Automotive circular economy: 60 percent lower CO2 emissions possible

Mobility is currently the cause of around 30 percent of global CO2 emissions. Road traffic accounts for a considerable proportion of these. If the environmental impact is to be minimized over the life cycle of a passenger car, not only emission-neutral drives are needed, but also innovative approaches along the entire value chain. The spectrum ranges from the sustainable design of new models and closed material cycles in production to better utilization of existing vehicles. European automakers currently lead the world in the circular economy with a rate of 40 percent, mainly due to strict EU regulations. In its study "Reuse, Remanufacturing, Recycling, and Robocabs: Circularity in the Automotive Industry," the international management consultancy Bain & Company analyzes the key levers that can be used to advance the automotive circular economy worldwide. It also shows how automakers and suppliers can prepare for the new era.

Nearly complete car recycling possible by 2040

The mobility sector currently accounts for around 10 percent of all raw materials and supplies used worldwide. For European car manufacturers, the proportion of recycled and reused materials in new car production is 23%, but could more than double to 59% by 2040 according to the latest Bain study. This alone would reduce the CO2 emissions associated with the use of materials by 60 percent. At the same time, it is possible to increase the recycling rate of a car from just under 80 percent today to 97 percent - almost all parts of a vehicle would then be reused. "Virtually all manufacturers are currently converting their model range to alternative drive systems," explains Björn Noack, Bain Partner and co-author of the study. "But only if they create closed material cycles at the same time will they actually achieve the ambitious goal of climate neutrality."

Automotive circular economy also offers economic advantages

The Bain study also takes into account downstream stages of the value chain. According to the study, the proportion of used parts for repairs in Europe could increase to 12% by 2040, compared to just 2% in 2020. For batteries in particular, remanufacturing and reuse will become the standard in future in order to meet the strict regulatory requirements. However, this will require professional marketing. "The more intensively car manufacturers commit to the circular concept and the more aggressively they go public with it, the easier it will be for service companies to convince their customers to use used spare parts," says Dr. Klaus Stricker, Bain Partner and head of the global Automotive and Mobility practice group. Around the globe, vehicle manufacturers are reaping several benefits from switching to a circular economy. "Closed loops not only reduce environmental impact, but also increase the resilience of supply chains and reduce material costs in the longer term," says Stricker. "This leads to higher margins and also opens up new earnings opportunities."

Mode of locomotion changes fundamentally

Changes in user behavior will also play an important role on the road to climate neutrality. According to the Bain study, the use of robotaxis is expected to become increasingly profitable in the 2030s. As a result, the share of private vehicles in kilometers driven worldwide will fall from 67 percent today to around 50 percent in 2030. By 2050, this figure is expected to be as low as 40 percent. The overall utilization of all vehicles would therefore increase significantly, while the demand for new vehicles would decrease. "Mobility will remain an essential part of our lives," Bain Partner Noack is certain. "But the way we get around will change fundamentally. This is mainly due to the noticeable climate change, increasing urbanization and a heightened awareness of the environment." He adds: "The future belongs to the automotive circular economy. The sooner manufacturers and suppliers adapt to this, the sooner they will be able to set themselves apart from their competitors."

Cross-divisional cooperation is indispensable

Pioneering companies focus on three measures. Firstly, they systematically review their entire value chain in order to consistently exploit the opportunities for closed loops. Secondly, they are identifying trends at an early stage and setting the course for tomorrow's markets today based on future scenarios. And finally, they are getting involved in ecosystems and starting to develop closed cycles together with partners. As part of the Global Battery Alliance, for example, more than 120 companies and institutions are now working on establishing a sustainable value chain for batteries. Cross-sector cooperation is particularly important. "The automotive circular economy requires manufacturers, suppliers and those outside the industry to work together extensively and in a spirit of trust," emphasizes industry expert Noack. "Those car manufacturers who recognize this are looking very closely at the areas in which their unique position gives them an edge and where cooperation is particularly advantageous for them. In this way, they are ideally equipped for future competition." Source: www.bain-company.ch The post Automotive circular economy: 60 percent lower CO2 emissions possible appeared first on Organizer.