Circular strategies could cut emissions from materials used in vehicles by 60% by 2040

Automotive sector

Greater circularity in materials used by the European automotive sector could reduce emissions associated with the materials used in production per vehicle by 60% by 2040, a new analysis by Bain & Company shows.

A combination of recycling, improved material use, reuse and remanufacturing of components, and scaling of new mobility business models can create a circularity revolution in the sector, according to the Bain study “Reuse, Remanufacturing, Recycling, and Robocabs: Circularity in the Automotive Industry.”

The automotive sector currently accounts for a third (30%) of all global emissions, with circularity set to play a key role in reducing lifetime emissions, Bain says.

The global consultancy firm says that European automakers have a 40% rate of circularity, which it credits to “strong” EU regulation.

Bain says it has found that the use of recycled materials in the sector’s production has the potential to more than double by 2040, (from 23% to 59%), resulting in a 60% reduction in sector emissions compared to the use of “virgin materials” for production.

A six-fold increase in the use of recycled parts in auto repairs, jumping from only 2% in 2020 to 12% by 2040, could also ensure better circularity throughout the lifetime of a vehicle, the report shows.

We are seeing business leaders strengthen their manufacturing ecosystems with a clear perspective on where to collaborate.

New vehicles produced in 2040 could also be 97% recyclable, up from 78% today, the company says. It continues that the switch to using remanufactured or reused engines has the potential to reduce emissions by 85%.

Bain & Company suggests attitudinal changes will drive further circularity, with the move toward shared and public ownership of vehicles improving the efficiency of the sector.

Circular strategies have also been shown to improve the resilience of automotive supply chains, reduce material costs over the long term, increase margins and open new revenue streams, Bain’s report notes.

Circularity in automotive sector
Interactive material flow infographic that Bain says shows how supply chains will evolve to reduce virgin material use.

Commentating on the report, Harry Morrison, a partner in Bain’s Sustainability & Responsibility practice and co-author of the report, said: “Our analysis finds that automotive companies pioneering their transition toward greater circularity do three things well.

“They scan the existing value chain to identify the potential for improving circular flows, they combine today-forward and future-back perspectives to capture new opportunities and they scale the ecosystem for success.

“Cross-sector partnerships will be essential too, as individual companies can’t solve circularity on their own. We are seeing business leaders strengthen their manufacturing ecosystems with a clear perspective on where to collaborate and where to compete.

“The Global Battery Alliance is an example of this, which saw over 120 public and private organisations come together to help establish a sustainable battery value chain.”

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