Powering the future: how EU regulations and US ambitions are shaping the global battery market

The new EU Sustainable Battery Regulation (SBR) will have wide-reaching impacts on electric vehicles (EVs) around the globe. In this blog we explore those impacts and how organisations can prepare, taking advantage of the opportunities the regulation brings and avoiding the risks of inaction.

Shifting trends

As policy and consumer demand is shifting the global automotive landscape towards electric vehicles, ensuring the sustainability of supply chains and production becomes crucial. For an EV, these stages can represent a significant share of their life cycle CO₂ emissions, in great part due to the production of EV batteries. In addition, current battery technology also relies on the use of lithium, nickel and cobalt. These are critical materials which are likely to be subject to future shortages.

The EU's vision for a greener automotive future

The European Union's Sustainable Battery Regulation 2023/1542 (adopted in August 2023) replaces the previous ‘Batteries Directive’ and represents a paradigm shift in the battery industry, setting a precedent for sustainability standards. With requirements increasing over the next few years, the SBR will affect the whole battery life cycle, from production to reuse and recycling, to ensure that in the future batteries in Europe:

• Have a low carbon footprint.
• Use minimal harmful substances.
• Need less raw materials from non-EU countries.
• Are collected, reused and recycled to a high degree.

The SBR drives action across the whole battery life cycle to create a safe, circular and sustainable battery value chain. 

The regulation expressly brings electric vehicle batteries and light means of transport batteries within its scope and introduces changes in four key areas: 

1. Sustainability and safety
2. Supply chain management
3. Labelling and information
4. End of life management 

SBR Timeline

The new regulation introduces a significant number of requirements and targets for all batteries placed or put into service in the EU. Some key targets and requirements of EV batteries include:

2025

EV batteries placed on the EU market require a carbon footprint declaration.

2026

EV batteries will have to bear a carbon footprint performance class label. 

2028

EV batteries need to comply with maximum carbon footprint thresholds. 
EV batteries will have to declare the content of recycled cobalt, lead, lithium and nickel.

 
2031

EV batteries need to contain minimum levels of recycled content (16% cobalt, 85% lead, 6% lithium and 6% nickel). 

2036

These levels would be further increased (26% cobalt, 12% lithium and 15% nickel). 

This regulation affects all batteries placed or put into service in the EU market regardless of the place of production. 

Long-term, it sets a pioneering standard for global battery practices and its implications will ripple across borders and across the whole value chain, impacting manufacturers, producers, importers, and distributors worldwide. 

What is the US strategy?

In the United States, legislative acts like the Infrastructure Investment and Jobs Act and the Inflation Reduction Act allocate substantial funds to boost domestic battery manufacturing, critical mineral development, and innovation in the US battery sector, in order to expand its EV production capabilities.  

With a substantial share of US car exports to  Europe – in 2022 the US was the third top exporter of vehicles to the EU  – the compliance of US automotive manufacturers with the EU's stringent battery standards becomes imperative to maintain access to the European market. Furthermore, adherence to the regulation shows global leadership in the rapidly evolving and standardised EV market and sets up a positive position as pioneers in shaping upcoming US regulatory frameworks on batteries.  

Empowering your resilience

Ricardo provides both breadth and depth of knowledge and skills to inform and support you to not only comply with the new regulation but to maximise the opportunities it brings. 

With an extensive track record of supporting policymakers and providing regulatory advice to corporates, our experts can offer you unique policy insights. From baseline policy mapping to ongoing monitoring of new requirements, Ricardo is equipped to assist you in identifying priority actions, risks and opportunities. Our team can help you understand the market and policy environment to inform a robust strategy and align your organisation with the new legislation.

Our experts are also highly experienced in providing a range of sustainability solutions and can help you identify the best options to meet the requirements. This includes:

• Preparing product carbon footprints (PCFs) and life cycle assessments (LCA) of batteries and vehicles.
• Resource mapping, recycling/reuse solutions and advice on sustainable procurement for a circular economy. 
• Providing social life-cycle assessments and due diligence support with a focus on sustainability.
• Advice on waste and resource management covering Extended Producer Responsibility (EPR) implications.

In an era defined by sustainability, navigating these regulations is not just compliance; it is an opportunity to drive innovation and lead the transition towards a cleaner automotive future.

Further information

• For any questions or to start a conversation on how we can support you with the Sustainable Batteries Regulation and its impact on your organisation,  Get in touch
• Sustainable Batteries Regulation support
• Batteries and energy storage
• Life cycle assessment support
• Circular economy support