Ukraine war redrawing Europe’s auto supply chain map

Then there’s the European Union Battery Directive, designed to reduce the CO2 in battery production. That rule again forces automakers to inspect the value chain and, ideally, localize it.

From July 2027, the EU must “comply with carbon footprint thresholds,” according to legislation. The exact thresholds have not yet been agreed. But Mercedes pointed out in its 2021 company report that production of an all-electric vehicle generates twice as much CO2 as a conventional combustion-engine vehicle – “due to the lithium-ion batteries.”

As new automakers look for new ways to cut CO2 from their entire manufacturing process, it is certain to affect supply chain decisions.

“The climate footprint for the upstream supply chain is important for every electric car sold,” BMW CEO Oliver Zipse said in a speech at the company’s annual general meeting last month. For its Neue Klasse (New Class) -platform electric cars, BMW is taking “CO2 emissions and the percentage of secondary [recycled] Selecting suppliers for criteria into account, ”he said.

That strategy may generate higher wage costs, but it also gives an advantage to local suppliers, given the high levels of renewable energy generated in some European countries.

“The whole Northvolt setup [in Sweden] is done in a very, very sustainable way using predominantly hydroelectricity, ”said Volvo’s Rowan.

Not everyone is convinced that supply chains will move from global to local. Mercedes-Benz CEO Ola Källenius argued that global trade has been too beneficial and too entrenched for the last 30 years. Financial Times event.

“To move away is not the right thing to do,” he counseled. “Sourcing will become more sophisticated, maybe a little bit more complex, but believe that the overall economic system will go into some kind of re-regionalization – well, I think it would be the wrong goal.”

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