Labour's 'green' EV grants raise sustainability questions

The Government launched an Electric Car Grant in July in a bid to invigorate interest in new EVs. However, unlike the previous Plug-In Car Grant offered under the Conservatives until 2022, the new ECG is awarded exclusively based on how sustainable an electric car is. In the Government's words, the grant will 'back UK and other manufacturers, with eligibility dependent on the highest manufacturing sustainability standards'.

Car makers are being awarded either a lower Band2 2 £1,500 subsidy or a higher Band 1 £3,750 subsidy depending on how each model complies with these 'sustainability standards.' And yet everyone from manufacturers to experts and buyers are confused by these 'standards'. To date, 35 EVs are confirmed eligible for the discounts - but just two for the full Band 1 £3,750 amount. Why this is the case, the Department for Transport won't yet divulge. What is clear is that the Government is not on a general push towards EVs now, but a push towards only certain EVs.

But EVs and sustainability is nothing new: the debate about how green EVs really are has been raging as long as early adopters first hopped in their zero emission models, and manufacturers have long been investing in sustainable production to make sure they past muster. So, we're taking a look at EV sustainability to try and add some clarity to the sustainable EV situation. Is green really green?

The Government says its criteria for sustainably produced cars 'is in recognition of the need to address embedded carbon emissions across a vehicle's lifetime, as well as tailpipe emissions'. At a minimum this means the manufacturer must hold a verified science based target. These are commitments corporate entities make to reduce their environmental impact and are verified by the independent Science Based Targets Initiative. As we've briefly mentioned, the Government has tiered its grant so that the amount available per vehicle (on or under the £37,000 price cap) will depend on the level of emissions associated with the production of the vehicle; the most sustainable get £3,750, less sustainable models get £1,500. Those that don't qualify at all will get £0. Emissions from vehicle production are assessed against the carbon intensity of electricity grid in the country where vehicle assembly and battery production are located.

While the Government is just now looking at lifetime emissions of electric cars, manufacturers have been doing this for a considerable period. Swedish brands Polestar and Volvo, both owned by Geely, are leaders in sustainability reporting that goes far beyond just EVs. Volvo has been publishing an annual sustainability report for years, with its Annual Sustainability Report accessible online all the way back to 2007.

Its first EV was launched in 2019, and along with it came the Carbon Footprint Report: Battery electric XC40 recharge and the XC40 ICE : 43 pages covering everything from 'end-of-life of the vehicle' to 'material production and refining' and the results of a comparison between the XC40 Recharge and ICE driving 200,000km. This is now a yearly occasion, with every new Volvo EV model being scrutinised to the nth-degree of sustainability. Then when Polestar appeared on the scene, it not only published annual sustainability reports, but gave customers the option to deep-dive into sustainability while on the Polestar website - you can trace every car's whole sustainability journey if you so wish, and read through exam level sustainability insights. It's not just Scandi brands though: Ford, Kia, BMW, Mercedes are just a few of the manufacturers who publish sustainability reports with as much weight to them as annual financial reports.

The Government might have announced the first 35 models that qualify, but we don't and won't know at any point why each manufacturer is awarded the level it is. What we do know is that it is almost certain that Chinese EVs won't qualify, and that South Korean brands are unlikely to either. Transport Minister Lilian Greenwood told BBC Radio 4's Today programme on 16 July: 'We don't expect any cars that are assembled in China to be eligible for this scheme.' As chief executive of EV website Electrifying - and all-round EV expert - Ginny Buckley points out: 'The reality is that car making is a global business. Even if your car doesn't bear a Chinese badge, the chances are part of it was manufactured there.' So, while you shouldn't put a new BYD with a Government Electric Car Grant discount on your bingo card, also don't put a Dacia Spring, Volvo EX30 or Mini Electric on it either, because as Ginny says, these are all partially made in China.

The main reason EVs aren't seen as 'green' in some eyes is the battery: Either end of the battery's life - manufacturing and recycling - and the use of raw materials. There are four essential raw materials battery manufacturers need to secure in order to produce electric car batteries; Lithium, nickel, cobalt and high-purity manganese. Mckinsey's December 2024 Toward security in sustainable battery raw material supply report found that battery producers use more than 80 per cent of all lithium mined today. By 2030 though that is predicted to rise up to 95 per cent. While around 65 per cent of demand for class 1 nickel today originates from the stainless steel sector, the battery sector is set to compete with this contributing to a possible shortage in 2030.

On the other hand about 64 per cent of cobalt – largely a by-product of copper and nickel production – originates in the Democratic Republic of Congo (DRC), Mckinsey states. Its analysts predict that demand for cobalt could rise by 7.5 per cent a year from 2023 to 2030, even though the share of cobalt in battery mixes is expected to decrease. Shortages are unlikely to arise but a resurgence in demand is possible. Using the latest demand estimates, Mckinsey predicts that in 2030 only about 20 per cent of the high-purity manganese supply will meet the requirement of battery applications, which in itself will only equate to about five per cent of the total demand for manganese. However, this could change with the rapid adoption of Lithium Iron Phosphate technology.

