Collaborative management of battery manufacturer responsibility in electric vehicle production with ESG due diligence

Precious elements within used electric vehicle (EV) batteries can be utilized through echelon utilization. However, the current echelon utilization system for retired batteries remains immature, exposing numerous issues in environmental, social, and governance (ESG) aspects. This paper seeks to enhance and regulate ESG issues throughout the lifecycle of EV batteries and explore the balanced decisions of battery manufacturers (BMs) and electric vehicle manufacturers (EVMs) in a supply chain. Using the Stackelberg game model, we explore ESG-related cost-sharing contracts across three distinct supply chain models, influenced by BM's ESG improvements and EVM's due diligence efforts. Our analysis reveals that prioritizing ESG considerations enhances mutual benefits, with centralized systems consistently outperforming decentralized ones. Notably, as consumer sensitivity to recycling prices increases, BMs tend to lower their recycling prices, which can reduce battery recycling rates and hinder the sustainable development of the closed-loop battery supply chain. To better align the interests of supply chain members, we propose a two-way cost-sharing contract, with EVMs favoring moderate arrangements to avoid profit loss for both parties. This paper contributes to a more responsible, transparent, and sustainable battery recycling system by integrating ESG improvements and due diligence into the closed-loop supply chain for EV waste batteries.