Sharjah24 – Reuters: An electric car is a clean car, right? If only it were so simple. From motor magnets with toxic histories to batteries made using copious fossil-fuel power, many challenges face carmakers seeking to purge dirtier materials from their supply chains to satisfy regulators and investors.

These obstacles represent opportunities for a growing group of companies in the electric vehicle (EV) ecosystem that bet they can capitalise on that demand.

They include Advanced Electric Machines (AEM) in northern England, which is working with Volkswagen VOWG_p.DE luxury brand Bentley and others in the auto industry to develop recyclable electric motors free of rare earth metals, which are often produced using polluting chemicals.

"Our customers need ways to ditch internal combustion engines that are cost-effective and sustainable without putting tons of this nasty rare earth stuff into their cars," CEO James Widmer said.

The increasing scrutiny of supply chains comes as the European Union, which announced draft laws last year to enforce net-zero emissions targets, considers charging for excess carbon on imports, as well as legislation requiring ethical sourcing and a recycling plan for EV batteries.

Globally, the prospect looms of national carbon taxes that could cost lagging automakers dearly, while investors and financiers increasingly favour companies with strong environmental, social and governance (ESG) credentials.

"The focus on ESG has become more intense," said Moshiel Biton, CEO of Israeli battery technology company Addionics, which makes three-dimensional electrodes that Biton says are more efficient, making cleaner but less energy-dense battery chemistries commercially viable.

"But it's nothing compared to what's coming."

Yet it remains to be seen how many of the companies looking to tap the market for cleaning up electric cars will succeed in a rapidly evolving EV technology arena; what's cutting edge today could be obsolete tomorrow.

Given fierce competition, any projects not advanced enough at the right time will risk missing their chance, according to MacMurray Whale, environmental sustainability strategist at Cormark Securities in Toronto.

"You won't be able to attract the investor interest because there's a lot of them and they're all trying to argue they're the best," he said.