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Alex Kimani

Alex Kimani

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. 

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EV Batteries Are About To Get Their Own Passports

  • The EV sector is looking to issue a ‘Battery Passport,’ which can be seen as a global quality seal and verification tool on a digital platform that will share value chain data of EV batteries.
  • The battery passport will advance the sector’s sustainability, help recycling efforts and reduce its carbon footprint.

The EV sector is looking to issue a ‘Battery Passport,’ which can be seen as a global quality seal and verification tool on a digital platform that will share value chain data of EV batteries.

The battery passport will advance the sector’s sustainability, help recycling efforts and reduce its carbon footprint.

Back in 2018, tech giant IBM unveiled a unique blockchain-based technology that can track diamonds, gold, and precious stones used in jewelry through all stages of the global supply chain, right from a mine located thousands of miles away to the customer. The technology helps establish the provenance of jewelry for quality assurance and authenticity purposes while limiting the trade of so-called blood diamonds that are mined in conflict zones.

And now, the EV sector has adapted this idea to batteries after launching ‘Battery Passport,’ a global quality seal and verification tool on a digital platform that will share value chain data of EV batteries.

‘Battery Passport’ takes this concept a step further because it is not only expected to help with human rights compliance but also to track environmental footprints.

Sustainable battery value chain by 2030

During the launch, Global Battery Alliance (GBA) outlined ten guiding principles--co-signed by 42 global organizations--that are intended to become the first step in a responsible and sustainable battery value chain. The principles are based on existing standards such as OECD’s Due Diligence Guidance as well as economically viable considerations for a low carbon economy.

Launched in 2017, GBA is a private-public partnership with over 70 leading global players, including Microsoft, Google, Honda, Volkswagen, the World Bank, and UNICEF, among other organizations. 

The body says Battery Passport was a natural development for the organization that aims to create a sustainable battery sector that supports the Paris Agreement on climate change and also safeguards human rights and economic development consistent with the United Nations’ Guiding Principles on Business and Human Rights as well as UN’s Sustainable Development Goals (SDGs).

The report notes that EV batteries will play a significant role in lowering the carbon footprint of the transport and power sectors, currently responsible for 40% of annual C02 emissions.

The EV explosion

The Battery Passport idea has come at a time when the electric vehicle revolution is truly getting underway. 

According to GBA, the demand for EVs is growing exponentially, with EV manufacturers set to launch more than 300 EV models in the next five years, while Bloomberg has predicted that 500 million passenger EVs will be on our roads by 2040. This will, in turn, see battery demand surge 19x, and with it, a surge in battery waste with 11 million metric tons of batteries expected to reach the end of their lives between now and 2030.

Those figures might appear stretched, considering that some analysts have predicted that global EV sales will plunge 43% this year to 1.3 million units from 2.2 million the previous year. That is a sharp turnaround after the sector recorded double-digit growth in 2019. 

However, the long-term trajectory of the EV industry remains bullish due to several secular trends that are unlikely to change due to Covid-19.

First off, EV battery prices have been falling at an admirable clip.

Batteries and the EV powertrain make up 70% of the cost of an EV. The good news is that the cost of lithium-ion batteries has been dropping precipitously since 2010 and is expected to continue to do so. To illustrate the point, consider that back in 2010, the price of an EV battery pack was $1,160/kWh (USD) compared to the 2018 average price of $176/kWh

BloombergNEF has forecast the cost will be cut in half to $94/kWh by 2024 and then fall to just $62/kWh by 2030. 

The International Council of Clean Transport sees Tesla getting there first, reaching $100/kWh by 2022 thanks to its NCA-based battery pack technology and better economies of scale compared to its peers.

Source: International Council of Clean Transport

The second trend is more countries adopting stringent fuel economy and emissions standards.

Although the Trump administration recently dealt the clean energy and EV industries a potential blow after rolling back stringent environmental regulations during the Covid-19 crisis, that is contrary to the global trend and is highly unlikely to become the new norm.

Many countries remain committed to clean energy, including a shift from ICEs to EVs. Many are gradually shifting their policies from offering direct purchase incentives towards zero-emissions vehicle (ZEV) mandates as well as stricter regulatory requirements regarding fuel economy, GHG, and pollutant emissions. In fact, it is a key reason why EV uptake in places like China and Europe has been impressive lately.

And finally, EVs are very likely to dominate the fast-growing shared mobility sector.

Shared mobility, including services such as taxis, car sharing, and ride-hailing account for an estimated 5% of current passenger vehicle miles. BloombergNEF sees that rising exponentially with shared mobility services projected to account for 19% of the total annual mileage completed by passenger vehicles in 2040.

The economics of EVs are considerably more favorable in a sharing economy, thanks to lower fuel and maintenance costs. EVs currently account for 1.8% of the shared mobility fleet but could climb to 80% by 2040 as per Bloomberg.

All these trends will outlive Covid-19, meaning a significant surge in battery demand. Battery Passport will, hopefully, do its part to ensure they are produced and disposed of sustainably.

By Alex Kimani for Oilprice.com

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  • Maxander on June 21 2020 said:
    With Battery Passport like standard, I see EV sales dramatically impacted going forward.
    This is because Battery Passport will prevent duplication of EV batteries which could be available at much cheaper rates than standard batteries & that makes maintaining an EV extremely costly after initial 3 years or after expiration of original standard battery.
    So buying an EV will be only a choice for upper middle & upper income earning consumers.

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