in 2030 more than twice as high as in the New Policies Scenario. For cobalt and lithium, these volumes mean that demand in the New Policies Scenario exceeds current supply. For class I nickel, this is the case in the EV30@30 Scenario. Cathode battery chemistry significantly affects the sensitivity of the demand of metals, particularly cobalt.

Managing change in the material supply chain

For the automotive sector, the scale of the changes in materials demand for EV batteries requires increased attention for raw materials supply. It needs to anticipate and manage potential challenges and ensure the sustainability of supply chains. Besides cobalt, lithium, manganese and nickel, other materials affected include aluminium, graphite and copper. The main challenges associated with raw material supply include:

• Ramp-up of production, linked with the availability of raw materials, potential price spikes such as demand/supply unbalance and geographic concentration of extraction and/or refining.
• Environmental impacts, e.g. local pollution, supply chain related CO2 emissions, landscape destruction, and impacts on local ecosystems and water resources.
• Social issues, including child labour and elements that influence the well-being of communities affected by mining operations.

Thanks to experiences developed with “conflict minerals” (3TGs: tin, tantalum, tungsten and gold), the traceability and transparency of raw materials supply chains emerged as a key instrument to help address some of the problems and foster sustainable sourcing of minerals. The Organisation for Economic Co-operation and Development (OECD) established high-level principles in the Due Diligence Guidance for Responsible Mineral Supply Chains, which are a significant resource to strengthen action in this regard. The Guidance provides detailed recommendations to help companies respect human rights and avoid contributing to conflict through their mineral purchasing decisions and practices. They are currently the leading international standard for responsible sourcing.

Experience developed to date suggests that the diversity of the issues for raw material supply also requires tailor-made solutions from both public and private stakeholders. For EVs, the risk of hazardous mining practices led automotive companies to increase their focus on raw material sourcing, for example through the development of cross-industry initiatives and on-the-ground actions to mitigate and address relevant issues. Nonetheless, there is still a gap between the efforts made to identify the risks and concrete actions to address them. The development of binding regulatory frameworks is important to ensure that the efforts started by the international multi-stakeholder co-operation underpinned by the OECD Due Diligence Guidance can effectively address these challenges. One example is the devoir de vigilance enforced in 2017 by the French government. It requires companies to establish and publish their strategies to identify and prevent environmental, human right abuses and corruption risks not only related to their work, but also for the activities of their suppliers and subsidiaries in France and abroad.

Battery end-of-life management is an important practice to reduce the need for critical raw materials and to limit risks of shortages. The options fall within the 3R framework (reduce, reuse, recycle), which, for batteries, is specifically for reuse and recycle. Regarding reuse, it is important to ensure that end-of-life regulations for automotive batteries allow their use in second-life application (rather than disposal and as an alternative to recycling). Regarding recycling, several countries have set standards for battery waste management including the recycling rate for the entire battery. These regulatory frameworks could be strengthened to ensure suitability with the electric mobility transition. There is also a need for the development of a regulatory framework for environmental requirements on the design phase of battery products. It should take account of the need to maximise the recovery of materials at battery end-of-life treatment while minimising costs, as well as the importance of thorough stakeholder consultation, given today’s dynamic nature of battery technology developments.

Safeguarding government revenue from transport taxation

The efficiency advantage of EVs, combined with the energy switch to electricity from oil products, means that even at similar levels of taxation per unit of energy, BEVs and PHEVs are subject to lower charges per kilometre in comparison with ICE vehicles. The effect is stronger if the level of fuel taxation per unit of energy is not the same for oil products and electricity. This could become more common if fuels are taxed based on carbon content and if power generation progresses to low-carbon resources than the pool of liquid fuels used by road vehicles. A number of countries tax vehicle purchases on a basis differentiated for tailpipe GHG emissions per kilometre. Some offer purchase incentives for vehicles with the best performance at the expense of poor performing vehicles. Without adjustment to current taxation schemes, the expanding uptake of EVs and other zero-emissions enabling technologies could affect the tax revenue base derived from vehicle and fuel taxes.

In the near term, road-use policies and vehicle and energy taxes in transportation need to be ready to adapt to changes in the vehicle and fuel markets posed by the transition to electric mobility. Potential solutions include: adjustments of the emissions thresholds that define the extent to which vehicle registration taxes are subject to differentiated fees (or rebates); adjustments of the taxes applied to oil-based fuels; and revisions of the road-use charges applied to vehicles with varying environmental performances, such as tolls for the use of road infrastructure.

