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How The Automotive Industry Can Make Circular Cars

11 minutes for read

A circular car can cut lifecycle carbon emissions of the automotive industry by up to 75 per cent by 2030, according to a joint report by Accenture and the World Economic Forum. 

However, the goal of manufacturing a circular car, which produces no waste and pollution, can only be achieved through collaboration across the industry to transition to circularity and optimise the lifecycle of every vehicle. 

Scaling up recycling and remanufacturing are part of this solution that will also make the entire value chain more resilient and profitable.

Circular car: what are automotive manufacturers currently doing?

Producing circular cars will be crucial in reducing the automotive industry’s carbon emissions, which currently comprise 23 per cent of global emissions. Currently, the automotive sector also produces five per cent of waste produced worldwide, which includes end-of-life vehicles and production wastes. 

Of this, 75 per cent are recyclable, and 25 per cent are more challenging to recycle and include hazardous materials, according to a 2013 scientific report. End-of-life tires, made of non-compostable durable material, alone account for two per cent of the world’s solid waste. 

Each year 26 million tonnes of tires are produced and used only for 4-6 years. 

End the “Take-make-waste” business model

Since car usage will increase by 70 per cent by 2030, automobile and tire waste will also increase if the current “take-make-waste” business model is followed.

Some automotive manufacturers have adopted business models that reduce their environmental impact and emissions by setting ambitious individual targets to reach carbon neutrality by 2050 and join the circular economy.

These manufacturers have already begun implementing reuse, remanufacturing, and recycling strategies. Car manufacturers are producing electric vehicles, using renewable energy, closing the material loop, using bio-based materials, and recycling production scrap. 

Though these trends have resulted in technological disruptions, the strategies are used individually or in some combinations and are not taking place at the industry level. The changes have not been enough to reduce the industry’s negative environmental impact. 

Simply replacing combustion engines with electric motors will not be enough. Leveraging the circular economy will be essential to avoid stagnation when the tipping point of electric car adoption is reached.

And though many materials are recycled, and cars are repeatedly repaired, the silo approach with individual efforts by companies has focused on improving their sales and reducing only Scope 1 emissions generated directly by their businesses.  

By 2030, the automotive industry has to reduce 50 per cent of carbon emissions and, therefore, also cut upstream and downstream emissions to meet the Paris Agreement’s zero emission targets for 2050.

To that end, the industry is now working towards creating a common framework so that all value chain stakeholders can start cooperating to make the production of a circular car and further emission reduction possible. The aim is to provide a common language for the entire value chain to guide progress.

The Circular Car Initiative: What is it?

The Circular Car Initiative was started at the 2020 Davos World Economic Forum. by over 100 global organisations, executives from the automotive industry, policymakers, and fleet purchasers. 

The Initiative aims to accelerate circular manufacturing and adopt business models to reduce total lifecycle emissions of vehicles with a focus on manufacturing emissions.

The Circular Car Initiative brings about industry-level change and encourage the formation of workgroups and pilot projects to produce circular cars that fit a 1.5°C climate scenario by 2030.

The “circular car” is a concept of a vehicle with maximum material efficiency. 

It would result in zero material waste and pollution during the entire life cycle—production, use, and disposal—and differs from present cars, which focus only on zero emissions. Though complete circularity will be challenging, the automotive industry can still significantly improve its circularity.

Major tire manufacturers, including Michelin and Bridgestone, have created RCB Rubber, an initiative to find industry-specific solutions to improve material circularity. In November 2021, the two tire manufacturers announced their partnership and goal to use recovered Carbon Black (rCB) to manufacture new tires instead of fossil-fuel-based virgin Carbon Black (vCB).

The RCB Rubber initiative aims to address the technical challenges in achieving material recovery at a scale to make an industry-level impact. 

As a member of the initiative, we have one of less than five end-of-life tire pyrolysis plants in Europe producing rCB, is committed to being part of the solution.

Defining circularity for the automotive industry: how do we define a circular car?

The Accenture and the World Economic Forum joint report for circular car manufacturing can guide the automotive industry in reducing lifecycle emissions and non-circular resource use. 

Circular vehicles will protect the environment, conserve resources, and add value to the economy and society. The new definition of the circular car presented in the report includes four aspects—materials, energy, lifetimes, and utilisation rates.

To meet the targets of a tight deadline, monitoring will be essential. Therefore, the industry plans to track the degree of circularity achieved by measuring carbon and resource efficiency.

  • Carbon efficiency measures the lifecycle carbon emissions per passenger kilometre. Increasing carbon efficiency requires reducing total lifecycle emissions by replacing fossil fuels with renewable energy during production, use, and end-of-life disposal operations. The entire value chain has to work together to achieve the 1.5°C climate scenario.
  • Resource efficiency measures non-circular resource use per passenger kilometre. Virgin materials are non-circular, and the goal is to reduce their proportion in each vehicle. Instead, recycled, renewable, and biobased materials, which are circular, must be used to minimise natural resource extraction and their associated environmental concerns.

Increasing resource efficiency can boost carbon efficiency. For example, pyrolysis uses waste tires instead of fossil fuels to produce recovered Carbon Black, with an 80 per cent lower carbon footprint than vCB.

Reimagining the value chain in the automotive industry

To build a circular car that produces zero waste and emissions, players in the automobile industry have to set new and vigorous targets that will need government policy support.

The entire value chain must be reimagined. The joint report recommends that circular car production will have to take a comprehensive view by implementing four pathways:  

  • Circular material use must be prioritised by boosting the recycling of end-of-life vehicles and components for resource recovery. Contec’s end-of-life tire pyrolysis can recover Carbon Black, gas, oil, and steel, which can be used to make new materials for remanufacturing tires and close several material loops.
  • Decarbonization will focus on reducing emissions throughout the lifecycle of vehicles. Besides ending fossil fuel use for cars, low-carbon materials will be used in manufacturing.
  • Optimising the lifetimes of vehicles and components will reduce the use of resources by encouraging reuse for repair, subscription-based ownership, and changing the scale of production.
  • Utilisation improvement aims to reduce the number of cars on the roads by increasing the passenger kilometres delivered by each vehicle. Private-owned cars currently stay idle for a large portion of the day. Mobility (and vehicles) can be provided as a service-on-demand by a fleet of cars through subscriptions. Fleet ownership will make circularity economically attractive.

With these pathways, the automotive industry can reduce carbon emissions by 75 per cent and non-circular resource use by 80 per cent for a hatchback electric car by 2030.

Circular cars and business value

Optimising the entire lifecycle of vehicles by adopting circularity can increase profits by 1.5 times in the value chain. The automotive industry can earn 15-20 times a vehicle’s sale value by adopting end-of-life recycling and material recovery, remanufacturing, repair, leasing, and subscription.

New business models considering cost-benefits over the vehicle lifecycle will have to become the norm. Value chain orchestrators will be able to guide the change to circularity.

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