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Executive Summary

The introduction of the Digital Battery Passport (DBP) under the EU Battery Regulation 2023/1542 marks a structural shift in how automotive OEMs will manage battery information, risk, and value creation across the entire lifecycle.

Contrary to early expectations, the challenge is not primarily technical; data formats, APIs, and standards will stabilise. What will matter is organisational structure: ownership, continuity, interpretation, and accountability.

As BASE begins consolidating early technical and operational insights, one pattern is unmistakable: OEMs are moving from battery integrators to full lifecycle data stewards. This role brings new responsibilities in procurement, after-sales, sustainability, financing, and supplier coordination – and reshapes how OEMs design, validate, service, and repurpose batteries.

This shift carries clear P&L implications: DBP-verified data reduces warranty exposure, improves diagnostic efficiency, strengthens supplier assurance, and enables new circular revenue pathways. The DBP is therefore emerging as a digital asset, not just a compliance requirement. OEMs that prepare structurally – not only technically – will transition faster and gain early competitive and financial advantage.

A New Role for OEMs: From Integrator to Lifecycle Data Steward

Historically, automotive manufacturing has treated batteries as high-value components governed by design contracts, performance thresholds, and warranty rules. With the DBP, this model changes fundamentally.

OEMs become the primary owners of battery identity and lifecycle continuity, meaning:

In other words, the DBP turns the battery into a regulated digital asset and this shift will force OEMs to rethink workflows that were never designed to intersect – procurement, compliance, BMS engineering, warranty, service networks, logistics, and recycling partners.

Automotive Data Was Never Meant to Flow Across the Lifecycle

 BASE analysis confirms a structural reality: OEMs do not lack data – they lack data continuity. The automotive environment is full of valuable information:

But these datasets live in separate ecosystems, owned by different functions and governed by incompatible standards. The DBP forces these silos to become interoperable for the first time in automotive history.

OEMs who master this early will unlock faster root-cause analysis, more accurate warranty decisioning, deeper visibility into supplier performance, stronger circularity strategies, and higher-confidence second-life pathways.

The Hidden Bottleneck: Ownership, Not Technology

BASE partners repeatedly demonstrate that DBP bottlenecks emerge long before any API or platform problem. The true blocker? Interestingely, no one knows who owns lifecycle data:

This diffusion of responsibility is a structural legacy of linear manufacturing.

The DBP disrupts this by informally introducing a new requirement: Lifecycle Data Stewardship – a clear, organisation-wide assignment of who owns what, when, and why.

OEMs who build this internal accountability model early will experience the smoothest compliance path and the fastest circularity gains. 

Circularity, Safety, and RUL: Data Fails on Interpretation not on Method

BASE’s work on SoH, SoS, SoP, LCA, ESGE and RUL estimation reveals a sharp insight:

The challenge is the organisational meaning behind these elements:

For OEMs, DBP readiness requires not only producing indicators but ensuring shared understanding across functions and partners.

The Invisible Interfaces: Where OEM Risk and Opportunity Will Concentrate

DBP value is created – or lost – in the transitions between lifecycle stages. These handovers often involve:

Examples include:

As these interfaces were not designed for circularity, the DBP forces OEMs to redesign these flows – and doing so will define competitive advantage for the next decade.

The P&L Dimension: Why DBP Is Becoming a Financial Lever for OEMs

One of the strongest signals emerging from BASE’s early work is that the Digital Battery Passport – apart from the data governance – will also reshape the P&L. Verified lifecycle data reduces warranty claims by preventing unnecessary pack replacements; improves diagnostic accuracy, reducing workshop hours and immobilisation time; strengthens supplier management by exposing ESG, quality, and performance gaps; and increases downstream value through certified second-life eligibility and more precise recycling pathways.

In practice, this means the DBP becomes a digital asset with measurable commercial impact, influencing revenue protection, cost control, risk exposure, and lifecycle profitability. OEMs that treat the DBP as part of their financial (and compliance) architecture – will gain a structural advantage in the next phase of electrification.

The Most DBP-Ready OEMs Are Already Moving

At the top end of the market, the most advanced OEMs already operate internal battery passport systems – not yet regulatory DBPs, but mature digital twins covering battery genealogy, diagnostics, traceability, and warranty analytics. They enter the EU Battery Regulation era with an architectural head start.

Just beneath them, a second tier of OEMs is now accelerating: they are mapping data ownership, aligning suppliers to DBP-compatible reporting models, preparing after-sales networks for new SoX and safety signals, and piloting early circularity workflows with recyclers and second-life operators. In practice, they are laying the foundations of a new battery operating model, where DBP alignment supports cost optimisation, warranty reduction, and lifecycle profitability.

As regulation approaches, one reality is becoming clear: OEMs that treat the DBP as software will fall behind. OEMs that treat it as a lifecycle transformation will move ahead.

Technology will stabilise. Standards will converge. The real advantage will belong to organisations that reorganise early around lifecycle data stewardship, cross-functional interpretation, supplier alignment, and seamless end-to-end traceability – unlocking the earliest gains in efficiency, safety, sustainability, and residual value.

At Seraph, we help companies use circularity indicators not just to comply – but to compete. Whether it is redesigning for faster disassembly or benchmarking data flows for traceability, the future belongs to those who translate sustainability into smart economics. 

Ready to harness the DBP for operational advantage?

Do you need support, guidance and insights on automotive manufacturing excellence? Let’s talk  https://seraph.com/contact-us/

About Seraph  

Seraph is a global operations and strategy consulting firm, that leads value chain improvements, restructurings, and turnarounds. We unite the disparate roles in operationally intensive businesses to create efficient operations, bridging the divide from concept to production. High-level decision-makers in manufacturing and industrial organizations rely on us to solve complex issues and launch initiatives that ensure success and sustainable change.

Seraph is a member of the BASE Battery Passport for Transparency and Circularity consortium.