Revenue from transport charges and taxation are important to ensure continued availability of funding for the development and maintenance of transport infrastructure, among other goals. But they are also a burden on the budget of households, many of which rely on the use of cars for their economic activity. The long-term stabilisation of fiscal revenues from transportation cannot simply be based on marginal adjustments of vehicle and fuel taxes. This due to the growing extent of the distortions that these adjustments would generate for the fiscal framework applied to the transport sector, as well as significant implementation challenges*. Gradually increasing taxes on carbon-intensive fuels, combined with the use of location-specific distance-based charges to recover infrastructure costs and to reflect the costs of pollution and congestion (something that requires the variation of distance-based charges depending on the extent of the pollution and congestion levels) can support the long-term transition to zero-emissions mobility while maintaining revenue from transport taxes. Location-specific distance-based charges are also well suited to manage the impacts of disruptive technologies in road transport, including those related to electrification, automation and shared mobility services. In all cases, careful consideration has to be made of the social implications of any taxation measure taken, so as to ensure public acceptability and that the needs of the poorer parts of the population are adequately addressed. Even if technological changes take time to percolate through the entire car fleet, early consideration of the implications for tax revenues is important. Thorough collaboration with stakeholders is required to reform tax regimes to the appropriate extent and depth for the longer term challenges posed by the transition to electric mobility.

*For example, a continued increase of taxes applied to oil products, without changes to taxes to electricity, would place a progressively unfair (and economically unsustainable) burden on vehicles that rely on oil products to recover costs capable to finance road transport infrastructure development and maintenance, given that this infrastructure would be shared by vehicle using multiple powertrain technologies. Compensating this by applying differentiated taxes for electricity used in transport and for other end-uses would not only lead to disproportionate levels of taxation on electricity (due to the much better energy efficiency of EVs), but also to significant implementation challenges, as this differentiation by end-use could be easily bypassed.

New mobility modes have challenges and offer opportunities

Emerging changes related to connected, shared and autonomous mobility could significantly reshape road transport over the coming decades, with important implications for vehicle electrification. Close co-operation between EV manufacturers and fleet operators will be important to ensure that EVs can effectively meet the operational and technical requirements of shared mobility services and take advantage of their high vehicle utilisation rates. Ensuring that shared vehicles will be electric requires reducing financing barriers for the more expensive vehicle purchases (especially for vehicles owned by individuals, given that they are often capital constrained) and providing access to chargers. Combinations of policy measures and company efforts could accelerate the electrification of fleets. For example, Uber’s Clean Air Program in London works in concert with the city’s Ultra Low-Emissions Zone to provide financial incentives to drivers to switch to EVs.

If (and when) fleets become highly automated, their utilisation rates may be higher than shared vehicles. Automation is likely to increase daily travel distances, which would require larger and more expensive battery packs or more frequent charging (and downtime). Autonomous cars may also require significant energy for on-board electronics, an issue that may be overcome by the rapid improvements in the efficiency of chips used in autonomous pilot vehicles, as it has already dropped from 3-5 kW in the first generation to less than 1 kW today.

Policy considerations

Ensure a policy environment conducive to increasing EV uptake

Creating optimal circumstances for the uptake of EVs requires the adoption of a progressive set of measures that already have been proven in many countries.

• Countries that are starting to develop policy tools aiming to foster the deployment of electric mobility should establish a vision and a set of targets in parallel with the adoption of vehicle and charging standards.
• Procurement programmes are important instruments to kick-start demand for electric vehicles and stimulate automakers to increase the market availability of EVs. They also help to enable an initial roll-out of publicly accessible infrastructure.
• The use of appropriate economic incentives is effective, especially as long as electric vehicle purchase prices are higher than purchase prices for internal combustion engine vehicles. They are also relevant for the early deployment of charging infrastructure.
• Complementary measures often include regulatory instruments to increase the value proposition of electric vehicles, such as waivers to access restrictions. These are typically grounded on better environmental performance such as local air pollution.
• Minimum requirements to ensure the EV readiness in new or refurbished buildings and parking lots, and the deployment of publicly accessible chargers on highway networks and in cities are also crucial to achieve increased EV adoption and to boost consumer confidence.
• Scaling up EV adoption also requires measures that provide incentives to increase the availability of vehicles with zero- and low tailpipe emissions; crucial instruments include fuel economy standards, zero-emissions vehicle mandates and ratcheting up the ambition of public procurement programmes.

