A genuinely sustainable automotive: Near goal or a far cry?
Vinay Sharma
Principal – Intellectual Asset Management
Strategy Consultant - Technology Research and Advisory | IAM 300 | Patent Agent | Attorney
Consumer mindsets have changed. There is an increase in the shift towards sustainability. The automotive industry contributes a massive amount to CO2 emissions; therefore, sustainable automotive is the top priority for automotive players and governments globally. Incentivising EVs and numerous schemes are being floated to encourage the same. We already have EV leaders, and Tesla tops the list. But will only big leaders like Tesla dominate the market? What about start-ups that are working towards developing new EV technologies? There is a lot underlying that needs to be analysed. Also, is electrification enough? The journey towards sustainable automotive is more complex and consists of multiple milestones.
Over recent years, there has been a paradigm shift in modern consumers' mindset concerning automobile.
The industry was already going through an inflection point owing to various factors. However, the pandemic has accelerated this even further and is responsible for tilting the balance in favor of genuinely green solutions.
Demand for better air quality and concern for the planet is driving the continuously increasing demand for sustainable automotive, forcing automotive players and stakeholders to evolve, adapt and transform.
According to Statista, passenger cars produced approximately 3 billion metric tonnes of CO2 in 2020. These were the statistics when pandemic-imposed lockdowns prevailed globally, and there was a reported decrease in air pollution levels. NASA researchers reported at least a 20% reduction in nitrogen oxide levels.
Therefore, many residents in heavily polluted cities of the world experienced cleaner air, something that had been missing for years. This contributed massively to the shift in societal preferences globally. Given this change and the recognition of a sustainable environment, governments globally are pushing for sustainable transportation solutions, imposing strict emission norms, and incentivising electric vehicles. According to this WEF article, governments globally have spent $14 Billion to support electric car sales, a 25% jump from 2019. In Norway, EVs are not subjected to the 25% VAT on motor vehicles. Germany offers purchase incentives of 4,000 Euros on the purchase of electric vehicles. California has a Clean Vehicle Rebate Project that offers rebates from $1,000 to $7,000 on the purchase or lease of new eligible zero-emission vehicles. The electrification of automotive and vehicle fleets constitutes a significant part of the overall sustainability efforts.
But is the electrification of vehicles enough to boost automobile sustainability?
That brings us to question how green EVs are in real.
EVs, in the long run, are greener than IC engines. However, EV batteries themselves require significant energy. With the current setup, most electricity grids still function on fossil fuels, and a relatively lower percentage is from renewables. In addition, there is a genuine concern about the production and recycling of batteries. As of 2021, 61% of the total generated electricity in the US was from fossil fuels and 20% from renewables.
In conclusion, while EVs are indeed a greener option, the world is still a few years away before they can be genuinely sustainable.
But are we analyzing the other components that make up the sustainable automotive landscape, or is the analysis limited to electrification and vehicular emissions?
What about vehicles powered by fuel cells? What about the energy-intensive process of producing batteries? Stakeholders globally are working towards reducing tailpipe emissions, but what about pollution from unsustainable materials?
Addressing material emissions is critical to achieving the ambitious target of net-zero carbon cars. According to this WEF article, by 2030, about one-third of emissions will be from material production.
Therefore a transformation in the entire value chain of automotive is needed with equal contribution of the whole value chain. OEMs have a key role to play in this transformation.
The Circular Cars Initiative, kick-started in Davos 2020, is an engagement of 100 plus organizations and 250+ executives working towards accelerating the transformation of the circular economy within the automotive industry. Besides that, targets set by major companies on an organization level will also aid in moving closer to the sustainable automotive goal.
In its sustainability goals, General Motors outlined its mission to reduce operational energy intensity by 35% by 2030.
BMW intends to use recycled materials in its cars starting in 2025 to lower C02 emissions. It has also joined hands with the recycling specialist Duesenfeld to achieve a recycling rate of 96%.
Modern sustainable automotive will require collective efforts across the industry value chain. EVs, V2X, and circular economy could enable us to achieve sustainable automotive.
How it unfolds will be a thing to look out for.
