In Collaboration with Accenture Strategy

Raising Ambitions: A new roadmap for the automotive circular economy

CIRCULAR CARS INITIATIVE BUSINESS MODELS CLUSTER DECEMBER 2020 Cover: Getty Images

Contents

Foreword 3

Letter from Accenture Strategy and the World Economic Forum 4

Introduction 5

1 In a nutshell: driving industry transformation 7

2 There is an urgent need for circular business models 9

3 Making sense of circularity: proposed definitions, 12 measurements and levels of circularity

3.1 Definition of a circular car – value and efficiency 13

3.2 The five levels of circularity – a proposed taxonomy 15 to gauge and guide progress

4 Next stop, a mobility revolution: pathways, solutions and 19 business models

4.1 Transformation pathways – key strategies 20 towards circularity

4.2 Identified solutions and enablers – concrete actions 23 for circularity

4.3 Case studies 25

5 Raising ambitions for a circular cars agenda 27

6 Next steps for the Circular Car Initiative 29

Appendix: Solutions and pathways 32

Contributors 41

Acknowledgements 42

Endnotes 43

© 2020 World Economic Forum. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording, or by any information storage and retrieval system.

Raising Ambitions: A new roadmap for the automotive circular economy 2 Foreword

Christoph Wolff Thomas Deloison Global Head of Mobility Director Mobility, World and Member of the Business Council for Executive Committee, Sustainable Development World Economic Forum

The car has given us freedom. It has accelerated bodies and think tanks are charting the course trade and made an indelible mark on modern culture towards a zero-emission future through new and lifestyles. But cars are also responsible for ~10% technology, materials innovation, efficient vehicle of greenhouse gas emissions and a large share of usage and full life-cycle management. global steel, aluminium, plastic, rubber, glass and increasingly battery material consumption. It is now We wish to thank Accenture under the leadership time for a revolution in automotive sustainability. of Wolfgang Machur and Alexander Holst, and McKinsey under the direction of Fehmi Yüksel The World Economic Forum and the World and Eric Hannon, for their in-depth analysis and Business Council for Sustainable Development thought partnership on these topics. We are also (WBCSD) jointly formed the Circular Cars Initiative appreciative of EIT Climate-KIC’s Sira Saccani to accelerate this transformation. The Initiative takes and Kirsten Dunlop, and SYSTEMIQ’s Matthias a systemic approach – accounting for the build Ballweg, Tillmann Vahle and Martin Stuchtey, for phase as well as the use phase – to automotive joining early on and for their ongoing work on policy sustainability. It looks at how technology and recommendations. business levers can maximize the resource value of the car, minimize life-cycle emissions and unlock We also would not have come to this point at the new opportunities. end of 2020 without the leadership of Levi Tillemann at the World Economic Forum. Within the Circular Car Initiative, 40 companies from the automotive value chain, several research The “circular car” is now on its way to becoming a institutes, international organizations, governmental core component of the automotive future.

Raising Ambitions: A new roadmap for the automotive circular economy 3 Letter from Accenture Strategy and the World Economic Forum

Axel Schmidt Alexander Holst Senior Managing Director, Managing Director, Global Industry Sector Lead Sustainability, Automotive, Accenture Accenture Strategy

Levi Tillemann Lead, Circular Cars Initiative, World Economic Forum

The automotive sector has integrated circular We expect circularity to become a major economics into its business practices for decades. element of this transformation. Companies But now is the time to raise ambitions on the need to chart their individual paths and sector’s approach to circularity to effectively learn to optimize and orchestrate the full- address climate change and resource depletion. value ecosystem and vehicle life cycle.

