The evolving strategic role of battery procurement amid geopolitical and technical risks

Battery procurement is no longer a narrow purchasing function concerned mainly with price, lead times and availability. In a sector shaped by volatile commodity markets, geopolitics, regulation and rapid technical change, it has become a strategic discipline that can affect product performance, compliance and resilience just as much as cost.

The old model of buying cells and components from the cheapest reliable source still exists, but it is no longer enough on its own. Procur...

ement teams now have to weigh chemistry, engineering fit, supply-chain concentration, auditability and long-term risk. A low-priced cell can become expensive if its datasheet proves unreliable. A component may look attractive until its supply route is disrupted or its producer encounters financial trouble. A chemistry that appears commercially appealing may fall short once environmental scrutiny and regulatory obligations are factored in.

That shift reflects the structure of the battery market itself. The International Energy Agency has warned for some time that battery supply chains remain heavily concentrated, with China dominating raw-material processing and cell manufacturing capacity. A study published in Nature Communications last year found that the supply chains for both nickel manganese cobalt and lithium iron phosphate cathodes still run heavily through China, underlining how even different chemistries can share the same geopolitical exposure. More recent reports from the Carnegie Endowment, the Centre for Strategic and International Studies and German and European policy think-tanks all point to the same conclusion: batteries have become a strategic industrial asset, and dependence on a small number of countries or suppliers is now a core vulnerability.

Regulation has added another layer of complexity. The EU Batteries Regulation is pushing companies towards lower carbon footprints, stricter controls on hazardous substances, reduced reliance on primary raw materials and stronger end-of-life obligations. That means procurement is increasingly tied to documentation, traceability and lifecycle data, rather than being judged solely on commercial terms.

For Fergal Harrington-Beatty, chief commercial officer at OM Batteries, the answer is diversification. The company, which develops drive and auxiliary batteries for electric vehicles, heavy machinery, drones, industrial robots, tools and back-up systems, tries to reduce exposure by spreading its supply chain across chemistries, formats and countries of origin.

He said the company tries to limit its exposure to political instability, ESG concerns and price swings by sourcing across LFP and NMC chemistries, as well as pouch, prismatic and cylindrical formats, from China, Korea, Europe and the United States.

Not all cell types are equally easy to substitute. Harrington-Beatty said standardised formats such as 2170 cylindrical cells are easier to benchmark because performance is more directly comparable. Pouch cells, by contrast, tend to involve more variation and less standardisation, although some niches, including drones, are beginning to settle on more common sizes.

That matters because battery procurement is rarely a simple catalogue exercise. Chemistry, form factor and end use are closely linked. A cell that works well in one sector may be useless in another if the pack design, certification regime or application requirements do not align.

Calvin Fahey, purchasing manager at Alexander Battery Technologies, said the most important task is to identify risks early rather than wait for a disruption to force a reaction. The company, which has been making battery packs for original equipment manufacturers for more than four decades, tries to avoid over-dependence on any one supplier or region and keeps a close watch on shifts in availability and pricing.

He said strong supplier relationships are essential because open communication makes it easier to spot problems before they become operational crises.

That emphasis on communication is increasingly important. In a market where shortages, shipping delays or production issues can emerge quickly, procurement resilience depends as much on information flow as on supplier count. The companies that get warning signs early can adjust design, sourcing or pricing. Those that are left in the dark may discover a problem only when a line stops.

Jas Kandola, founder of Eqonic, takes a similar approach but places greater emphasis on long-term materials exposure and chemistry choices. The British battery technology company, which provides energy storage systems and sustainability consulting, works to spread its sourcing across regions, monitor geopolitical and ESG risk, and invest in research on alternative chemistries that reduce dependence on volatile commodities such as lithium and rare-earth metals.

Where possible, he said, the company chooses materials and technologies that offer greater long-term stability, lower ESG risk and less exposure to global price movements.