The BASE project has received funding from the Horizon Europe Framework Programme (HORIZON) Research and Innovation Actions under grant agreement No 101157200 

Visit the BASE website here: https://base-digibattpass.eu/

European automotive manufacturers helped China build its automotive industry by sharing technology, expertise, and production methods. Now the tables have turned, and Europe is trying to catch up with innovations from China.

As someone who has spent decades working with European automotive OEMs and suppliers, I’ve seen the region weather many storms. We’ve navigated global supply chain disruptions, shifting consumer preferences, emissions crises and the green transition. But the challenge posed by the rise of Chinese vehicle manufacturers is unlike anything we’ve faced before. It is strategic, structural, and long-term.

For those of us vested in automotive manufacturing, it’s tempting to focus on short-term manufacturing trends and market dynamics (and certainly the added chaos of U.S. tariff policy is not helping). But what we also face today goes deeper and is more structural.

The manufacture of electric vehicles, and China’s dominance in the sector, impacts many of the key economic issues of our time: the energy transition (mobility with lower emissions), the digital transition (an EV is a computer mounted on a battery) and European economic security in a volatile geopolitical environment.

Addressing this challenge requires a clear-eyed analysis and coordinated action across European industry and policy institutions.

EU – China FDI and Technology Transfer

It is worthwhile taking a quick look at EU to China foreign direct investment (FDI) to understand how it aided the ascendance of the Chinese EV industry.

The Chinese Open Door Policy initiated in the late 70s by Deng Xiaoping aimed to open China’s economy to the outside world, especially to foreign direct investment. The Open Door Policy was a pragmatic shift after the Cultural Revolution, as Deng Xiaoping famously said:

“It doesn’t matter whether a cat is black or white, as long as it catches mice.” 

This symbolized a practical rather than ideological approach to economics, prioritizing development and modernization over strict socialist doctrine. Critically, this policy also aimed to foster domestic Chinese industrial development by facilitating the transfer of technology and managerial expertise from foreign firms to Chinese partners.  Special Economic Zones (SEZs) were introduced in the early 80s offered tax breaks, simplified bureaucracy, flexible labour polices but also pushed joint venture structures focused on transferring skills and know-how into the local industry. Even though the skills transfer to local OEMs did not happen as quickly or effectively as Chinese government strategists hoped, a robust industry and supply base grew in China.

Meanwhile China was also becoming the largest global markets for automobiles. European auto brands saw this opportunity and made large direct investment into China. Germany has been the largest EU investor in China for the past decade. More than 40% of EU FDI into China takes place in the automotive sector.

The Importance of the European Automotive Industry.

Let’s remind ourselves that the automotive sector remains a central pillar of Europe’s economy. It employs 13.8 million people equating to around 7% of the Union’s employment. It also represents 7% of the region’s GDP. Arguably, it’s the backbone of our manufacturing economy. In Germany, automotive manufacturing accounts for 11% of all manufacturing jobs. Auto manufacturing also leads in research and development investments, accounting for 37% of the country’s total R&D expenditure.

EV AGILITY – Speed of cycle data EU vs China

Chinese EV makers are exceptionally strong at process innovation, and particularly at accelerating speed to market with their products. Chinese automakers are around 30% quicker in development than legacy manufacturers. Chinese EV makers offer models for sale for an average of 1.3 years before they are updated or refreshed, compared with 4.2 years for foreign brands. This rapid pace of innovation recalls then-Nokia CEO Stephen Elop’s “Burning Platform” memo, in which he famously observed that “Chinese mobile phone makers are bringing out new versions faster than it takes Nokia to polish off a power point presentation.”

How do they achieve this? It’s a combination of factors including: 

A deluge from the East: Chinese EV success in Europe

It’s worth remembering that Europe was a pioneer when it came to incentivising demand for sustainable cars. But arguably, Europe was not as pioneering when it came to EV production and instead backed hybrid models.  Regulations moved against hybrids, so a new investment was required to again transform the industry to meet the BEV and zero emissions mandate. 

China, by contrast, partnered with the leading western automakers and did not have a significant car industry to defend. Instead they embarked on a leapfrog strategy, intently focused on fully electric vehicles, both in terms of growing demand and production.

The result has been staggering.  In 2023 China produced over 8 million vehicles, exporting 1.2 million globally and surpassing Japan as the world’s largest car exporter. Today, the EU is China’s largest exporter of EVs, with 40 percent of Chinese EV exports intended for Europe.

In April this year, registration of EVs made by Chinese carmakers rose by 59% per cent year-on-year in Europe. This rapid market penetration is no accident. It is the outcome of a deliberate, state-directed industrial strategy.

The Beijing Playbook: Subsidies, Planning & Quality

State Subsidies

China’s EV technology success has been built off the back of generous state subsidies. The Kiel Institute for the World Economy has found that BYD received at least €3.4 billion in subsidies from 2018-2022. BYD is now the largest EV manufacturer globally. This is just one company in an ecosystem designed to dominate global markets.

And the state subsidies apply to essential EV components. Earlier this week we saw the largest IPO of 2025 so far – CATL. CATL is the world’s largest electric vehicle battery manufacturer. The cost of an EV is largely driven by the battery pack, which can make up to 30-40% of production costs.  If you drive a Tesla, an electric BMW, Ford, Mercedes, there’s a good chance the battery inside is made by CATL.  There was a lot of politics swirling around the CATL listing but worth noting are the Chinese subsidies CATL has enjoyed during its period of huge growth.