For the world to experience less than 1.5°C of The Circular Cars Initiative (CCI) represents the first global warming, the automotive industry needs to organized industry effort to systematically address target around a 50% reduction in absolute carbon the opportunities and challenges of circularity with emissions by 2030. In the same period, we expect an eye towards fundamentally remaking automotive mobility demand to increase by 70% globally. value chains and business models. Accenture Circularity and electrification will be the core has been honoured to support the Forum and the strategies that enable the industry to decarbonize participating companies on this journey towards a and prepare for this increased mobility demand. circular automotive economy. Circularity means using cars more efficiently, shifting to fleets and coordinating value ecosystems more This report proposes a taxonomy of five levels effectively. All of these aspects of circularity can add of circular cars and four major strategies for value for the industry and for society, and enhance industry transformation before detailing a variety the broader ecosystem that humans inhabit. of necessary solutions for circular business models. Over the coming months and years, Original equipment manufacturers (OEMs) we expect multistakeholder pilot projects and have already set ambitious roadmaps towards public-private collaborations to move the vision carbon neutrality in the next two decades. of the Circular Car Initiative into reality.

Raising Ambitions: A new roadmap for the automotive circular economy 4 Introduction Sustainable cars must be powered by green electricity; circular economy principles need to govern both manufacture and use phase.

The term “circular car” refers to a theoretical Indeed, the convergence of technology, vehicle that has maximized materials efficiency. environmental and economic megatrends is This notional vehicle would produce zero materials propelling the modern automotive industry waste and zero pollution during manufacture, towards just such a transformation. The Circular usage and disposal – which differentiates it from Cars Initiative has assembled a broad coalition today’s zero-emission vehicles. While cars may of participants from the automobility ecosystem never be fully “circular”, the automotive industry can committed to leading this transformation and significantly increase its degree of circularity. Doing increasing the environmental sustainability of so has the potential to deliver economic, societal global mobility by harnessing the power of new and ecological dividends. technologies, materials and business models.

FIGURE 1 Decarbonizing the car

BEVs use less energy Shifting to low-carbon ...but only circular-economy in operation, but more electricity for the use innovations can finish the job in production phase helps…

Carbon emissions 146 124 44 3 per passenger km

-98%

Today1 + Adoption of BEVs2 + Low-carbon energy + Circular-economy for use phase3 innovations4

Use phase Materials, assembly and end-of-life

1. ICEV hatchback (level 1) with 1.70t weight (incl. repair components), 0.90t steel, 0.15t aluminium, 0.29t plastics, 200,000 life-cycle km and average occupancy of 1.5 2. BEV hatchback (level 1) with 1.90t weight (incl. repair components), 0.70t steel, 0.19t aluminium, 0.32t plastics, 0.32t EV battery, 250,000 life-cycle km and average occupancy of 1.5 3. Requires decarbonization of electricity grid with additional renewable energy as per consumption requirement by BEVs 4. Circular-economy innovations consider level 4 circular BEV (fully circular) Source: Accenture Strategy analysis

The Circular Cars Initiative (CCI) is comprised of – The business models workstream is led three main workstreams: by Accenture Strategy. Its work lays out a series of strategies for achieving circularity. In – The materials workstream, led by McKinsey, collaboration with the World Economic Forum, is focused on the pressing need to decarbonize Accenture Strategy has developed a taxonomy materials, institute closed-loop recycling and to guide the industry’s progress on carbon and provide materials with a productive second life resource efficiency. The goal is to maximize the – capturing value that today is downcycled into mobility output achieved per unit of resources other industries (see Figure 2). and emissions expended (see Figure 3). The

Raising Ambitions: A new roadmap for the automotive circular economy 5 taxonomy addresses usage, vehicle lifetime, research institutes, non-governmental organizations materials and energy-related aspects of circular (NGOs) and academic institutions. They have business models. contributed their insights through workshops and many dozens of interviews, as well as data and – Finally, the policy workstream is under feedback on this multifaceted analytical process. development. It will connect the dots of this In addition to our analytical partners McKinsey ecosystem and address the relevant policy tools and Accenture, CCI would also like to recognize to be taken onboard by governments globally. the valuable support and contributions of our CCI co-founders at the World Business Council for Each of these workstreams has been supported by Sustainable Development (WBCSD), EIT Climate- our diverse community of stakeholder organizations, KIC and SYSTEMIQ. including carmakers, materials suppliers, national

FIGURE 2 The Circular Cars Initiative (CCI): organizational structure and 2020 deliverables

CCI deliverables for 2020 include

A five-level taxonomy for automotive circularity

A materials transition tool to delineate pathways for material decarbonization in the sector

Roadmaps (materials, policy and business models) outlining critical investments, milestones and policy-drivers for circularity

Approach to start circularity-focused pilot projects among member companies

Raising Ambitions: A new roadmap for the automotive circular economy 6 1 In a nutshell: driving industry transformation To achieve a circular economy transformation, the industry requires a common language and roadmap.

