Circular economy and the automotive industry: the shift towards the zero-carbon car

07 March 2022

Sustainability and circular economy strategies go hand in hand, with cars being the perfect product to be reused, remanufactured, and recycled. Carmakers are also putting an increasing focus on cleaning up vehicle production and supply chains. Autovista24 journalist Rebeka Shaid considers some of the car industry’s circular approaches to producing the zero-carbon car, looking at the efforts of Skoda, BMW, and a promising Dutch startup, Circularise, which hopes to make the auto industry more circular.  

While carmakers face numerous challenges as they transition to cleaner forms of electromobility, the common consensus is that the industry needs to look beyond battery-electric vehicles (BEVs) to decarbonise transportation. Establishing concise circular-economy strategies can help the automotive sector drive down lifecycle carbon emissions of passenger cars. But what does it take to make a vehicle truly circular?

Net-zero carbon car waste

This is a question the World Economic Forum and the World Business Council for Sustainable Development are attempting to address after forming the Circular Cars Initiative. The project has a clear agenda: to increase the environmental sustainability of mobility.

By looking at how new technologies and business models can close material and production loops, the central idea is that of a zero-carbon car – a ‘vehicle that has reached its full potential with respect to carbon efficiency.’ Although industry experts admit that the automotive value chain might never be free of emissions, it can be improved by focusing on net-zero materials waste.

After all, a circular economy is based on the principle of reusing and recycling resources, including anything from tyres to the vehicle body shell, with the aim of extending the life of cars and their components. It can involve sharing, leasing, repairing, refurbishing, and recycling materials and products for as long as possible. Keeping in mind that the EU generates more than 2.5 billion tonnes of waste a year, and the world is only 8.6% circular, taking care of resources is crucial.

Closing the car-production loop

The EU’s end-of-life vehicles directive states that 95% of the material in passenger cars and vans needs to be reusable or recoverable, depending on the vehicle weight. Setting clear targets and objectives certainly helps limit waste from cars and their components. Automotive companies are increasingly working towards improving their degree of circularity, which takes shape in many forms.

Czech carmaker Skoda, part of Volkswagen (VW) Group, told Autovista24 it is actively engaged in applying the principles of a circular economy. ‘We follow four key principles: we minimise negative impacts on the environment, diminish resources inputs and the loss of these resources, conversely maximising the circulation of resources,’ said Martina Špittová of Skoda’s corporate communications department in the Czech Republic.

She added that the carmaker is working with an interdisciplinary team to implement these concepts in coordination with the ecology and occupational protection department. Špittová emphasised circular economy is ‘an integral part’ of Skoda’s strategy. The brand closely cooperates with recyclers and suppliers to cut down on primary materials and extend the lifetime of used materials. The efficient use of resources, she said, also shows financial benefits.

So, what are some of Skoda’s milestones on the sustainability front? ‘At Czech production sites, we have zero production waste to landfill. That means, all the waste from production is either materially or energetically reused,’ she said, adding that Skoda has also expanded circular activities to its production sites in India and Russia.

The carmaker uses seat covers made from recycled PET bottles, combining wool with recycled polyester. It is also involved in pilot projects focused on reusing end-of-life glass from cars in the manufacturing process. In its paint shop, Skoda deploys ground limestone, which absorbs residual paint particles, thus eliminating the need for water in a process known as ‘dry separation’.

Moving away from a linear economy – which involves taking raw materials, manufacturing a product only for it to be thrown away at the end – is not an outlandish idea although it is still largely the norm in the automotive industry. One of the carmakers hoping to change this is BMW, which aims to ‘become the most sustainable car company in the world.’

BMW’s ‘holistic’ approach

The Munich-based manufacturer raised an eyebrow or two at last year’s IAA Mobility event when it presented a fully-recyclable BEV – the i Vision Circular. While this concept car will not be launched until 2040, it shows what a circular car could look like.

The design relies on 100% recyclable materials, both old and renewable, and BMW purposefully created the four-seater with the circular economy in mind. The surface, for instance, is made from secondary aluminium while the tyres are created from certified natural rubber. BMW said the interior is 100% sustainable, with the dashboard being 3D-printed and produced from recycled plastic. Wood powder, again 3D printed, can be found in the steering wheel. The design has been described as ‘disruptive’.

Benedikt Fischer, spokesperson for BMW Group, explained to Autovista24 how the company is aiming to cut the use of primary materials in car manufacturing. ‘We are working to achieve holistic sustainability in every regard by gradually making a significant increase to the share of secondary materials in vehicles,’ he said. ‘At the moment, vehicles are made from almost 30% recycled and reused materials. With our “Secondary First” approach, the share of recycled and reused materials is expected to steadily increase to 50%.’

