Accelerating sustainability across the automotive value chain

03 Mar 2023

Sustainability and circular economy expert, Jamie Pitcairn, explores some key challenges facing the automotive industry on its sustainability journey.

Current trends such as the electrification of vehicles and carbon neutral manufacturing demonstrate the growing importance of sustainability in the automotive industry. These trends are not just driven by the introduction of stricter emissions regulations, but also by increased awareness of environmental and sustainability issues within society and a growing demand from consumers for vehicles that have been manufactured in a more sustainable way as well as having a lower environmental impact during use and end of life.

Sustainability must be incorporated at every stage throughout the value chain.

Sustainability in the automotive supply chain

The automotive sector is navigating an unprecedented shift in how and from what vehicles are made in the transition to low carbon mobility.

Ricardo see three key issues at the heart of this transition:

1. Climate change and carbon emissions in the automotive sector

Climate change and its impacts have been part of a broader societal debate for some time. Corporates are under significant and increasing pressure to have a credible and robust decarbonisation plan from investors, shareholders, regulators and customers.

Car manufacturers are required to reduce their carbon emissions both during vehicle manufacture and the emissions of the vehicles themselves. In this context, the use of alternative powertrains such as batteries and fuel cells play an important role. To achieve these climate and sustainability goals automotive manufacturers are having to address emissions across scopes 1, 2 and 3 (taking action across product design and supplier emissions as well as their own operational emissions).

Use of life cycle methodologies to help identify and assess emission ‘hotspots’ along the value chain is becoming more prevalent as manufacturers discover the benefits that extend down the value chain. Understanding these ‘hotspots’ will demonstrate that action needs to extend beyond propulsion and identify the potential upstream decarbonisation opportunities from supply chain and innovative material choices.

2. Sustainable materials for automotive manufacture

While electromobility is key to slashing carbon emissions during use, the materials that go into a car also matter. The automotive industry is starting to move away from traditional materials that are difficult to recycle or have high-embodied carbon. There is a new focus on more sustainable resources but more needs to be done to reduce material emissions.

Reports suggest that 60% of automotive-industry emissions by 2040 will come from materials used in production, so stepping up decarbonisation efforts in this area is key.

Car makers are on their way to carbon neutrality and greener sustainably sourced materials that are both renewable and recyclable are an integral part of this transition. By 2030, sustainable high-performance materials should be used as standard in vehicles in a move away from fossil-based materials. These materials should be used, reused, and recycled for as long as possible, and then taken care of as efficiently as possible at end of life.

New material choices will require design innovations with knock-on impacts across the supply chain. New materials will also provide opportunities for new circular economy business models as materials are sourced from bio-based or secondary sources and are captured and reused/recycled at end of life.

3. Sustainability and circularity across the automotive value chain

As natural resources become more and more scarce, sustainable value chains are becoming increasingly important for the automotive industry. As highlighted in last year’s IEA special report on The Role of Critical Minerals in Clean Energy Transitions, the world faces potential shortages of lithium and cobalt as early as 2025 unless sufficient investments are made to expand production. A circular economy is based on the principle of keeping resources in the value chain for as long as possible through approaches such as repair, reuse and recycling. This encompasses anything from tyres to the vehicle body shell, with the aim of extending the life of cars and their components.

A circular economy model can be supported by new business models such as sharing, leasing, repairing, refurbishing, and recycling materials and products, extending the lifetime and retaining value.

Transparency along the supply chain is critical. This is the only way to trace the origin of parts and ensure sustainability along the value chain. Consequently, automotive manufacturers and suppliers are considering how to implement innovative solutions to facilitate the tracking of raw materials.

Digitisation will play an ever more important role to help record information securely and track materials and components from mining to end of life and so Blockchain and materials passports will support with data sharing.

Ricardo’s deep understanding of the automotive sector combined with our technical expertise in decarbonisation, life cycle assessment, circular economy, sustainable procurement and waste and resource management means we are uniquely placed to support automotive organisations to accelerate towards a sustainable future.

Jamie Pitcairn will be interviewing Jeff Morrison, VP of Global Purchasing and Supply Chain at General Motors at the Ricardo Mobility Summit 23 (9 March, Detroit) where they will discuss the opportunities and challenges on the path to net zero.