EU regulation drives automakers to accelerate responsible sourcing and decarbonisation of EV supply chains

According to the Lead the Charge Auto Supply Chain Leaderboard, a new industry ranking produced by a coalition that includes Transport & Environment, Human Rights Watch and investor groups, major automakers are making measurable strides in cleaning up the supply chains behind electric vehicles. The fourth edition of the leaderboard finds that a cluster of original equipment manufacturers , notably Ford, Mercedes, Tesla, Volvo Cars and Volkswagen , have accelerated progress on both material decarbonisation and responsible sourcing, driven in large part by regulatory pressure from the European Union.

Industry data from the leaderboard show pronounced gains on several fronts. Manufacturers are increasing the use of low‑carbon steel and aluminium in EV programmes, expanding battery recycling and publishing more granular, model‑level disclosures that enable verification of claims. According to the analysis, Tesla tops the overall ranking while Volvo leads specifically on supply chain decarbonisation and Ford ranks highest on responsible sourcing. Average performance across the 18 assessed companies remains modest, however, with a mean score of 25% and no company exceeding 50% overall.

The leaderboard credits EU regulation, and in particular the Batteries Regulation, with changing market incentives by requiring mapping of supply chains, due diligence and battery recycling obligations for EVs. Franziska Grüning, Raw Materials Officer at T&E, is quoted as saying: “This year’s leaderboard shows that cleaner, more responsible supply chains are becoming the norm rather than the exception for carmakers. But that shift didn’t happen on its own. The EU’s green rules have turned sustainability from a nice‑to‑have to the price of entry. The Batteries Regulation is not just a European but a global opportunity to clean up supply chains and responsibly produce minerals that go into EVs.”

The policy context underlines how regulation can convert leading practice into industry standards. The European Commission’s Automotive Package, published in December 2025, set tougher CO2 targets for cars and measures to support electrification and low‑carbon materials, including pathways to use offsets such as low‑carbon steel within a strict framework. Separately, EU moves to expand domestic net‑zero manufacturing capacity through the Net Zero Industry Act aim to create industrial demand that should, in theory, help scale green inputs such as renewable‑intensity steel and aluminium.

Yet the leaderboard warns that these gains are fragile. Key due diligence elements of the Batteries Regulation have been delayed and remain under review, and the report highlights active lobbying by parts of the auto industry against the EU’s 2035 internal combustion engine phase‑out and other climate rules. Franziska Grüning is also quoted as saying: “The very laws at the heart of this progress are now at risk. The EU put the brakes on progress when they delayed the due diligence rules under the Batteries Regulation even when many carmakers were ready to comply. At the same time, carmaker lobbyists continue to attack the phase‑out of polluting fossil cars that bring nothing but pollution at home and dirty oil extraction abroad. EU carmakers want credit for sustainability, but too many of them are working to weaken the very rules that make progress possible. They are preaching water while drinking wine.”

For industrial decarbonisation professionals, the practical implications are clear. Where policy has created a lead market for green inputs, companies have secured supply agreements and begun to deploy low‑carbon steel at scale; Volvo’s earlier agreements with steel suppliers are an example of how procurement can lock in reductions across scope 3 emissions. According to reporting on corporate practice, Volvo has gone further than most on green steel targets and supplier contracts, while Tesla is among the limited set disclosing detailed scope 3 data for steel. The leaderboard also finds rapid improvement among some Chinese manufacturers: Geely has notably advanced battery decarbonisation, recycling and initial human‑rights steps, while BYD has introduced supplier codes of conduct and grievance mechanisms.

The geopolitical and competitive angle matters for buyers and policymakers alike. Independent analysis has argued that weakening EU regulations would advantage manufacturers that have yet to build comparable compliance systems, making regulatory dilution effectively a competitiveness subsidy for lagging producers. That dynamic risks encouraging a two‑tier market in which greener, traceable EVs remain a premium segment rather than the baseline.

Beyond raw materials, the transition depends on enabling infrastructure and broader industrial coordination. EU authorities have been addressing grid readiness and charging infrastructure to ensure demand can be supported without offsetting decarbonisation gains; Commissioner Thierry Breton convened stakeholders in 2024 to assess grid preparedness as electrification scales. Meanwhile, proposals such as recycled‑content targets in the End‑of‑Life Vehicles regulation or the upcoming Circular Economy Act, and demand signals through an Industrial Accelerator Act, are offered by the leaderboard authors as levers to cement market adoption of recycled and low‑carbon steel and aluminium.

For corporate procurement teams and supply chain managers the message is twofold. First, regulatory compliance is increasingly inseparable from competitive positioning in EV markets; transparent supplier engagement, binding supplier agreements for near‑zero materials and investment in battery circularity are no longer optional if manufacturers intend to compete in jurisdictions enforcing the new rules. Second, policymakers remain a critical partner: sustained progress will depend on defenders of the regulatory framework preserving due diligence obligations and on targeted industrial policy to scale green inputs and recycling value chains.

The Lead the Charge network concludes that if all automakers adopted current best practices already demonstrated by peers, industry scores could rise from today’s average to as high as 86%. For professionals charged with decarbonising industrial supply chains, that potential represents both a roadmap and a call to action: maintain procurement pressure for credible supplier commitments, coordinate with policymakers to secure predictable demand for low‑carbon materials, and prioritise investments in battery recycling and traceability to lock in the emissions reductions that electrification promises.