Volvo Cars will become the first car maker to implement global traceability of cobalt used in its batteries by applying blockchain technology. The announcement follows the unveiling last month of the company’s first fully electric car, the XC40 Recharge.
Traceability of raw materials used in the production of lithium-ion batteries, such as cobalt, is one of the main sustainability challenges faced by car makers. Volvo says it is committed to ‘full traceability’, ensuring that customers can drive electrified Volvos knowing that the material for the batteries has been sourced responsibly.
Blockchain technology, which establishes a transparent and reliable shared data network, significantly boosts transparency of the raw material supply chain because the information about the material’s origin cannot be changed undetected.
Volvo Cars has now reached an agreement with its two global battery suppliers, CATL of China and LG Chem of South Korea, and leading global blockchain technology firms to implement traceability of cobalt, starting this year.
Technology firms Circulor and Oracle operate the blockchain technology across CATL’s supply chain following a successful pilot earlier this summer, while the Responsible Sourcing Blockchain Network (RSBN), together with responsible sourcing specialists RCS Global and IBM, is rolling out the technology in LG Chem’s supply chain.
“We have always been committed to an ethical supply chain for our raw materials,” said Martina Buchhauser, Head of Procurement at Volvo Cars. “With blockchain technology, we can take the next step towards ensuring full traceability of our supply chain and minimising any related risks, in close collaboration with our suppliers.”
A blockchain is a digital ledger containing a list of records linked to each other via cryptography. Within supply chains, the technology creates records of transactions which cannot be changed, while also enforcing a common set of rules for what data can be recorded. This allows participants to verify and audit transactions independently.
In this particular case, data in the blockchain includes the cobalt’s origin, attributes such as weight and size, the chain of custody and information establishing that participant’s behaviour is consistent with the Organisation for Economic Co-operation and Development (OECD) supply chain guidelines.
These provide detailed recommendations to help companies respect human rights and avoid contributing to conflict through their mineral purchasing decisions and practices. The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas is global in scope, and applies to all mineral supply chains. This approach helps to create trust between participants along a supply chain.
Last month, Volvo launched the XC40 Recharge, the first of an upcoming family of fully electric cars under the Recharge banner. By 2025, it expects half of its global sales to consist of fully electric cars, with the rest being hybrids.
In October, the Swedish car maker also launched an ambitious climate plan, which includes a radical reduction of carbon emissions by 40 per cent per vehicle by 2025, as well as a continued commitment to ethical business across its entire operations and supply chain.
Volvo says that “CATL and LG Chem are renowned battery manufacturers, both with long and successful track records supplying lithium-ion batteries to the global automotive industry. They fulfil Volvo Cars’ strict sourcing guidelines in terms of technology leadership, responsible supply chains, reduction of carbon emissions and competitive cost models”.
The agreements between Volvo Cars, CATL and LG Chem cover the supply of batteries over the coming decade for next-generation Volvo and Polestar models, including the XC40 Recharge.