The aim of this report is to lay a foundation for business models and strategies for achieving future discourse on automotive circularity by circularity through the lens of each of these providing a framework for understanding circularity transformation pathways. within the automobility ecosystem. Achieving circularity is a complex endeavour. In order to clarify The industry has made carbon neutrality a core the path forward, this study lays out a five-level objective. Already most automotive materials are taxonomy for circularity (0 = no circularity, 5 = net recyclable. Cars are built to last and to be repaired. positive impact). This report also identifies business These are all important aspects of circularity. But models that will generate more mobility and less the industry must go further. The value chain needs waste in the future. Based on current technology, to be fundamentally reimagined to minimize lifetime we see the opportunity to reduce carbon emissions carbon emissions and resource consumption. This by up to 75% and resource consumption by up to is a decadal transformation, which ecosystem 80% per passenger kilometre by 2030.1 players must address together.

Circular cars will be a key building block Overall, the key recommendations for industry, for a low-carbon mobility system and are the value-chain ecosystem and policy-makers are critical to achieving a 1.5°C scenario. They as follows: can help to serve growing mobility demand while at the same time reducing resource – Create a common framework for guiding and consumption to a level that is truly sustainable. measuring progress towards circularity. This Circular cars framework should raise industry ambition from will be a key Business models address a core aspect of this merely “do less harm” to building a sustainable building block transformation. Simply improving vehicle use could global economy. for a low-carbon yield dramatic reductions in carbon emissions per mobility system passenger kilometre. Combine this with optimized – Realign the profit motive for the automobility and are critical to vehicle lifetime, increased materials recycling and ecosystem away from selling products towards achieving a 1.5°C clean energy, and automotive emissions could selling mobility and other services. scenario. They plummet in the years and decades to come. can help to serve – Create data standards, reporting growing mobility A circular car should also be a good frameworks and transparency measures business case, as it maximizes resource and that allow for the rationalization of demand while at carbon efficiency, the two key performance vehicle design development, life-cycle the same time indicators proposed by this report. management and end-of-life processing. reducing resource consumption to a There are four main transformation pathways to – Secure policy support for systemic level that is truly increase circularity. These are centred on energy, transformation. sustainable. materials, lifetime and use. This report examines

Raising Ambitions: A new roadmap for the automotive circular economy 7 FIGURE 3 Report overview – towards a taxonomy for the circular car

Levels of circularity

0 1 2 3 4 5

No Low Moderate High Full Net positivity circularity circularity circularity circularity circularity in system Past Today 2025 2030 2035 2040

Classic Product Aligned incentives Full circular value Silo optimization Ecosystem make-use-waste improvement and and life-cycle chain in as-a-service and sales focus optimization mentality better coordination optimization models

>5 <5 >150

<150 <4

<100 <50 <20 <0.5 <1.5 <0 <0

Measures

Carbon efficiency Resource efficiency

Life-cycle CO2e emissions (g) Non-circular resource consumption (g) Passenger km Passenger km

Aligning the car with greenhouse gas budgets Maximizing the value from for mobility in a 1.5-degree scenario resource consumption

Transformation pathways

Achieving net-zero carbon emissions across the whole life cycle Product CO e.g. Low-carbon materials and assembly, integration with energy grid 2 decarbonization

Enabling resource recovery and closing material loops Material e.g. End-of-life disassembly and reverse logistics, product passports circularity

Increasing the lifetime of the vehicle and its components Lifetime e.g. Subscription-based ownership, reuse and remanufacturing at scale optimization

Ensuring efficient vehicle use over time and occupancy Utilization e.g. Vehicle on demand, mobility on demand, breathing fleets improvement

Source: Accenture Strategy

Raising Ambitions: A new roadmap for the automotive circular economy 8 2 There is an urgent need for circular business models Business models are the key lever for rapid decarbonization of automobility.

