British risk analysis firm Verisk Maplecroft said electric vehicle makers would need to be careful as they cast a wider net to source raw materials ranging from rubber to aluminium and mica needed for the 30,000 or so components in each car.
But tracing the raw materials was only one problem in the complex supply chain with an elaborate network of suppliers and transporters involved, adding risks at every stage.
“Increased exposure to human rights abuses, environmental degradation and less-than-savoury governments is therefore going to be inevitable as the industry’s growth accelerates,” Maplecroft researcher Stefan Sabo-Walsh said in the report.
The report, based on data from the firm’s commodity risk service, said China was now the top producing country for about 86 percent of the key commodities in lithium-ion batteries but this was likely to change as production picks up speed.
Demand for eco-friendly electric vehicles is on the rise.
Car buyers had shunned electric vehicles because of their high cost and limited operating range until Tesla unveiled a model in 2012 that cracked 200 miles (322 km) on one charge.
Since then, big advances in battery technology and a global crackdown on pollution in the wake of Volkswagen’s diesel scandal have raised pressure on carmakers to speed up development of zero-emission alternatives.
Paris authorities this month unveiled plans to banish all petrol- and diesel-fuelled cars by 2030 while the British government earlier this year said it would ban the sale of new petrol and diesel cars and vans from 2040..
Sabo-Walsh said this meant businesses would seek new source countries with reserves of key materials such as the Democratic Republic of Congo, Russia, the Philippines and South Africa.
But in some countries it was hard to trace if their raw materials came from legal, commercial mines or from illegal smallholder mines where forced and child labour are rife.
The risks associated with lithium-ion batteries were of particular concern. The Democratic Republic of Congo is the leading global producer of cobalt used in these batteries, but has faced global criticism for human rights abuses.
The United Nations children’s agency (UNICEF) estimates 40,000 children work in the warn-torn central African nation’s cobalt mines in dire conditions.
“This should provide an instant red flag for the industry operators who will increasingly face brand damage or regulatory penalties from the slew of emerging legislation addressing supply chain issues,” Sabo-Walsh said.
As well potential slavery, other risks range from corruption associated with overland transport to east African ports to potential natural hazards disrupting smelting in Indonesia.
Sabo-Walsh said a big problem for the industry and electric vehicle companies is that no laws or significant initiatives exist for the majority of the raw materials they use.
“To maintain their clean, green image, they will need to ensure every individual component required for the manufacture of their vehicles is ethically sourced and as untarnished as a new vehicle rolling off the production line,” he said.