Electric Car Makers Clean Up Supply Chains Thanks to EU Rules

Electric vehicles just got even greener, and it's not just about zero tailpipe emissions anymore.

A new report ranking the world's 18 largest car makers shows companies are racing to build EVs with low-carbon materials while protecting workers and communities along the supply chain. The fourth annual Lead the Charge Auto Supply Chain Leaderboard reveals clear winners and a surprising truth: strong rules work.

Tesla leads the overall rankings, while Volvo tops the list for supply chain decarbonization and Ford excels at responsible sourcing. Five companies including Ford, Mercedes, Tesla, Volvo, and Volkswagen are improving twice as fast as their competitors.

The standout success story? European Union regulations are driving the transformation. The EU Batteries Regulation now requires car makers to map their supply chains, conduct due diligence on minerals like lithium and cobalt, and recycle batteries at end of life. These rules never existed for traditional gas-powered cars.

Mercedes and Volvo are already selling new EV models built with cleaner steel and aluminum. Geely, now the top-scoring East Asian automaker, developed industry-leading battery recycling practices. Even BYD, the world's largest EV maker, put supplier codes of conduct in place for the first time.

The transparency shift is real. Companies are publishing detailed reports on water use, waste, and environmental impacts from mining operations. Twelve of 18 automakers now take steps to protect Indigenous rights, up from just six in 2023.

Chinese manufacturers showed the biggest improvements this year, proving rapid change is possible regardless of company size or location. Meanwhile, Toyota continues ranking near the bottom alongside state-owned Chinese automakers, showing that being big doesn't guarantee being responsible.

The Ripple Effect

This progress extends far beyond individual companies. When major automakers demand cleaner materials, entire industries transform. Steel and aluminum producers are investing in low-carbon production methods. Mining companies are implementing better environmental and labor practices. Battery recyclers are building new facilities.

The shift creates advantages for everyone. EV buyers increasingly value sustainability, rewarding brands that use decarbonized materials. Workers and communities near mines benefit from stronger protections. The climate wins as supply chains cut emissions before cars even reach the road.

But there's a catch. The very regulations driving this success are now under threat. Key provisions in the EU Batteries Regulation have been delayed two years. Some automakers are lobbying against the policies that helped them improve, including the 2035 phase-out of gas-powered cars.

Only Volvo received positive marks for climate lobbying, and it's the only EU automaker not part of the main industry lobby group pushing back against green rules. Transport & Environment, which produces the ranking, warns that weakening these regulations would halt progress just as momentum builds.

The message is clear: when governments set high standards, companies rise to meet them. Electric vehicles are proving that cleaner, more ethical supply chains aren't just possible but profitable and competitive.