If automakers want their electric cars to qualify for newly revised federal tax credits, they must be able to certify the provenance of their batteries — potentially through the use of a "battery passport."
Why it matters: Strict supply chain requirements attached to the Inflation Reduction Act's restructured electric vehicle (EV) tax credits were meant to catalyze domestic manufacturing and bolster U.S. energy independence.
Yes, but: Tracing battery minerals from the mine, through multi-stage processing and, eventually, recycling is a huge challenge that many experts worry could end up slowing EV adoption.
What's happening: One company, Circulor, already uses blockchain technology to help carmakers like Volvo and Tesla trace their supply chains to avoid child labor and track carbon emissions.
How it works: Tracing battery minerals is similar to tracing the ingredients in a cake, Circulor CEO Douglas Johnson-Poensgen explained in an interview.
What they're saying: "I can create a chain of custody from source to consumption, where all the materials came from, even though those materials are processed and changed many times," Johnson-Poensgen said.
Reality check: For now, at least, most EV battery supply chains go through China.
The bottom line: Until the U.S. builds its own domestic battery supply chain — a work in progress that's beginning to accelerate — tracing will only prove that most of today's EVs won't qualify for a tax credit under the IRA.