In the production process, he added, key material groups are increasingly being separated and recycled while BMW is also trying to use more secondary materials in the supply chain, depending on market availability. A pilot project the company has initiated with chemicals company BASF and recycling firm Alba Group aims to reduce the use of primary plastics.

Circular design concept

‘Alba Group analyses end-of-life BMW Group vehicles to establish whether a car-to-car reuse of the plastic is possible,’ Fischer said. ‘In a second step, BASF assesses whether chemical recycling of the pre-sorted waste can be used in order to obtain pyrolysis oil. This can then be used as a basis for new products made of plastic. In the future, a new door trim or other components could be manufactured from a used instrument panel.’

Fischer added BMW has shifted its focus to a ‘circular design’ concept, which he explains would guarantee the economical dismantling capacity of vehicles. ‘It is essential that disassembly of the vehicle and its individual components is fast and cost-efficient. It all starts with the construction of the vehicle, which must be done in such a way that allows materials to be removed at the end of the vehicle’s service life without different types of material being mixed with each other.’

The Bavarian carmaker is also looking at increasing circularity around steel, one of the materials that is highly emissions-intensive but also 100% recyclable. BMW recently signed a deal with one of Europe’s largest steel producers, Salzgitter AG, to increase the use of low-carbon steel at its European plants, calling it an important step to substantially reduce CO₂ emissions in the supplier network – the key to making the industry truly sustainable.  

Transparency in the car-manufacturing supply chain

The supply chain is responsible for 80% of a company’s overall greenhouse gas emissions, and more carmakers nowadays demand proof that the material they use is sustainable. Dutch startup Circularise supports that mission. It helps businesses trace materials and products, with the aim of verifying their origins, certificates, and CO₂ footprints – all via blockchain.

The young business is part of an EU-funded certification scheme for rare-earth materials, found in electric vehicle (EV) drivetrains, which are known to be extremely emissions-intensive. The three-year project, dubbed Circular System for Assessing Rare Earth Sustainability, will increase transparency around sustainable practices throughout supply chains. Founder and CEO of Circularise, Jordi de Vos, told Autovista24 there is an increasing demand for traceable materials, especially batteries.

But when de Vos founded the startup in 2016, he realised there was seemingly no organisation at the time that could close all the loops when it comes to tracing and tracking the origins of materials. ‘We actually found that the key blocker today is information [and] if you do not have the right information, you obviously cannot make the right choice,’ he said.

Digitising materials

So how does the company ensure the right data is shared with all stakeholders across the supply network? By setting up a system that, in this case, tracks rare-earths using blockchain tokens, or digital passports, through the supply network from mining to end-of-life. Blockchain enables parties to record information securely, and in a certifiable way. It allows suppliers to describe materials and products, with Circularise believing it to have great potential for the manufacturing industry.

De Vos emphasised the startup is collaborating with independent third parties to audit the materials to ensure verification. ‘We are closely working together with auditors, to make sure that data input at the beginning is correct. Because that is the only way you can guarantee the integrity of the insights you can get out of it. I think it is also important to understand that blockchain is not a solution to everything. It is just a tool.’

The company is working with various carmakers, including Porsche. In a past project, Circularise helped the German brand establish traceability of plastics, using blockchain while guaranteeing the use of sustainable materials in Porsche cars. De Vos revealed the company also experimented with other materials, including aluminium, some steel products, paints, as well as coatings. As a blockchain supply-chain transparency provider, Circularise’s main mission is to trace materials from source to product, without endangering confidentiality.

Consultancy firm McKinsey estimates a sharp increase of material emissions from 18% of vehicles’ life-cycle emissions to more than 60% by 2040. While this surge represents a challenge, it can also bring in new opportunities on the path to the zero-carbon car.

‘I am quite certain that there is going to be more of a push for legislation on these topics,’ said de Vos. ‘We know there is more demand coming from consumers and automotive brands. Nothing is stopping you from tracing what you put on the market today, and it might not have a real benefit in the short term,’ he said. ‘But it is a way to build up a stockpile for the future, at least data-wise, and hopefully, in 20 or 30 years from now, we can make better recycling choices than we do today.’

With most carmakers striving to become carbon-neutral by the middle of this century, if not earlier, a circular economy provides a framework to make those better choices – hopefully, we will not have to wait 20 years for these automotive companies to pick better recycling options.