The Circular Car Initiative

The global automotive industry, an engine of both prosperity and environmental degradation at the same time, is currently facing a moment of profound transition. At the World Economic Forum (WEF) in Davos last year, the need for more sustainable solutions led to the launch of the Circular Cars Initiative. The initiative, which involves materials suppliers, fleet operators, manufacturers, recyclers, and data platforms, focuses on three main strands: Materials, curated by McKinsey and Co; Business Models, led by Accenture Strategy; and Policies, co-managed by WEF and SYSTEMIQ.

Among the initiative’s first results we find the report “Raising Ambitions: A new roadmap for the automotive circular economy”. According to the report by Accenture, WEF and the World Business Council for Sustainable Development, released last January, the adoption of circular economy practices, combined with electrification, has the potential in the automotive industry to reduce CO2 emissions by up to 75% and non-circular resource consumption by up to 80% per mile by 2030.

Circularity in the automotive ecosystem, the report suggests, can be achieved through four key pathways: achieving zero carbon emissions throughout the vehicle lifecycle; recovering resources and closing material loops; extending the life of cars and their components; and making efficient use of the vehicle over the time and its use.

Circularity is an almost mandatory step for the sector responsible for about one-fifth of total global CO2 emissions – about 20% of which are directly attributable to the production phase alone – and consumer of huge natural resources, including 80% of all rubber produced in the world, a quarter of all aluminum and about 15% of the global steel market. According to EIT Climate-KIC, cars are also responsible for 90% of air pollution in cities.

Decarbonizing the automotive industry through material efficiency

Today, at the end of life of the product, little of the value and materials of these vehicles are recoverable due to non-circular design practices and a lack of business models focused on circularity. Beyond fuel, vehicles consume large amounts of currently non-renewable materials that result in huge amounts of liquid and solid waste.

In a Business as Usual scenario, by 2040, an analysis conducted by McKinsey & Co part of the Circular Cars Initiative estimates that about 60% of total car lifecycle emissions will be directly attributable to materials, with only 40% coming from other sources including logistics, end-of-life disposal and use.

ICC aims to provide the industry with more efficient and cost-effective transition tools on the path to decarbonization. Among its first goals, it aims to define and measure the so-called material efficiency against key metrics and end goals such as greenhouse gas emissions and the use of materials such as rare earths. The material efficiency metric is still being defined: it’s intended to indicate the amount of raw materials used to build a vehicle divided by the number of miles per passenger provided by the vehicle. Other measurable metrics, such as recycled content, or greenhouse gas emissions per passenger km, may also be evaluated. The next goal will be to improve industry performance based on these metrics, thereby reducing the environmental footprint of the automobile life cycle.

In the near future, of course, we also see the shift to electric vehicles, which will substantially decrease emissions during use, although, in the short term, during the production phase, emissions will increase due to the carbon footprint of EV batteries. In addition, electrification, by simplifying vehicle design, is an opportunity to incorporate circular principles into the design and production phase.

The circular car mirage and new mobility models

According to Axel Schmidt, senior managing director at Accenture, “Circular cars will be a key element in serving the growing demand for mobility while reducing resource consumption and carbon emissions to a level that is truly sustainable”. The term circular car denotes a theoretical vehicle that has maximized material efficiency and produces zero waste and zero pollution during production, use and disposal. Although cars will never be completely circular, the automotive industry must increase its degree of circularity.
Circular strategies for the industry include implementing new business models such as shared mobility as a service (MaaS); closed-loop recycling of aluminum and steel; and extending the life of vehicles and key components such as batteries.

Joss Bleriot, head of Institutions, Governments & Cities at the Ellen MacArthur Foundation hypothesizes a multimodal shared mobility system in which multiple modes of transportation are offered: these services can be shared, electrified, autonomous and interconnected. If cars were increasingly shared as a service and designed for durability and reuse, there would be fewer cars on the road, each car would be in use for longer periods of the day, with benefits such as less congestion, lower maintenance costs, less land and investment used for parking lots and roads, and less air pollution.

Mobility-as-a-service (MaaS) models are already influencing the traditional automotive industry, with the rise of Uber and Lyft and schemes such as Karshare and Renault Mobility, which allow drivers to rent cars by the hour or the entire day through a self-service phone app. The emergence of MaaS companies leaves the ownership of cars for the entire lifecycle to manufacturers or leasing companies, that will have, therefore, a greater interest in maintaining the value of their materials when disposing of vehicles.

Regeneration and recycling: examples from the rest of the world

During the production phase, regeneration and recycling are key areas. More than one-third of Renault‘s new vehicles are made from recycled materials, including copper, steel, textiles and plastics. The French company says any remanufactured part uses 80% less energy, 92% less chemicals and 88% less water, as well as generating 70% less waste in the manufacturing process than a new part. Each part is also 30-50% cheaper.

Several manufacturers are adopting circular practices. In the U.S., Ford uses McDonald’s coffee bean waste to make reinforced plastic car parts; Caterpillar regenerates pistons and cylinders; Land Rover has introduced an aluminum recycling and over-cycling program in the UK. In Germany, Hetzel, a family-owned business, regenerates automatic car transmissions.

The various processes of the circular economy are being facilitated by a number of emerging technologies such as IoT, which allows materials and components to be better tracked throughout their life cycle so they can be more easily recovered, recycled or remanufactured. Then we have 3D printing that promises reductions in the amount of materials used, primarily plastic.