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. Among European automakers, the share of recycled and reused materials in new car production is 23 percent, but could more than double to 59 percent by 2040, according to the latest Bain study. This alone would reduce CO2 emissions associated with material use 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 recycled. "Virtually all manufacturers are currently converting their model ranges 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 downstream stages of the value chain into account. According to the study, the share of used parts in repairs in Europe could increase to 12 percent by 2040, compared with just 2 percent in 2020. Particularly in the case of batteries, remanufacturing and reuse will become the standard in the future in order to meet the strict regulatory requirements. But this will require professional marketing. "The more intensively automakers commit to the idea of recycling and the more aggressively they go public with it, the easier it will be for service companies to convince their clientele to use used spare parts," notes 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-loop systems not only reduce environmental impact, but also increase supply chain resilience and reduce material costs in the longer term," Stricker said. "This leads to higher margins, in addition to offering new revenue 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, the figure is expected to be as low as 40 percent. The overall utilization of all vehicles would thus increase significantly, and the need for new vehicles would decline. "Mobility remains an essential part of our lives," Bain partner Noack is certain. "But the way we get around will change fundamentally. The main contributors to this are noticeable climate change, along with increasing urbanization and a heightened awareness of the environment." And he adds, "The automotive circular economy is the future. The sooner manufacturers and suppliers adapt to this, the sooner they can set themselves apart from their competitors."

Cross-divisional cooperation is indispensable

Pioneering companies are focusing on three measures. Firstly, they are systematically reviewing their entire value chain in order to be able to consistently exploit the opportunities for closed cycles. Second, they identify trends at an early stage and set the course today for tomorrow's markets on the basis of future scenarios. And finally, they are getting involved in ecosystems and starting to build closed-loop systems together with partners. In the Global Battery Alliance, for example, more than 120 companies and institutions are now working to establish a sustainable value chain for batteries. Cross-sector collaborations in particular are of great importance. "The automotive circular economy requires manufacturers, suppliers and industry outsiders to cooperate extensively and in a spirit of trust," stresses industry expert Noack. "Those automakers who recognize this are probing very carefully to determine in which areas their unique position gives them an edge and where cooperative ventures are of particular advantage to them. In this way, they are ideally equipped to compete in the future." Source: www.bain-company.ch The post Automotive circular economy: 60 percent lower CO2 emissions possible appeared first on Organizer.