Strategic Planning

As important as subsidies, was the clear strategic focus from the state. Xi Jinping’s “Made in China 2025” strategy (announced in May 2015) outlined EVs as one of ten strategic industries in which China seeks global leadership by 2049. To do this, planned to achieve 70% domestic self-sufficiency in core components and key basic materials by 2025. By building a strong foundation, China was able to insulate itself against rising labour costs by becoming a one-stop-shop for scaled manufacturing. While Europeans debated climate targets, the Chinese were executing a comprehensive industrial policy to capture both the technology and markets of the future. The results are astonishing. In 2024, China produced 12.4 million of the 17.3 million electric cars made globally, over 70% of total output. Chinese OEMs made up 80% of domestic production, rising from about 66% in 2021. The rapid growth of domestic Chinese OEMs is a trend, that if it continues unabated, will eventually strike at the heart of European OEMs.

Labour Costs

Lower Chinese labour costs are deeply embedded in the broader economic advantages Chinese firms enjoy and allow Chinese manufacturers to produce EVs at significantly cheaper prices than their Western counterparts.

Quality & Innovation

And Chinese EVs aren’t just cheap, low-quality vehicles – they’re increasingly sophisticated and attractive to European consumers, offering features and range that match or exceed European models at lower prices. The manufacturing presence of innovative brands like Tesla in China inspired local manufacturers to step up their game and invest in upgrading their technology.

Europe’s Response: Too Slow and not enough

The EU’s tariffs on Chinese EVs, introduced in late 2024, were necessary but came too late and are too modest to stem the tide. The duties differ across car brands, ranging from 7.8% for Tesla to 35.3% for SAIC, reflecting the varying levels of subsidy calculated for each producer. The tariffs specifically target battery EVs, leaving hybrid models, car parts, and battery packs unaffected. Notably Chinese plug-in hybrids sales in Europe January to April this year have increased nearly eight-fold.

These measures are weak compared to those taken by the United States. The Biden administration imposed 100% duties on EVs, effectively closing the U.S. market to Chinese car makers. The Trump administration has shown no signs of relaxing this approach. In addition to protecting finished vehicles, the U.S. has local content requirements that support regional suppliers in its USMCA trade deal.

More concerning is Europe’s internal division on how to address this challenge. The tariff strategy does not enjoy unanimous support in Europe. The German Association of the Automotive Industry said the potential damage caused may be greater than the benefits. Major German car brands are still big players in the Chinese market and could potentially be at risk of retaliatory tariffs or other market access restrictions. China accounted for about a third of sales from BMW, Volkswagen, and Mercedes-Benz in the first quarter of 2024.

Caught between protecting Europe’s industrial base and maintaining access to the Chinese market, many European automakers have adopted a seemingly contradictory strategy: For the German big three, these partnerships have focused on investing heavily in research and development of batteries and digital solutions.

Another factor driving this dependency on joint-ventures in China is the dominance of Chinese EV battery producers like CATL. CATL controls nearly two-fifths of the EV battery market, has invested significant sums in creating battery factories in Hungary and Germany, and is a supplier to BMW, Volkswagen, Mercedes-Benz, Stellantis, Renault, and Volvo.

These incentives are driving a simultaneous approach of tariffs and joint ventures  unlikely to succeed at either objective. As Europe’s auto giants pour resources into China, their domestic operations face cutbacks.

Beyond Economics: The Security and Human Rights Dimension

The threat from Chinese EVs extends beyond economics. Under China’s Data Security Law (2021) and National Intelligence Law (2017), Chinese EV producers and companies in their supply chain (including Cellular Internet of Things Modules Manufacturers such as navigational systems) have a responsibility to “assist, support, and cooperate with national intelligence efforts.” At the same time, it is illegal to disclose the extent of that cooperation with a foreign government.

I attended a recent event at the Institute of International and European Affairs in Dublin about European Security and Defence. Professor Brigid Laffan, (European University Institute) stressed that the level of data security risk exposure posed via EVs is much greater than most realise.

Recognising China’s legal requirements for data collection and the broader data security risk, the Biden Administration issued an Executive Order on September 23, 2024, banning the import and use of Chinese-connected EVs in the U.S. Meanwhile, Europe continues to welcome these potential security threats onto its roads.

Modern EVs are constantly collecting and transmitting vast amounts of data. The planned integration of Chinese AI software, such as DeepSeek, into new Chinese EV models will only exacerbate data security concerns, given that DeepSeek has faced restrictions in several countries already on alleged grounds that it has shared user data with ByteDance and may have a backdoor within it.

Some of Britain’s most secure military sites are restricting access to electric cars over concerns that Chinese technology embedded within the vehicles could be used for spying. In April this year, The Financial Times reported that Staff at RAF Wyton — an air base in Cambridgeshire that houses intelligence operations — have been told to avoid parking EVs near the base in case sensors on the vehicles can be remotely monitored. In 2021, China itself banned Tesla cars, which are equipped with multiple cameras, from entering military complexes over concerns the sensors could be used to gather intelligence. As modern vehicles become increasingly software-defined and connected to national infrastructure (charging grinds, traffic systems etc) the potential for state interference grows. Cars are no longer just mechanical devices, they are rolling computers.

There’s also the disturbing human rights dimension. China’s EV supply chain has been linked to Uyghur forced labour in Xinjiang, child labour in mineral extraction in the Democratic Republic of Congo. An investigation by the U.S. Select Committee on the Chinese Communist Party has found that two Chinese EV Battery producers, CATL and Gotion High Tech, have alleged links to Chinese companies operating in Xinjiang who are linked to forced labour programs.

If these suppliers are added to the U.S. Uyghur Forced Labor Prevention Act entity list, as is being debated, European automakers using their batteries could face export bans to the U.S. This would complicate supply chains and further fragment transatlantic trade alignments.

The Economic Impact: A Vanishing Industry

The consequences of inaction are stark.  A forecast by European insurer Allianz Global has warned that European automakers could lose 24.2 billion euros by 2030 if Chinese EV producers achieve 75% market share in China and reach 13.5% market share in Europe. The economic impact would be the equivalent of a loss of 0.15% of the EU’s total GDP – and that is only the beginning.