Raising Ambitions: A new roadmap for the automotive circular economy 9 The automotive industry is dramatically the automotive sector. The confluence of overshooting its estimated carbon and resource electrification, autonomy and mobility business budgets. At the same time, car-based mobility models has created a plastic moment during is set to grow globally by around 70% by 2030 which OEMs can capture new revenue streams. (passenger kilometres, as well as predicted vehicle Slowly but surely, we are witnessing a shift stock in a business-as-usual use scenario).2 This is away from traditional business models focused happening at a time when the scientific consensus on production and sales: Cars are increasingly is that mobility emissions need to decrease by bought online and flexibly “subscribed” to for around 50% within 10 years (2030) to achieve a shorter time periods; revenue streams are 1.5°C climate scenario.3 Achieving Level 3 circularity shifting towards the use phase; and the drive for the full fleet by 2030 would align with achieving towards circularity is slowly picking up speed. this important and ambitious goal (see Figure 4).4 Business models represent an immediate But this will require a radical transformation of the opportunity to accelerate electrification, increase car and the role it plays in the mobility ecosystem. vehicle capacity factors and extend effective Reducing reliance on cars is one approach, but lifetime. Fleets can use capital more efficiently that will get us only so far. Cars will remain a core than individuals and provide a higher number of provider of mobility for many decades to come. passenger kilometres with fewer cars. Combining Because of this, it will also be critical to minimize fleet-based mobility with improved maintenance the car’s environmental impact. Some companies and advanced recycling systems has the potential have already embraced both of these pathways to to reduce both carbon emissions and resource decarbonization. Original equipment manufacturers extraction – the latter is especially relevant for the (OEMs) such as Volvo, Renault, Daimler, BMW and rare metals and rare earth elements in batteries. Volkswagen have set targets for carbon neutrality. They are investing heavily in electrification, closing The path ahead is not without peril for the material loops, new service offerings and new industry. Sales might fluctuate as a “new normal” mobility solutions. Investors and regulators are relying on higher utilization and extended pushing them to go further. lifetimes for vehicles takes hold. However, increased demand, shorter replacement cycles These trends and new technological possibilities and service-based business models have have created a generational disruption in the potential to fill that gap in revenues.

FIGURE 4 Automotive passenger kilometres, non-circular resource consumption and carbon emissions per annum (currently and in 2030) in a business-as-usual and circular scenario

KPI Today 2030

Linear development Circular scenario

Passenger km per year 24 40 40 [tril. km]

Global vehicle stock [bn] 1.2 2 0.8

CO2 emissions CO CO CO CO CO CO CO CO CO CO CO CO per year [gt] 2 2 2 2 3.4 2 2 2 2 2 2 5.7 2 2 1.6 Yearly CO2 budget for Yearly CO2 budget for Yearly CO2 budget for automotive industry (1.7gt)* automotive industry (1.7gt)* automotive industry (1.7gt)*

Non-circular resource consumption 113 188 35 per year [mt]

*CO2 budget of automotive industry per year estimated at 1.7gt if net zero is reached in 2040 (66% probability)

Source: Accenture Strategy analysis, based on BloombergNEF (2020), OECD (2019), European Commission (2019), International Energy Agency (2019) and IPCC (2019). Note: In the circular scenario, all cars achieve Level 3 circularity

Raising Ambitions: A new roadmap for the automotive circular economy 10 Barriers holding back the transformation: paradigms and disincentives in the system

