–As the industry scales, a competitive, large- scale network of companies has emerged alongside vehicle manufacturers (including those in battery production, materials manufacturing and recycling). Research shows that China has established a leading position in the global market share, and the operating quality of power batteries and other major automotive parts industries in China are growing stronger.19 –Local automotive brands have become the new market favourites, with several Chinese EV brands now among the top 10 for retail sales in China,20 a ranking once dominated by European and American brands. The rise of Chinese EV manufacturers has disrupted automotive industry competitiveness and influenced the rising trend of automotive technology development. Rising demand for key raw materials The strategic prioritization of developing new energy vehicles will significantly boost the high-quality development of the industry in China till 2035.21 While China produces three-quarters of all lithium- ion batteries, the majority of key minerals are mined in other resource-rich countries such as Australia, Chile and the Democratic Republic of the Congo.22 China’s EV industry will still depend on the global supply of several key raw materials to thrive: –The demand for key minerals for batteries continues to rise. China dominates the global market of processing operations for the majority of critical minerals such as lithium (55%), cobalt (65%) and nickel (35%). China is expected to account for 70% of global battery production capacity from now until 2030.23 –The automotive industry is currently the third largest consumer of steel. Steel-related products make up about 50-60% of a vehicle’s total weight.24 In 2023, the transport sector (including light-duty vehicles, trucks and buses, auto parts, etc.) alone in China consumed 82 million tonnes of steel, and this may increase due to EV industry expansion.25 –Aluminium alloy is currently one of the best lightweight materials with improved energy efficiency and vehicle performance, which has led to significant demand from the automotive industry. The Ministry of Industry and Information Technology’s (MIIT’s) Energy- Saving and New Energy Vehicle Technology Roadmap 2.0 set targets for aluminium use per vehicle in China – specifically, 250 kilograms (kg) per vehicle by 2025 and 350 kg per vehicle by 2030.26 As the aluminium use per vehicle in China (see Table 2) remains well below these targets, the demand is estimated to grow. Given the high consumption of raw materials, which could potentially cause significant impacts on nature and invite risks for companies in the value chain, relying only on mineral extraction is no longer optimal. Recycled materials are gradually becoming a significant source of raw materials supply. Research found that recycling critical metals would be an effective way to avoid a decrease in the supply of critical metals in China. The economic benefits could also be significant.27 China’s aluminium use per vehicle (2020) TABLE 2 Energy type Aluminium use per vehicle (kg/vehicle) Passenger car 138.6 Battery EV 157.9 Hybrid EV 198.1 Source: International Aluminium Institute (IAI). (n.d.). Assessment of Aluminium Usage in China’s Automobile Industry 2016-2030 . China is expected to account for 70% of global battery production capacity from now until 2030.70% Nature Positive: Role of the Automotive Sector – China Deep-dive 14

Nature Positive Role of the Automotive Sector China Deep dive