EU’s new battery act comes with caveats; headache for Samsung, Apple

The European Union’s decision to go greener with batteries that cut carbon emissions and promote recycling comes with a few caveats, posing a headache for leading smartphone makers such as Samsung Electronics Co. and Apple Inc.

The new rules approved by the EU parliament last week are a welcome change, but excessive control over the manufacturing sector might hurt non-EU companies’ business activities, boosting unnecessary costs and stunting new technology, analysts said.

The parliament passed a new law June 14 that requires smartphones to come with batteries that can be easily replaced by the user. The law isn’t specific to mobile phones but covers various types of batteries, including those in laptops and other portable devices.

The new rules, albeit undecided on the exact implementation timing, will affect the design, production and waste management of almost all types of batteries sold in the EU.

Many expensive smartphones come with an integrated battery, making it virtually impossible for end users to replace it.

Apple, the world’s No. 1 premium smartphone maker, has been manufacturing iPhones with integrated batteries since 2007 and Samsung, the largest mobile phone maker by volume, has done so with its Galaxy series of smartphones since 2015.

"We are aware of the provisions related to battery detachment. We’re closely monitoring the situation. We’ll respond accordingly,” said a Samsung official.

DESIGN CHANGE

Analysts said smartphone makers such as Apple, Samsung and China’s Xiaomi, Oppo and Vivo, which export their products to Europe, might be forced to change the designs of their phones, at cost, to comply with the rules.

“In some cases, such as foldable phones, a design change to make batteries easily replaceable could be much harder,” said an industry official in Korea.

The EU regulations also include requirements for battery makers to declare and label their products’ carbon footprint.

Light means of transport (LMT) batteries and industrial batteries with a capacity above 2 kWh and EV batteries will be required to have a “digital battery passport” including information on the battery model as well as information specific to the individual battery and its use.

The carbon border adjustment mechanism (CBAM), which the EU plans to implement in October on a pilot basis, is also burdensome for companies like Samsung and LG Electronics Inc., which run home appliance plants in Europe.

The mechanism calls for companies to buy carbon credits or pay import charges for steel, cement, electricity, fertilizer, aluminum and other related items if their carbon emissions from the production stage exceed certain levels.

The EU also plans to introduce in November a supply chain due diligence policy, which requires companies with sales of 150 million euros or more in the region to address the social and environmental risks linked to sourcing, processing and trading raw materials and secondary raw materials.

Industry watchers said such a rule could force companies to disclose their business secrets.

VIRTUAL TRADE BARRIER

The EU parliament said the new rules are designed to make batteries more durable, more sustainable and better-performing while turning the industry greener with lower emissions and use of recycled materials as well as boosting consumer convenience.

Some analysts, however, said the legislation would help EU countries strengthen their supply chain across advanced industries, including batteries.

Industry officials said the EU may ban the export of waste batteries outside the region as it seeks to make it mandatory to use recycled raw materials from waste batteries sold in Europe.

"If recycling becomes mandatory under the EU battery law, keeping waste batteries within the region could be a competitive advantage,” said Ahn Jae-yong, head of the Korea Trade Investment Promotion Agency (KOTRA)’s Brussels office.

“The EU lags industry leaders such as Korea and China in key areas of battery raw materials and cells. It may be striving to gain an edge in the waste battery ecosystem. Both our companies and the government should prepare for this.”

Write to Jeong-Soo Hwang and Nan-Sae Bin at hjs@hankyung.com

In-Soo Nam edited this article.