The procurement challenge is different again for Cognition Energy, which provides cell testing services and manufactures battery testing equipment. Its exposure is less about raw cell materials and more about precision parts and electronics used in fixtures and CellPod systems. But founder Tom Cleaver said volatility still has a direct effect on commercial practice.

Because the company spots buys rather than locking in long-term volumes, it has to keep customer quote validity periods short so that supplier prices do not expire before an order is confirmed. Speed in quoting, he said, has become part of the business model.

For smaller specialist firms, procurement risk is not confined to lithium, cobalt, nickel or graphite. It also reaches into electronics, machined parts, fabrication equipment and other supporting components. Rising demand for AI data centres is adding pressure to some electronic component markets as well, making procurement discipline even more important across the wider battery value chain.

The industry’s growing need for technical collaboration also changes how suppliers are assessed. Batteries are not static products. Cells, packs and test systems often require several rounds of iteration before they are ready for commercial use. That means suppliers are judged not only on whether they can deliver to specification, but on whether they can contribute to design refinement.

Harrington-Beatty said a supplier’s ability to customise, offer engineering feedback and support product development cannot be evaluated through a conventional transactional relationship alone. In practice, that often means closer collaboration, sometimes formalised through memoranda of understanding.

Fahey said the same principle applies at Alexander Battery Technologies. Commercial terms matter, but so does a supplier’s technical capability, willingness to work with engineering teams and speed in responding to design changes. The strongest supplier relationships, he said, resemble partnerships rather than simple buying arrangements.

That approach is especially important in sectors such as medical devices, e-mobility, drones, robotics, industrial tools and test equipment, where the customer is not just buying stored energy. They are buying safety, service life, manufacturability and compliance in a precise form factor. Procurement therefore becomes part of engineering assurance.

Cognition Energy uses a deliberately cautious qualification process, starting with small jobs and gradually building trust before moving a supplier into production work. The process takes time, but Cleaver said the cost of choosing badly is too high.

Eqonic formalises due diligence more explicitly. Kandola said the company assesses engineering readiness, responsiveness to design changes, prototyping capability, research and development capacity and a supplier’s record of collaboration. It also runs periodic audits, asks for carbon-intensity and sustainability data, expects ethical sourcing standards and uses third-party verification where possible.

Compliance is now a procurement issue from the start, not a box to tick at the end. Harrington-Beatty said the right requirements vary by country, sector and application, so OM Batteries begins compliance planning during the battery design phase rather than afterwards. Fahey said Alexander Battery Technologies builds compliance checks into supplier onboarding and continues to review certifications as rules change.

Cleaver said geography also affects how compliance is managed. Where possible, Cognition Energy prefers UK suppliers for fabrication and components so that it can inspect them in person. For overseas suppliers, recognised standards become more important.

“This is why standards exist after all; they allow a global supply chain to function without boots on the ground everywhere,” he said.

AI is beginning to influence the procurement function too, though the degree of enthusiasm varies. Kandola said Eqonic uses AI tools to model supplier risk, forecast demand, track volatility and assist compliance work, seeing them as a way to improve visibility across multi-tier supply chains.

Fahey said AI is already useful for data analysis, pattern recognition, forecasting and repetitive administration, but added that procurement still depends on judgement, relationships and an understanding of the broader commercial context.

Harrington-Beatty was more cautious. AI tools may help with general business processes, but they cannot independently benchmark battery cells, and datasheets from manufacturers can still be unreliable. In his view, there is no substitute for testing sample cells and running them through real-world profiles.

Cleaver agrees. He prefers to source through word of mouth or trade references where possible, then inspect components physically once they arrive. AI may help with paperwork, he said, but it has limits.

That leaves procurement at the centre of the battery business in a way it was not before. It now has to read commodity signals, interpret regulation, evaluate suppliers, support engineering iteration and defend customer programmes against disruption. The cheapest offer may still win some orders. But in a market defined by concentrated supply chains, geopolitical tension, compliance pressure and fast-moving technical demands, the better question is increasingly what risk a supplier removes, and what risk it quietly brings with it.

Source: Noah Wire Services