As Europe races to become climate-neutral by 2050, the auto industry has become the focal point of carbon emission reduction efforts.
The industry needs to fundamentally transform itself to meet EU targets of a 55 percent reduction in car emissions, getting 30 million zero-emission vehicles on the road by 2030, and comply with the ban on the sale of new gasoline and diesel-powered cars by 2035.
This would be a huge challenge even in ideal circumstances -- requiring a massive shift in the industrial base away from internal combustion engines toward new technologies, such as batteries, fuel cells and electric motors.
Every electric car is a microcosm of this challenge -- an average EV contains more than 200 kg of minerals, versus just 40 kg in a conventional car. Now consider this at scale, with more than 13 million motor vehicles made in Europe alone in 2023.
Add to this the fact that Europe relies to an extraordinary degree on imports of essential raw materials, in many cases dominated by one or a few supplier countries and companies. In a world of dramatically increased geopolitical uncertainty, this presents the European auto industry with a challenge of unprecedented complexity. Not only must it navigate a technological revolution, but transform its supply chains to prioritize security and sustainability.
Europe's new Critical Raw Materials (CRM) Act sets the stage for this transformation -- identifying raw materials critical to our industry and setting clear targets to ensure the security and sustainability of supply. In short, we need to safeguard our raw materials supply and ensure that the supply chain meets our highest standards of transparency -- no matter where the materials are mined, processed and produced.
But recent revelations of unethical practices in the mining of critical materials for the auto industry -- cobalt in particular -- have shown how failing to uphold high ethical standards across all parts of the supply chain can pose serious reputational and commercial risks for the industry.
Kerrigan Advisors recently sat down with Donnie and Denny Buckalew, co-owners of Buckalew Chevrolet, the 5th highest-volume Chevrolet dealership in Houston, Texas, to discuss their perspective on the changing auto retail industry and how challenges facing single-point dealers influenced their decision to sell their dealership.
Blockchain - promising tech
With the European Union leading the way with far-reaching legislation including the CRM Act and Corporate Sustainability Reporting Directive, and a well-informed and conscientious consumer demanding change -- traceability and transparency are now as critical and urgent for the auto industry.
A promising technology-based answer is blockchain, offering the industry global scalability and instant traceability.
Blockchain technology can monitor the entire journey of one material along the supply chain, recording all critical information -- quality, material origin, environmental and social governance (ESG) and other relevant certifications. These details are attached to the physical material using low-cost, widely available identification methods such as barcodes or RFID tags, which can then be scanned and authenticated at any stage along the supply chain.
For example, German startup Minespider has developed a blockchain-based digital product passport that provides a comprehensive digital history of products through a QR code. The product passport offers verified provenance, ESG metrics, carbon emissions data, compliance records, due diligence reports and essential recycling information to enhance trust and visibility.
The company last year signed with the world's second-largest producer of tin -- Minsur-- to attach Minespider's product passports to 10 percent of their annual tin production output, providing Minsur the ability to give its customers on-demand access to essential data for each product shipment.
Minespider's product passports are now being used in the auto industry, too. Earlier this year, Temsa, one of the world's leading coach, bus, and light-truck manufacturers, announced it was partnering with Minespider to integrate Battery Passports to help them comply with the new EU Battery Regulation.
For Europe's automotive industry, blockchain stands to be a game changer, as the success of the sector hinges on its ability to integrate advanced technology with a strong commitment to ethical standards.