The pattern is familiar. If these factors continue, Europe’s automotive industry may go the way of its solar industry a decade before. Germany used to be the world leader in solar power production. Today, Europe imports 90% of its solar panels from China.

Entangling investments from Chinese EV producers into EU Member States through planned Chinese EV plants in Hungary and Spain will not meet the job losses from the European automakers they undercut, instead they will likely be used to bypass tariffs, expand market share, and undermine European competitors, raising concerns about long-term economic independence.

Decisive Measures Needed Now

For European policymakers and automotive industry leaders, the time for half-measures and divided responses has passed. Here are some actions that should be urgently considered:

  1. Strengthen and Broaden Trade Defences: The EU should commit to reviewing the countervailing tariffs on Chinese EVs. These tariffs should be strengthened and broadened to include EV parts and battery components to prevent circumvention. Regional content requirements can support supply chain continuity in the region.
  2. Implement Stringent Data Security Requirements: Legally require foreign EV companies from a country where the EU does not have a data standards equivalency agreement to store data on European servers and to commit not to transfer the data overseas under any circumstances. EV companies from these countries operating in EU Member States should be legally required to share their source code with European regulators and allow regular inspections of their data storage operations.
  3. Revise Investment Screening Rules: The EU Commission should review the EU’s current Foreign Direct Investment Regulation to focus on rules regarding joint ventures and look at local ownership requirements, data security requirements, and local content requirements.
  4. Forge Strategic Partnerships with Democratic Allies: The EU Commission is using the ICTs security and competitiveness working group of the EU-US Technology and Trade Council to negotiate shared EU-US standards on Cellular Internet of Things Modules (CIMs) and develop mutual European and American standards for EVs and connected vehicles. Building off the EU-Japan Economic Partnership Agreement and the EU-Republic of Korea Free Trade Agreement, as well as the Minerals Security Partnership, the EU Commission should negotiate economic security partnership agreements with Japan and the Republic of Korea.
  5. Address Human Rights Concerns in Supply Chains: The EU Commission should investigate forced labour in Xinjiang, add the geographic region of Xinjiang to its forced labour risk database, and introduce guidelines for European businesses regarding the prevalence of forced labour goods in the automotive supply chain.
  6. Foster European Industrial Collaboration: European policymakers should introduce tax incentives and other measures to encourage European automotive companies to work together to share research, development, and production costs for EVs.
  7. Create a Coordinated Industrial Strategy: Develop funds to support the development of the European EV sector, including encouraging matching private sector investment in the EV battery supply chain and EV charging infrastructure. This should serve as the frontrunner to an EU-wide Green Industrial Strategy that includes policy measures to stimulate the development of an EU EV sector which protects and promotes European automotive jobs.

The European automotive industry stands at a critical juncture. The decisions made in the next two years will determine whether Europe maintains its position as a global automotive powerhouse or cedes this vital industry to Chinese domination. The stakes couldn’t be higher – not just for the millions employed in the sector, but for Europe’s industrial sovereignty, economic security, and technological independence.

About Seraph

A global enterprise consulting firm that partners with business leaders to handle their most complex problems in areas such as supply chain, operations, and manufacturing challenges while delivering long-term operational and leadership improvements. Seraph has extensive on-site industry experience in the automotive, private equity, defense, medical device, electronics, energy infrastructure, and engineering sectors. The Seraph leadership team brings vast expertise across; crisis management, mergers, acquisitions, due diligence, restructuring, turn-around services, product launches, and logistics. Our four-phase process has been proven to provide quick payback and positive ROI, which is measured throughout customer engagement. Learn more at www.seraph.com and follow Seraph on LinkedIn.

Introduction: Reindustrialising for Security

European defence manufacturing stands at a critical inflection point. As outlined in Seraph’s report “European Defence Manufacturing Ramps Up: 10 Actions for Manufacturers“, Europe faces an urgent need to scale its industrial base to match geopolitical realities.

Europe is accelerating its rearmament efforts in response to a resurgent Russia, evolution in US strategy and broader geopolitical instability.  Defence manufacturers are being called upon to deliver at a pace and scale not seen since the Cold War. The EU has recently announced the Security Action for Europe (SAFE) instrument,  a large-scale defence investment programme worth €150 billion . SAFE is the first pillar of the European Commission’s ReArm Europe Plan/Readiness 2030 which proposes to leverage over €800 billion in defence spending.

With defence spending rising and the strategic landscape evolving, operational leaders must navigate a complex threat environment—one in which supply chains, particularly those involving China, present growing risks.

So, while the European defence industrial base ramps up production, it is doing so with a critical vulnerability: deep, and in some cases opaque, dependencies on Chinese supply chains. This article explores the specific risks these dependencies pose, the mechanisms through which they could be exploited, and what strategies operational leaders should consider to ensure resilience in the long run.

Why Defence Manufacturing Is Uniquely Vulnerable

The unique operational demands of military supply chains distinguish them from conventional commercial ones in three key respects:

  1. Long Development Timelines: Advanced military systems often require 5–10 years from design to deployment. Dependencies embedded at the early stages become difficult to unwind later.
  2. Limited Substitutability: Many critical raw materials (CRMs) used in defence have no near-term substitutes. Their performance characteristics in missiles, radar, and space systems are often unmatched.
  3. Geopolitical Exposure: Adversaries can exploit these dependencies in times of conflict or coercion. As the Ukraine conflict illustrates, supply resilience is not optional—it is a prerequisite for sustained operations.

Supply Chain Dilemma: Ramping Up Under Constraint

Europe’s defence manufacturers are being asked to scale quickly. Ammunition stocks are depleted. Equipment must be replaced or modernised. Collective defence readiness across NATO and the EU has become a top political priority.  Yet Europe’s industrial base is fragmented, undersized, and has limited surge capacity due to decades of underinvestment.