Over the past The primary barriers to circularity are Production methods and technology: Production 100 years, the related to: customers and use patterns; methods and technology have focused on mass automotive value business models; production methods and producing new cars. This results in: chain has been technology; and regulatory hurdles. optimized for – Constant output: Regardless of demand, Customers and use patterns: Buyers have long new car production needs to remain selling cars as regarded cars as a status symbol. They are an constant to maximize economies of scale. a product, not aspirational purchase that provides freedom and This requires OEMs to push new cars onto providing mobility- independence. This leads to: the market and reduces economic interest as-a-service. in innovations for extending mileage and – Inefficient allocation of capital: Privately held lifetime or optimizing capacity factors. cars are only effectively used at 1.5%5 of their seat and time capacity. This leads to congested – Overbuilt vehicles: Most cars are designed roads, unnecessary pollution, energy inefficiency to meet higher performance requirements than and massive demand for parking. necessary (e.g. high speeds). This reduces the potential to design for circularity (e.g. material- – Car lock-in: Once a customer owns a car, they efficient design, modularity or use of recycled are inclined to use it. A customer accounts for materials). only certain marginal costs (e.g. fuel), not the full cost of ownership, when weighing different – Underdeveloped life-cycle technologies: mobility modes (e.g. public transport vs. car). Technologies for repair, remanufacturing and recycling are underdeveloped. They lack scale – A “grey” fleet: Due to their low usage, and standardization. most cars are in use for 15–20 years. Thus old and inefficient cars remain on Regulatory hurdles: Up until now, car regulations the road. They pollute excessively and have not directly accounted for life-cycle emissions are difficult to repair and recycle. and use of materials. Today’s regulations have led to:

Business models: Over the past 100 years, the – Overload and unintended consequences: automotive value chain has been optimized for OEMs and suppliers are forced to consider a selling cars as a product, not providing mobility- multitude of regulations when designing and as-a-service. This has a range of implications, planning new models. Especially in the context including: of circularity, these well-intended regulations can pose an obstacle; for instance, by complicating – Focus on product costs: The sales price is the use of reused and remanufactured parts in the prime concern for all players along the value the production of new vehicles. chain – the customer, the OEM and suppliers. Total life-cycle cost optimization would enable – Inconsistent or incomplete metrics for more circularity. optimization: Metrics used in regulation are often incomplete and neglect a variety – Systems optimization that disincentivizes of important considerations. For example, change: The value chain and systemic incentives regulation ought to holistically regard life-cycle of the industry are optimized for today’s product CO2 per passenger km instead of just exhaust sales-focused business model. As a result, emissions to effectively incentivize the reduction alternative service-focused business models of all CO2 along a car’s life cycle. cannot compete. For them to be competitive, a new service-focused system will have to be – Markets that discount externalities: CO2 optimized and achieve significant scale. emissions are not yet properly priced into the cost of mobility. Expanding schemes such as – No incentive to invest: The benefits from fleet emissions credit markets to include life- additional investments in circularity are often cycle carbon emissions, non-circular resource diffuse and they cannot be easily captured by consumption and capacity factors could any single entity through current business models significantly benefit circular business models. (e.g. improved design for recyclability benefits end-of-life vehicle values, not sales margins).

Raising Ambitions: A new roadmap for the automotive circular economy 11 3 Making sense of circularity: proposed definitions, measurements and levels of circularity To build a circular ecosystem, the industry requires a common language.

Raising Ambitions: A new roadmap for the automotive circular economy 12 To overcome the challenges to achieving circularity, levels of circularity based on two primary measures it will be necessary for players along the automotive (carbon and resource efficiency) to evaluate and value chain to establish a common language related improve the circularity of cars. This framework is to the circular economy and relevant business intended to serve as the basis for further discussion models. This study proposes a taxonomy with five and refinement of ideas throughout the industry.

3.1 Definition of a circular car – value and efficiency

A circular car maximizes value to society, the emissions, non-circular resource consumption and environment and the economy while efficiently use of public goods, such as space or clean air. Our using resources and public goods. Its value is definition focuses on four relevant variables: energy, measured in terms of its ability to provide mobility, materials, lifetime and use (see Figure 5). and its efficiency is measured in terms of carbon

FIGURE 5 Definition and elements of a circular car

A circular car maximizes the value from resource consumption

Lifetime of the vehicle and Energy (incl. fuel) is used components is optimized for efficiently (per km of resource efficiency (by emphasizing movement) and renewable efficient design, modularity, purpose-built vehicles, reuse, repair, remanufacturing, etc.)