Lithium iron phosphate batteries have become the 'rising star' of the battery industry thanks to the fact that they reduce reliance on cobalt and nickel, which addresses sustainability concerns at the same time as bringing down costs of production. The International Energy Agency's (IEA) 2024 Global EV Outlook report found that LPF has supplied more than 40 per cent of EV demand globally by capacity in 2023, more than double the share recorded in 2020. Despite LFP being invented in the US in 1997, China has been the only country mass-producing LFP since 2010. Today two-thirds of EV sales in China use this chemistry, and China produces 70 per cent of the world's EVs. In Europe and the US, LFP remains below 10 per cent. However, there's a shift towards LFP batteries in Europe, with BMW announcing LFP batteries in its EVs from this year and Volkswagen confirming it will use cheaper LFP batteries from 2026. They both join Tesla (among others) which has been using LFP batteries in the majority of its new EVs since 2022.

2025 analysis published in Scientific Reports by a team based out of China discovered that replacing nickel-cobalt-manganese batteries with lithium iron phosphate batteries and combined with battery recycling can reduce lithium, cobalt, and nickel demand between 2021 and 2060 by up to 7.8 million tons. Similarly new lithium manganese-rich (LMR) batteries used far fewer raw materials. Comparatively composition of LMR cells is around just 35 per cent nickel, 65 per cent manganese, and virtually no cobalt. There is of course the issue that a massive increase in demand for manganese as LMR batteries become popular will see manganese contributions to manufacturing emission rise.

Last year Amnesty International's study revealed that many of the world's leading EV manufacturers are not adequately demonstrating how they address human rights risks in their mineral supply chains. Amnesty scored 13 key manufacturers using criteria based on international standards to comprehensively assess their human rights due diligence policies and self-reported practices, with the automakers awarded a score out of 90. Worryingly none of the companies scored higher than 51/90, with Mercedes-Benz coming out top. Tesla was second with 49/90 and Stellantis third with 42/90 - showing only 'moderate demonstration' of their commitment to human rights policies, risk identification processes, supply chain mapping and reporting and remediation. At the other end of the spectrum BYD – the world's largest EV manufacturer – scored the lowest with just 11/90. Mitsubishi didn't fare much better with 13/90, Hyundai managed 21/90, and Geely Auto (which owns Lotus, Volvo and Polestar) and Nissan both scored 22/90. Renault and GM sat in the middle with 27/90 and 32/90 respectively (both showing 'minimal demonstration'), while Ford, BMW and VW all scored 41/90 - 'moderate demonstration'.

Amnesty International's Secretary General, Agnès Callamard commented: 'While some progress was made, across the board, the scores were a massive disappointment.' With the main concern being the 'huge risks for people and the environment' caused by mining for materials, Callamard put pressure on car companies 'to use their massive leverage as global minerals buyers to influence upstream mining companies and smelters to mitigate these human rights risks'. Presumably human rights will be an area of sustainable practice the Government looks at. Science Based Targets itself cites 'stakeholder engagement guidance' as a key component, where corporations are guided on 'how to engage with and recognize the knowledge and potential contributions of Indigenous peoples, local communities, and other stakeholders who are (directly or indirectly) affected in positive and negative ways by your company's activities and value chains'. It's important to note that some manufacturers, despite being owned by conglomerates have marque specific commitments to responsible mining and sustainability. The Volvo Group for instance says that its Sustainable Minerals Program uses 'strict practices to protect human rights'.

In 2021, environmental think tank Transport & Environment (T&E) analysed that an EV uses up just 30kg of raw materials with recycling compared to the 17,000 litres of petrol burned by the average car. Crude oil dependency far outweighed the need for battery raw materials, with the gap set to increase further as technological advancements drive down the amount of lithium required to make an EV battery by half over the next decade. There's an increasing need for battery recycling as there are sufficient mineral reserves in Europe and the UK to manufacture almost 200 million electric cars – enough to replace about two-thirds of Europe's car fleet if recycling of EV batteries is optimised, T&E found. The European Union enacted a Batteries Regulation law in 2023, which mandates minimum recycled content targets for various battery types, including EV batteries, and sets recycling efficiency targets for different types of waste batteries.

Overall, T&E states that EVs are also far better for the climate, requiring 58 per cent less energy than a petrol car over their lifetime. With better battery recycling, this will only improve. Greg Archer, the campaign group's former UK director, said: 'The valuable minerals mined to make electric car batteries will be used and reused unlike those of oil. Over its lifetime, an average engined car would burn through a stack of oil barrels, 25 storeys high, creating about 40 tonnes of CO2 and worsening global warming. In comparison only 30kg of metals would be lost each time an electric car battery is recycled – roughly the size of a football.'