Ford, VW, Volvo, Tesla turn to blockchain tracking to ensure responsible sourcing for EV batteries

Automakers and suppliers say it's vital that the cobalt, lithium, copper and other materials used in electric vehicle batteries are sourced responsibly, and they are turning to blockchain technology to ensure that happens.

Blockchain — a digital ledger that records transactions and stores the information across multiple computer networks — has been used in recent years to track everything from medical records to food supply data to cryptocurrency.

The technology, experts say, can save automakers money by modernizing and streamlining key elements of their supply chain so they can easily tell whether human rights or environmental violations have occurred in the mines and refineries that produce the ingredients used to make EV batteries.

Ford Motor, Volkswagen, LG Chem, Huayou Cobalt, IBM and RSC Global Group in 2019 founded the Responsible Sourcing Blockchain Network to do just that. Tesla in its 2020 impact report, revealed that it's using different blockchain solutions to trace its cobalt and nickel supplies. And Volvo Cars last year said it would invest in blockchain traceability firm Circulor.

"In order to really deliver fully transparent and verified supply chains, continual, up-to-date, and verified supplier data is needed," Nicholas Garrett, CEO of RCS Global Group, said in a statement. "In our experience, most of the companies we work with, not least in the auto sector, now want to visualise and monitor supplier performance on a consistent and regular basis rather than having to rely on paper-based systems."

Using blockchain, automakers would be able to see a step-by-step account of where the materials for their batteries come from and whether those locations have been verified as ethically responsible. Previously, most automakers would have to rely on less advanced systems that require time-consuming in-person audits.

The goal is to deter human rights abuses that happen in places such as the Democratic Republic of Congo, a cobalt-rich nation where mines have in some cases relied on child labor.

Ford recently completed a pilot showing how cobalt produced at Huayou's industrial mine site in Congo could be traced through the supply chain to LG Chem's cathode and battery plant in South Korea, then to a Ford plant in the U.S.

"We think the pilot was successful in terms of proving the merits of the technology helping provide transparency across our global supply chain," a Ford spokesman said in a statement. "The pilot tested hypothetical scenarios, not production applications. We believe the technology could have broad supply chain possibilities, which is why we are now studying the more comprehensive business case."

Ford plans to build three battery plants in Tennessee and Kentucky. As those projects come online later in the decade, the company said its role in the blockchain network will become even more important.

"By collaborating with other leading industries in this network, our intent is to use state-of-the-art technology to ensure materials produced for our vehicles will help meet our commitment to protecting human rights and the environment," the Ford spokesman said. "We believe the immutable nature of blockchain technology can help add even more transparency to the rigorous supply chain tracking we already have in place."

VW, in an email, said it continues to test blockchain technology to gain more transparency in the supply chain. Volvo in 2019 went beyond the pilot stage and became the first automaker to implement global traceability of cobalt with the technology.

It invested in Circulor a year later, and a spokesman said it aims to use the tech to trace other materials as well.

"We are committed to an ethical supply chain for our raw materials, and our partnership with Circulor has been instrumental in that regard," Martina Buchhauser, Volvo Cars' chief procurement officer, said last year. "By supporting Circulor's ongoing development, we can expand the use of blockchain technology in our operations and contribute to a more sustainable business."