Volvo Cars is investing in a blockchain company in order to monitor its supply chain for electric battery materials such as cobalt.
The company will invest high single-digit millions into Circulor as it plans to expand the materials it tracks in an effort to eliminate unethical sourcing from its products.
Despite relying on a vast network of companies around the world, carmakers often have limited visibility of the businesses operating below tier 1 suppliers that work directly with them.
The potential for disruption through the supply chain was highlighted in the early months of this year when some factories across Europe and North America closed because of difficulty sourcing parts from further down the supply chain in China, where the coronavirus pandemic had shut plants.
A host of companies, from carmakers to consumer electronics groups, have also been accused of complicity in human rights violations in mines where cobalt is produced by not cracking down on the practice of child labour, particularly in the Democratic Republic of Congo.
Apple, Dell and Microsoft are among businesses that had been named in a US class-action lawsuit filed on behalf of families of children killed or injured while mining cobalt in the central African nation.
Volvo has been using blockchain, where its components are monitored and accounted for, to track cobalt used in batteries for electric vehicles.
The company wants to expand its use of blockchain to monitor other materials, such as mica, a mineral used in electric battery packs.
It also allows the company to widen its view of individual businesses further down its supply chain, as it tries to reduce CO2 emissions through its network.
“The traceability of materials has been very important for us,” said Martina Buchhauser, Volvo’s chief procurement officer, ahead of announcing the deal at the Financial Times’s Future of the Car virtual summit on Wednesday.
“We want to make sure there are no children in the actual site of the mine. That has been such a breakthrough for us. With this tech, we can actually trace where it comes from.”
She added: “We realise that in this technology there lies a lot more opportunity that we could use because cobalt is just one of the conflict minerals that we need to look for.”
Volvo trialled the tracing technology with its battery suppliers LG Chem and CATL earlier this year.
Both groups have agreed to use the systems to trace materials that go into batteries for the Volvo XC40 Recharge, the brand’s first full electric car that comes out later this year.