Chinese electric vehicle battery maker Contemporary Amperex Technology (CATL) is stepping up efforts to decarbonize its supply chain, as it faces increasing pressure from European regulators over its factories there.
CATL announced last month that suppliers bidding on projects from next year will be required to submit carbon footprint data covering carbon dioxide emissions generated throughout raw material procurement, manufacturing, and sales.
Metrics such as renewable energy usage and energy consumption per product will be incorporated into CATL’s annual supplier evaluations. Suppliers that receive high scores stand to benefit through preferential treatment in orders and greater assurance of long-term business relationships.
CATL unveiled a phased carbon neutrality roadmap in 2023, pledging to achieve net zero emissions in core operations by the end of 2025 and across the entire supply chain, including business partners, by the end of 2035. While the 2025 target has already been met, achieving carbon neutrality throughout a supply chain that includes more than 1,000 companies will be far more challenging.
CATL holds 40% of the global market for EV batteries by installed capacity and has been a driving force behind the automotive sector’s electrification shift. Yet EVs are not entirely emissions-free when viewed over their full lifecycle.
A typical midsize passenger EV operated for 15 years generates roughly 50% less greenhouse gas emissions than a comparable internal-combustion-engine vehicle, according to the International Energy Agency. While EVs produce no tailpipe emissions, greenhouse gases are generated through electricity production as well as vehicle and battery manufacturing.
Battery production accounts for about 20% of an EV’s total emissions. Much of that comes from battery materials. For example, the production of cathode materials involves heating materials to temperatures of 700–1,000 degrees Celsius for dozens of hours, generating significant carbon emissions.
Against this backdrop, the European Union is gradually tightening regulations on EV batteries, requiring companies to manage and disclose data such as carbon emissions generated during production.
“In the future, batteries that are not carbon neutral will become obsolete,” CATL chairman Robin Zeng has said. “Carbon neutrality is also a market opportunity.”
CATL plans to standardize methods for calculating carbon emissions across the entire battery lifecycle and apply standards like minimum usage rates for low-carbon materials throughout the production process.
“We will promote this framework as a reference standard for the global lithium-ion battery supply chain,” said Huang Bin, CATL’s procurement director.
CATL is facing growing scrutiny as it expands manufacturing overseas, including from authorities in Hungary, where the company is building a factory.
David Vitezy, Hungary’s minister of transport and investment, announced last month that even projects categorized as priority investments would be unable to obtain construction permits if they conflict with environmental or urban planning regulations.
Vitezy specifically cited factories by CATL and South Korean battery makers Samsung SDI and SK On as potentially being affected.
Later that month, local authorities said they had rejected CATL’s application for an operating permit, citing increased nickel exposure among factory workers. Hungary underwent a change of government following general elections in April, and the new administration appears to be reassessing efforts by its predecessor to attract investment from Chinese companies.
CATL’s overseas sales ratio reached 31% in the year ended December, up sharply from 4% in the year ended December 2019.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.