Materials are used without Use rates are optimized

waste (reduced, reused, CO2 (accounting for resiliency recycled and/or renewed) requirements)

Source: Accenture Strategy

To measure progress over the five levels of circularity, this study Resource efficiency: non-circular resource consumption per proposes carbon efficiency and resource efficiency as primary passenger kilometre measures. Efficiency is increased by reducing carbon emissions and non-circular resource consumption, as well as by increasing Resource efficiency considers the amount of non-circular the service delivered by a vehicle – mostly in the form of resources consumed to deliver one unit of service. It takes passenger kilometres. into account the inflow of resources into a car (recycled, bio- based and renewable materials would be considered circular, Carbon efficiency: life-cycle CO2 emissions per passenger while virgin materials are non-circular), as well as the outflow kilometre of resources. Circularity can be increased through strategies including reuse, remanufacturing and high-quality recycling. Carbon efficiency takes a holistic view of a vehicle’s carbon Improving resource efficiency often has an indirect impact on footprint – not merely exhaust emissions or carbon intensity carbon efficiency as well. of materials. This methodology accounts for both: a) total life-cycle emissions, including materials, production, use There are still several open questions with regards to how phase and end of life; and b) service delivered (as opposed to measure circularity. For instance, the difference between to kilometres driven). The entire automotive fleet’s carbon reuse, remanufacturing, high-quality recycling and downcycling efficiency should align with a 1.5°C climate scenario. options needs to be quantified. Resources consumed for streets, parking or fuel/energy creation could also be taken into account – though they are not addressed in this study.

Raising Ambitions: A new roadmap for the automotive circular economy 13 Levels of circularity

0 1 2 3 4 5

No Low Moderate High Full Net positivity circularity circularity circularity circularity circularity in system Past Today 2025 2030 2035 2040

Classic Product Aligned incentives Full circular value Silo optimization Ecosystem make-use-waste improvement and and life-cycle chain in as-a-service and sales focus optimization mentality better coordination optimization models

>5 <5 >150

<150 <4

<100 <50 <20 <0.5 <1.5 <0 <0

CarbonFIGURE efficiency 6 Measures for a circular carResource efficiency Life-cycle CO2e emissions [g]/passenger km Non-circular resource consumption [g]/passenger km

Making sense of circularity

Carbon efficiency Materials

Component production and assmebly CO2e linked to product End-of-life treatment

Exhaust-pipe emissions Life-cycle CO2e emissions (g) CO2e from use time Energy generation emissions

Passenger km Average # of passengers in the vehicle

Km driven over life cycle

Resource efficiency Non-circular material in the car Non-circular inflow/outflow determined by: – Total mass of the vehicle – Total scrap – Remanufactured inflow/outflow Non-circular resource consumption (g) Non-circular scrap – Recycled inflow/outflow (with downcycling factor)

Passenger km Average # of passengers in the vehicle

Km driven over life cycle

Source: Accenture Strategy. Notes: 1) including replacement components; 2) calculation analogous to non-circular material in the car

Raising Ambitions: A new roadmap for the automotive circular economy 14 3.2 The five levels of circularity – a proposed taxonomy to gauge and guide progress

The five-level taxonomy proposed here for The levels describe vehicles that are part of an automotive circularity ranges from single-owner increasingly circular automobility system. Each use and disposal (Level 0) to an aspirational goal level can be determined based on characteristics of an automobility ecosystem that has net positive of both the product and its use. Thus both the impacts (Level 5). producer and the owner of the car are responsible for achieving circularity.