In this race against time, manufacturers naturally look to global supply chains to fill capacity and sourcing gaps. And that poses a risk.

Examining the Supply Chain – The China Risk

This need for expedience has led to increased entanglement with, what the EU terms a ‘systemic rival’, China. From critical raw materials (CRMs) and rare earth elements (REEs) to electronic components and software modules, many inputs essential to modern defence platforms are produced—entirely or primarily—by Chinese firms or within Chinese-controlled markets.

The European Commission currently designates 34 raw materials as “critical” due to their economic importance and supply risk. For eight of these—including bismuth, magnesium, and manganese—EU imports from China exceed 65%, a threshold indicating dangerous concentration. In some cases, the dependency is even more severe: China refines 87% of the world’s rare earths and produces 83% of the permanent magnets used in electric motors, missile guidance systems, and advanced sensors.

Recent Chinese export controls on gallium and germanium—used in advanced electronics and military applications—underscore the political leverage Beijing can exert through its dominance in strategic materials. As relations between the EU and China continue to cool, the risk of sudden supply shocks looms large.

The defence sector’s vulnerability isn’t limited to raw materials. Chinese-sourced dual-use components such as microchips, batteries, and optical elements are embedded in supply chains for everything from drones and radar to communications systems. Even tier-one or tier-two European suppliers often unknowingly rely on components with Chinese origins.

In the defence context, China’s leverage manifests in three core risk vectors:

  1. Access Disruption: Political or military crises could result in sudden cutoffs of critical raw materials or component supplies, delaying production or maintenance of critical systems. China has a track record of using economic coercion as a geopolitical tool. The 2010 embargo on rare earth exports to Japan demonstrated how even modest supply chain leverage could be weaponized. More recently, Beijing has used informal pressure and bureaucratic hurdles to limit exports of gallium and germanium, two metals crucial to semiconductor and military-grade electronics production.
  2. Quality and Counterfeit Risks: Investigations have previously found counterfeit or substandard electronic components originating from China embedded in Western military platforms, raising serious questions about reliability and security
  3. Cyber and IP Threats: Chinese-made components and software have been associated with risks of hidden vulnerabilities or ‘backdoors’, potentially compromising the integrity and confidentiality of defence systems. Modern military systems increasingly integrate artificial intelligence, satellite communications, and advanced sensors. Many of these technologies are built on components from commercial sectors where China dominates production. For example, the global semiconductor industry remains critically exposed, with China playing a pivotal role in the back-end processing and assembly stages. Moreover, in a worst-case scenario, Chinese suppliers—under direction from the state—could restrict software updates, deny access to system upgrades, or introduce delays that impact system availability.

Strategic Blind Spots

The allure of low-cost components and rapid procurement timelines has historically led many European defence programs to tolerate or overlook third-country exposure in their supply chains. However, as the European Defence Industrial Strategy (EDIS) and White Paper on Defence Readiness 2030 highlight, this approach is increasingly seen as a systemic vulnerability.

One pressing issue is the lack of visibility across multi-tiered supply chains. Many prime contractors rely on mid-tier suppliers who, in turn, source globally without full transparency. This makes it difficult to assess cumulative exposure to Chinese inputs, especially for complex platforms with thousands of components.

“The mid-stream part of a defence manufacturing  supply chain is a noted blind spot”.

Ambrose Conroy, Founder & CEO, Seraph.

The beginning and the end of defence supply chains are often clear. Upstream materials such as aluminium and steel for example.  Downstream, the processes for assembling complex equipment such as aircraft are clearly known and managed.  But the mid-stream elements often contain thousands of components from thousands of companies across various regions.  Several tiers of suppliers are involved adding high levels of complexity, increasing risk of bottle-necks and points of failure.

Risk Mitigation for Operational Leaders: 6 Actions

In order for manufacturers to play an active role in anticipating, absorbing and reacting to disruptions, there is an increased need for risk mitigation actions.

European defence manufacturers must shift from reactive supply chain management to strategic resilience planning. Seraph recommends the following priorities:

  1. Map Tier-N Dependencies Move beyond Tier-1 suppliers. Understand where CRMs, semiconductors, and specialised electronics originate.

Implementation Framework:

  1. Dual-Source Critical Components Where China is the dominant source, identify and qualify alternative suppliers—even if they are more expensive or require co-investment. Examples include processors, capacitors, and rare earth magnets.
  2. Invest in Domestic and Allied Processing Support EU initiatives like the Critical Raw Materials Act, which aims to process at least 40% of strategic materials domestically by 2030. Defence firms should align sourcing strategies with EU industrial policy and participate in public-private partnerships and government or European Defence Fund-backed consortia.
  3. Build Strategic Stockpiles Like fuel or ammunition, key inputs should be stockpiled. This is especially true for components with long lead times or volatile availability.
  4. Redesign for Resilience Where feasible, redesign components to reduce reliance on scarce inputs. Embed design-for-resilience principles in new platforms and upgrade cycles.
  5. Embed Supply Chain Risk in Board-Level Governance Make supply chain resilience a standing agenda item. Incorporate risk metrics, scenario analyses, and progress on diversification into quarterly reviews.

Conclusion: A New Strategic Posture

Europe’s rearmament plan comes at a crucial time. European sovereignty in defence manufacturing is an essential part of the plan but cannot be achieved without decisive action on supply chain vulnerabilities.

China-related risks must be treated with the same strategic urgency as cyber threats or force readiness. The choice is not whether to decouple entirely from China—that is neither realistic nor desirable. The choice is whether to identify and mitigate risks before they materialise.

Operational leaders in Europe’s defence sector hold a pivotal role in this transformation. With the right focus, tools, and political support, Europe can reindustrialise with resilience at its core—ensuring its defence base is ready not just for today’s challenges, but for those that lie ahead.

Next Steps: Is Your Target Ready?