Anticipate long-term impacts of the transition to electric mobility

Without adjustment to the current taxation schemes, the growing uptake of electric vehicles may alter the tax revenue derived from vehicle and fuel taxes, reducing available funding (e.g. for the development and maintenance of transport infrastructure).

Gradually increasing taxes on carbon-intensive fuels, combined with the use of location-specific distance-based charges to recover infrastructure costs and to reflect the costs of pollution and congestion (which requires the variation of distance-based charges depending on the extent of the pollution and congestion levels) can help support the long-term transition to zero-emissions mobility while maintaining revenues from transport taxes. Location-specific distance-based charges are also well suited to manage the impacts of disruptive technological in road transport, including those related to electrification, automation and shared mobility services.

Even if technological changes take time to percolate through the entire car fleet, early consideration of the implications for tax revenues is important. Thorough preparation and discussion with all relevant stakeholders can help to develop appropriate reforms that consider the longer term challenges posed by transport decarbonisation as well as the needs of the population.

Maximise the GHG emissions reduction benefits of EVs

To ensure that the emissions reduction over the EV life cycle are maximised, governments need to ensure that policies aiming to support the uptake of EVs are coherently coupled with measures to decarbonise the electricity generation mix.

To prioritise the opportunities for EVs to increase of the flexibility of power systems for the integration of variable renewables in the electricity generation mix and to minimise costs associated with the adaptation of power systems, governments also need to ensure that power markets evolve to incorporate the services (e.g. grid balancing) that are suitable for EV participation. This requires the effective participation of small loads in demand-side response through aggregators in the electricity market. To enable this effective participation, government should ensure that transaction costs for aggregators (including not only fees, but also other regulatory, administrative and contractual hurdles) are reduced to be able to pool large number of small loads.

Increase policy support for the development of a battery industry value chain

The establishment of a policy framework that reduces investment risks (e.g. providing clear signals on the deployment of charging infrastructure, fuel economy standards, and zero- or low-emission mandates) is a prerequisite for the development of a battery industry value chain.

In addition to the development of policies that enable the mitigation of investment risks, governments should discuss key priorities to enable the scale up of capacity and investment with key industry players and stakeholders. Taking stock of the inputs from this dialogue, governments can effectively allocate funds to accelerate research and innovation, looking in particular at advanced lithium-ion and solid state battery technologies. Strengthened funding for battery manufacturing can be coupled with requirements regarding the sustainability of battery cell manufacturing, further improving the transparency of the raw material supply chains.

Scaling up the development of the battery industry value chain also requires investment to ensure that academic institutions and training centres are well equipped to close the skills gap. This is essential to enable the timely formation, development and strengthening of the professional profiles needed for the battery whole value chain.

Increase the attention on raw material supply

The scale of the increase in material demand for EV batteries calls for increased attention to raw material supply, anticipating and managing potential challenges and ensuring the sustainability of supply chains. Governments interested in fostering the development of a battery industry value chain can enable industry to access raw materials for batteries securing supplies from resource-rich countries or capitalising on the local availability of these resources. To address critical issues in the supply chains of raw materials, governments should work towards the improvement of their traceability and transparency.

The development of binding regulatory frameworks will be important to support the efforts started by the international multi-stakeholder co-operation, underpinned by the OECD Due Diligence Guidance for responsible mineral supply chains.

End-of-life management of batteries is essential to reduce dependency on critical raw materials and to limit risks of shortages. There are policy options to manage this within the 3R (reduce, reuse and recycle) framework, specifically for batteries within the reuse and recycle elements. Regarding reuse, it is important to ensure regulations for end-of-life of automotive batteries enables their use in second-life applications (as opposed to disposal and as an alternative to recycling). Regarding recycling, several countries have set standards for battery waste management including the recycling rate for the entire battery. Governments need to strengthen these regulatory frameworks to ensure their suitability with the expected transition to EVs. The focus should move towards the development of requirements on the design phase for battery products that take into account the need to maximise the recovery of materials during end-of-life treatment of batteries while minimising costs. Thorough stakeholder consultation is important given the dynamic nature of battery technology advances.