Trade and technology

Leveraging regional cooperation for resilient EV battery supply chains

APEC Policy Support Unit

APEC PSU Resilient EV Battery Supply Chains Min Min

Published 01 October 2024

Despite the significant role EVs play in developing green transport solutions, the industry continues to face sustainability and resilience challenges, including high costs, battery reliability, extreme weather, and geopolitical risks. To overcome these obstacles, APEC economies must invest and cooperate in research and development, build a distributed and circular economy, and set standards to ensure supply chain transparency.

There is significant global momentum toward adopting electric vehicles (EVs), with the APEC region particularly committed to advancing this transition. Together, five APEC economies – China, the United States, Canada, South Korea, and Japan – accounted for over 70 percent of battery EV sales worldwide.

Despite this significant growth, challenges remain in ensuring that EV adoption effectively decarbonizes the land transportation sector. For instance, EV adoption is constrained by public concerns about high costs and battery reliability. In addition, the environmental costs associated with the mining of critical minerals and energy-intensive battery production have been cited as significant barriers to using EVs for climate change mitigation. A related concern is the source of electricity for producing and recharging these energy-intensive batteries, highlighting the importance of renewable energy.

APEC economies are particularly well-positioned to address these challenges, as many members play prominent roles within the global EV battery supply chain. Australia, Chile, Indonesia, Mexico, the Philippines, Thailand, and Viet Nam produce key raw materials for lithium-ion batteries. Peru is currently exploring lithium mining opportunities and is already a large producer of copper and other minerals essential for EV-related technologies. Malaysia is ramping up battery and semiconductor manufacturing, as well as battery recycling. Each APEC member can play a role in this complex ecosystem of transitioning to electric vehicles.

This policy brief by the APEC Policy Support Unit, sponsored by the Hinrich Foundation, aims to help policymakers to build an inclusive, sustainable, and resilient EV supply chain. It notes that APEC economies should promote research and development and innovative initiatives to minimize dependence on specific resources, reducing the environmental impact of mineral extraction and processing. It also calls for the development of a circular and distributed economy in the region through the fostering of joint investments among APEC economies in battery recycling and mineral recovery. Increased partnerships within the EV supply chain can also help reduce tensions and create a more balanced playing field for APEC economies. Finally, it recommends setting clear standards and regulations for EV battery production and logistics in line with international agreements to promote domestic market standardization and supply chain visibility.

© The Hinrich Foundation. See our website Terms and conditions for our copyright and reprint policy. All statements of fact and the views, conclusions and recommendations expressed in this publication are the sole responsibility of the author(s).