At Seraph, we specialise in operational due diligence for defence manufacturers.

Contact us www.seraph.com/contact-us/ to schedule a rapid readiness review.

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In most factories, efficiency is the king – but circularity is the future. As Europe accelerates toward lifecycle accountability and regulatory traceability, manufacturers are being asked to rethink not just how they produce, but how their decisions today shape what happens at end of life. 

At Seraph, we see the Digital Battery Passport (DBP) – mandatory for all batteries manufactured and imported into and from the EU as of February 2027 – not as an administrative burden, but as a powerful tool for operational transformation. While the DBP itself will be created and owned by OEMs, its accuracy and value depend heavily on the data provided by manufacturers, suppliers, and service providers. 

By embedding DBP logic directly into production processes, companies can uncover hidden inefficiencies, redesign for reuse, and futureproof their operations – all while staying ahead of regulatory change.  

Here is how we are making that shift real for battery manufacturers across Europe: 

1. SEEING THE WASTE YOU NEVER MEASURED

Most manufacturing lines were never built with end of life in mind. Small design decisions – like mixing metals, gluing parts permanently, or layering packaging – add up to big problems when it is time to repair or recycle. These design oversights become tomorrow’s unrecoverable waste or missed revenue. 

Seraph starts by mapping existing production processes against DBP criteria.  

One Tier 1 supplier we worked with discovered that 11 % of material costs were being lost due to design choices that made recovery nearly impossible. After integrating traceability markers like QR codes and modular redesigns, waste dropped by 18 % and repair turnaround times improved significantly – without slowing down production. 

It is important to note that most manufacturers we work with do not yet have an active Digital Battery Passport in place; instead, they are working with the minimum and maximum DBP field requirements published to date. Our role is not to deliver a full DBP system, but to help them interpret these upcoming data fields and apply the underlying logic to their own processes on the manufacturing site, so they can begin preparing and aligning operations long before the official passports go live (February 2027). 

Although these manufacturers don’t issue DBPs themselves, the traceability data they generate directly feeds mandatory fields in the OEM’s DBP – including disassembly time, critical material content, repair logs, and recycling suitability. The DBP thus becomes a mechanism for making internal inefficiencies visible – and solvable. 

In practice, this means better data equals better visibility, and better visibility equals better value. What once passed as normal loss becomes a roadmap to recovered material, tighter quality control, and more circular design logic. 

2. INTRODUCING LIFECYCLE-ALIGNED KPIS

 Traditional KPIs like OEE or scrap rate are no longer enough. In a circular economy, the rules have changed, and performance is not measured only by how fast you produce but by how intelligently the product moves through its entire life. Today, success is a function of three forces: speed, circularity, and sustainability. If any one of them is missing, the system breaks down.   

A truly future ready operation answers deeper questions: How repairable is your product? What is its embedded carbon per unit? How many components are designed for a second life rather than the landfill?  In this sense, Seraph is helping factories ask better questions. On one battery pack line, we worked with the team to introduce a reuse readiness score – a simple KPI that tracks how components perform at end of life. Within six months, that score became a key driver for procurement decisions, cutting warranty scrap by over 20 % and increasing average part life by nearly 15 %. 

These indicators do more than improve internal awareness. They structure and verify the very data OEMs need to populate their DBPs – such as cycle counts, repair rates, and embedded carbon. By embedding lifecycle-aligned KPIs into daily management systems, manufacturers strengthen their position in OEM contracts and prove their readiness for the data-driven regulatory environment ahead. 

While most factories are not fully racking these indicators today, they will soon be essential. By 2027, DBP-linked metrics will be mandatory – meaning that factories which start now won’t just be compliant, they’ll be ahead of the game. 

3. READINESS AUDITS: CLOSING THE TRACEABILITY GAP

In many plants, data still lives in silos. Repair logs are still on paper. And dynamic production data isn’t structured for reuse or recall. When we audited a European cell manufacturer because of a site accident, we found that 67 % of future DBP fields were missing, offline, or inaccessible – making full traceability or problem solving impossible. 

Seraph’s readiness audits identify exactly where those gaps are – and how to close them. With lightweight interventions like cloud-based repair logs, barcode scanning, and better operator training, traceability coverage jumped from 30 % to over 80 % in one year. Compliance was just the beginning – the improvements also reduced root cause analysis time by 40 % and saved weeks during audit prep. 

Each DBP field must be supported by verifiable, traceable data – much of which originates at the factory level. Even when manufacturers don’t create the DBP, they play a decisive role in ensuring that OEMs can populate those fields with quality inputs. From module IDs to repair outcomes, from BMS swaps to reuse assessments – DBP success begins at the line. 

Traceability, once seen as a compliance cost, becomes a platform for real-time quality insight, lifecycle thinking, and stronger supplier – OEM relationships. 

4. DIGITAL BATTERY PASSPORT – YOUR MIRROR

The Digital Battery Passport is like a mirror – showing where value is lost, where data is missing, and where opportunity lies. For manufacturers, the DBP may not be theirs to own – but it will be theirs to feed, influence, and shape through the quality of data they deliver. 

The financial upside is real. Identifying just three traceability gaps led to direct annual savings of over €420,000 – driven by fewer line stoppages, faster supplier investigations, and reduced material loss. By structuring data to match DBP logic, the manufacturer got audit-ready but also negotiation-ready. They unlocked visibility that made upstream negotiations tighter, warranty claims easier to validate, and repairversusreplace decisions more precise.  

Traceability saves money only when it is built into operations instead of bolted on later. In this sense we have the opportunity to see the DBP as an engine for operational clarity, circular performance, and cost reduction. 

And while the DBP may originate as an EU regulation, its ripple effects will reshape global supplier expectations. At Seraph, we help factories look into that mirror and redesign accordingly. The result? Less waste. Smarter KPIs. Stronger traceability. And a production floor that doesn’t just build for today – but for tomorrow’s lifecycle, accountability, and advantage. 

Want to learn more about DBPaligned manufacturing processes or KPI integration? 

Do you need support, guidance and insights on automotive manufacturing excellence? Let’s talk  https://seraph.com/contact-us/

About Seraph  

Seraph is a global operations and strategy consulting firm, that leads value chain improvements, restructurings, and turnarounds. We unite the disparate roles in operationally intensive businesses to create efficient operations, bridging the divide from concept to production. High-level decision-makers in manufacturing and industrial organizations rely on us to solve complex issues and launch initiatives that ensure success and sustainable change.

Seraph is a member of the BASE Battery Passport for Transparency and Circularity consortium.

The BASE project has received funding from the Horizon Europe Framework Programme (HORIZON) Research and Innovation Actions under grant agreement No 101157200 

Visit the BASE website here: https://base-digibattpass.eu/

Executive Summary

Automotive OEMs are entering a new phase of electrification in which battery circularity is no longer optional but central to competitiveness. As millions of EV packs return from the field with limited usage history, the inability to access accurate lifecycle intelligence is now the primary barrier to safe, economical second-life deployment and high-yield recycling. OEMs that design batteries for traceability, modular repair, predictable repurposing, and Digital Battery Passport integration will unlock lower lifecycle costs, stronger supply-chain resilience, and new multi-life revenue opportunities. Those that do not will face escalating operational risk, higher recycling inefficiencies, and increasing dependence on volatile material supply.

Why Circularity Is Becoming a Core Competitive Advantage for OEMs 

For more than a decade, EV battery strategy has focused on chemistry selection, pack architecture, production scale, and manufacturing cost. But as global electrification accelerates, a new competitive frontier is emerging: what happens to the battery after its first life in the vehicle.

Circularity—once viewed as a compliance or sustainability requirement—is rapidly becoming a profitability discipline. By 2030, global EV battery demand is projected to increase more than 4.5× compared to 2023, meaning millions of packs will reach end-of-first-life at a pace the industry has never managed before. OEMs that design for traceability, repairability, and multi-life reuse will define the next era of competitiveness. 

The Challenge: Batteries Are Returning With Missing Lifecycle Intelligence 

Although regulations such as the EU Battery Regulation (EU 2023/1542) are pushing for transparency, the more urgent driver is operational. OEMs are now receiving their own batteries back from the field—and discovering just how little lifecycle intelligence is available. 

Most packs were never engineered with second-life or recycling considerations in mind. As a result: 

This data gap is costly because retired EV batteries typically retain 70–80% of usable capacity, making them potentially high-value second-life assets. What limits their value is not their performance—it is the absence of structured data. 

Repurposing Depends on Safety, Transparency, and Predictability 

European pilot programs show that second-life application is no longer a future scenario—it’s already happening. Automotive modules are routinely stabilized, reconfigured, and deployed into stationary energy systems. Yet every repurposing effort encounters the same barrier: undocumented stress history. 

Without complete data: 

Predictability is the economic engine of the second-life battery market. With reliable usage data, OEMs can position retiring packs as predictable, financeable assets—one reason why market forecasts estimate the second-life battery sector will surpass USD 10–12 billion by 2030. 

Safety magnifies this impact. Over 40% of EV-related recalls in Europe over the past three years were linked to battery or thermal-risk issues. When safety is data-driven, OEMs regain control of risk, cost, and market value. When safety depends on guesswork, second-life economics collapse. 

Recycling: A Data-Driven Commodity Strategy 

Recycling introduces a third, increasingly strategic dimension. Material recovery yields depend on: 

Yet recyclers often lack this information, forcing them to treat mixed chemistries as homogenous input—this reduces recovery efficiency and drives up cost. 

With accurate upstream data, recyclers can: 

 European estimates show that recycled materials could supply ~14% of lithium, 16% of nickel, and 17% of manganese demand by 2030. But this depends entirely on upstream visibility. 

By 2026, European recycling capacity is expected to reach ~420 kt/year, meaning the infrastructure is scaling quickly. The question is whether OEMs are designing packs that can fully leverage this system. 

The Shift: OEMs Must Design for a Multi-Life Value Chain 

Across the demonstrations Seraph has observed, the OEMs gaining the most strategic advantage share a common approach: they design for what comes next. 

They treat the Digital Battery Passport (DBP) as an engineering tool—not a reporting obligation. They embed lifecycle intelligence across manufacturing and supply-chain systems. They ensure their packs are modular, traceable, and economically recoverable. They design architectures that maintain value through multiple lifecycles. 

This shift is not cosmetic. It is a strategic reset that: 

With battery materials representing 30–40% of an EV’s total cost, efficient recovery is becoming a core business lever—not a sustainability checkbox. 

OEMs that embrace circularity as an engineering discipline will shape the future of the European battery value chain. With Europe expected to reach 9–10 million EVs in circulation by 2030, the scale of second-life batteries will increasingly define which manufacturers lead on cost, safety, and resource resilience.

About Seraph 

Seraph is a global operations and strategy consulting firm, that leads value chain improvements, restructurings, and turnarounds. We unite the disparate roles in operationally intensive businesses to create efficient operations, bridging the divide from concept to production. High-level decision-makers in manufacturing and industrial organizations rely on us to solve complex issues and launch initiatives that ensure success and sustainable change.

Seraph is a member of the BASE Battery Passport for Transparency and Circularity consortium.

The BASE project has received funding from the Horizon Europe Framework Programme (HORIZON) Research and Innovation Actions under grant agreement No 101157200

Visit the BASE website here: https://base-digibattpass.eu/

The Hidden KPI Shift Happening on Your Manufacturing Floor 

Battery manufacturers and OEMs have long treated quality, cost, and performance as their gold standard KPIs. But what if the next frontier of manufacturing intelligence comes not from what happens inside the factory – but from what happens after the battery leaves it? 

Under the EU Battery Regulation, the Digital Battery Passport (DBP) becomes a mandatory requirement from February 2027. While it might initially seem like a compliance burden – a set of data fields to populate, certificates to attach, and checkboxes to tick – Seraph sees it differently.  

Working directly on manufacturing floors, Seraph treats the DBP as a real-time diagnostic tool. When properly leveraged, DBPs expose bottlenecks, waste, and blind spots that traditional KPIs ignore, providing a factual, structured way to see how materials, processes, and suppliers interact across the full lifecycle. This is exactly where Seraph operates: translating DBP-related indicators into actionable insights that redefine how efficiency, quality, and sustainability are measured on the factory floor. 

From OEE to ESG-Enhanced OEE: Rethinking Efficiency 

Traditional OEE (Overall Equipment Effectiveness) metrics still dominate manufacturing dashboards, but they are increasingly out of step with the demands of regulated, circular supply chains. DBP-related data points – such as traceability, repair time, and recycled content – now influence what availability, performance and quality really mean in practice. 

Availability can no longer be measured only as uptime; it also includes how quickly a production line recovers after a fault flagged by traceability checks. Performance extends beyond cycle time and throughput to include load profiles, energy use, and the frequency of compliance stops. Quality, meanwhile, expands from first-time right to include embedded carbon footprint per unit, repairability and ease of disassembly. 

Seraph has already seen cases where the primary cause of downtime wasn’t equipment failure but batteries failing traceability checks, holding up shipments. By tying DBP fields to floor-level KPIs, we help manufacturers see these hidden inefficiencies and address them before they escalate into cost, compliance or reputational problems. 

Quality Is No Longer Just an Output – It is a Lifecycle KPI 

Most factories still define quality in binary terms: pass/fail inspections at the end of the line. DBPs expand this perspective by embedding lifecycle and compliance information into the definition of good product. Under this new model, a battery pack may pass electrical tests but still fail to meet repairability, disassembly or ESG criteria recorded in the DBP – making it a quality risk in the future. 

Seraph helps clients redefine quality by building configurable templates tied directly to DBP traceability fields. These templates can include torque traceability, assembly method data, interface stiffness, or clamp-load retention after thermal cycling. Instead of being an afterthought, these parameters become part of day-to-day quality tracking. 

In one case, a organization discovered through DBP-linked fatigue data that brackets sourced from one supplier were losing pretension faster than expected. This was invisible under their old inspection regime but became clear once DBP fields were used to create a digital view of quality. Armed with this insight, they revised supplier requirements and maintenance intervals – saving both time and warranty costs. 

Using DBP Data to Run Better Floor-Level Reviews 

DBP-linked indicators are not just for auditors and ESG reports; they can be powerful tools for daily operations. Scontinuous improvement spevcialists can use DBP fields to reshape how teams and organizations run Gemba walks, line audits and supplier reviews. A floor supervisor can now see, in real time, which battery batches are at risk of disassembly delays, which mounting methods are pushing stress limits, or where clamp-load values drift from specification. 

Instead of relying on retrospective spreadsheets, these metrics can be displayed on a plant’s internal dashboards, giving immediate feedback to production teams. During supplier reviews, DBP fields such as carbon per kWh, vibration class or thermal path consistency allow procurement teams to compare suppliers using identical, traceable criteria – not self-reported claims. This is a shift from anecdotal supplier quality to evidence-based supplier selection. 

A Practical Toolkit: DBP-Informed Floor Metrics Seraph Tracks 

Some organizations might want to integrate DBP-related indicators into custom KPI dashboards that manufacturing teams can actually use. Typical metrics include disassembly time versus DBP baseline, traceable repair events per 1,000 units, kg CO₂e per battery pack, clamp-load loss after thermal cycling, and battery fault recurrence by supplier. These are not theoretical; they are measurable in today’s factories with the right approach. 

By translating DBP data into these metrics, Seraph helps clients move from compliance to intelligence: from ticking boxes to discovering patterns, testing new designs, and closing feedback loops between engineering, suppliers and the shop floor. 

Conclusion: DBP as an Operational Mirror 

For Seraph, the DBP is not paperwork – it is a mirror. It reflects your processes, good and bad, and shows where to act. Manufacturers who view DBPs only as a reporting requirement will miss the opportunity to use them as a management tool. Those who integrate DBP fields into their KPIs can turn compliance data into a source of competitive advantage – reducing downtime, improving traceability, and redefining quality at every stage of the battery lifecycle. 

If you are asking why certain batteries fail field diagnostics, why repair costs are rising, or why warranty claims are trending up, the answer might already be in your DBP fields. Seraph’s work is to help you find it, interpret it, and act on it – turning regulatory data into real operational improvement. 

At Seraph, we help companies use circularity indicators not just to comply – but to compete. Whether it is redesigning for faster disassembly or benchmarking data flows for traceability, the future belongs to those who translate sustainability into smart economics. 

Ready to harness the DBP for operational advantage? 

Do you need support, guidance and insights on automotive manufacturing excellence? 

Let’s talk  https://seraph.com/contact-us/

About Seraph  

Seraph is a global operations and strategy consulting firm, that leads value chain improvements, restructurings, and turnarounds. We unite the disparate roles in operationally intensive businesses to create efficient operations, bridging the divide from concept to production. High-level decision-makers in manufacturing and industrial organizations rely on us to solve complex issues and launch initiatives that ensure success and sustainable change.

Seraph is a member of the BASE Battery Passport for Transparency and Circularity consortium.

The BASE project has received funding from the Horizon Europe Framework Programme (HORIZON) Research and Innovation Actions under grant agreement No 101157200

Visit the BASE website here: https://base-digibattpass.eu/

Seraph delivers long-term operational improvements that help our clients transform their manufacturing operations.
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