FIGURE 7 Five levels of circularity in cars – overview

Levels of circularity 0 1 2 3 4 5

No Low Moderate High Full Net positivity circularity circularity circularity circularity circularity in system Past Today 2025 2030 2035 2040

Classic Product Aligned incentives Full circular value Silo optimization Ecosystem make-use-waste improvement and and life-cycle chain in as-a- and sales focus optimization mentality better coordination optimization service models

Renewable energy Alternative Carbon-neutral use Carbon-neutral Full energy grid Carbon-intensive in component drivetrains; CO Energy phase; low-carbon production and integration of 2 fuels production and low-carbon materials materials vehicles assembly production

Full “at level” Production scrap Recycled content High-quality Materials Linear value chain recycling and Upcycling of waste looping increased recycling loops transparency

Repair networks Modular design for Increased reman Purpose-built Second-life Lifetime Sales-driven model and used car upgradability and in aftermarket vehicles applications markets reman

On-demand Fleets dominate: Private ownership Mobility on demand Optimized mobility Private ownership services (cities); vehicles and mobility Use and leasing in breathing fleets system subscriptions on demand

Source: Accenture Strategy – developed during project

Raising Ambitions: A new roadmap for the automotive circular economy 15 Level 1 circularity – today’s reality

The value chain is mostly optimized for sales, focused on reducing product costs. Optimization is transactional and in isolation (e.g. reducing material scrap in production). Players 1 along the value chain are not coordinated, and incentives are narrow and misaligned.

A network of repair shops and Lifetime of Materials second-hand markets support lifetime Production scrap is recycled. components without waste extension. Repairs are conducted on a and vehicle per-event basis and cost case.

Assembly processes are shifted to Private car ownership with typical low CO2 Energy use renewable energy, reducing Scope Capacity use 1 carbon emissions. levels of use.

Carbon efficiency < 150g CO2 / pkm Resource efficiency < 5g resources / pkm

Today’s automotive system generally operates at this level of circularity. As a result, the automobility value chain is still characterized by high levels of waste and unnecessary carbon emissions.

Level 2 circularity – the next step

Use-phase emissions are improved, especially through 2 alternative drivetrains. Carbon emissions and to some extent resource consumption are reduced. Lifetime and use are enhanced through increased cross-value chain coordination.

Recycled content in materials is selectively increased. Cross-value Remanufactured components are chain collaboration to improve Lifetime of Materials used more in the aftermarket, and recycling and high-quality components without waste repairability of vehicles is improved recyclability. End-of-life processing and vehicle through design. is also more carefully considered during the design phase.

Alternative drivetrains reduce Cars in cities are increasingly used via use-phase carbon emissions with mobility-on-demand services, boosting CO2 Energy use Capacity use some decarbonization of materials use. Subscription-based solutions and production. begin to reach rural areas.

Carbon efficiency < 100g CO2 / pkm Resource efficiency < 4g resources / pkm

The seeds for a Level 2 circularity ecosystem have already been planted. Significant portions of our automobility system will probably reach Level 2 circularity by 2025.

Raising Ambitions: A new roadmap for the automotive circular economy 16 Level 3 circularity – transformational shift

3 Full vehicle life cycle is optimized, driven by a significant shift towards cars-as-a-service and fleet solutions. Incentives are aligned across the value chain.

High-quality end-of-life recycling is Modular design facilitates broadly implemented, enabled by Lifetime of upgradability, disassembly and Materials product passports and network components remanufacturing. Remanufactured without waste collaboration. Materials-as-a-service and vehicle components are, as far as possible, solutions align ecosystem incentives. used in new vehicle production.

Use phase is mostly carbon-neutral Subscription and on-demand services (as a result of alternative drivetrains dominate, and a significant share of

CO2 Energy use and renewable energy), and Capacity use vehicles are operated as part of a “true low-carbon materials and production fleet”. Fleet ownership increases technology are ubiquitous. incentives for circularity.

Carbon efficiency < 50g CO2 / pkm Resource efficiency < 1.5g resources / pkm

Level 3 represents a transformational shift away from the current automobility ownership and use model. It could start to characterize large portions of the mobility system by 2030. Individual cars and fleets could achieve this level sooner, through a shift to mobility-as-a-service (MaaS) and substantial cross-value chain alignment.

Level 4 circularity – end-to-end revolutionary change

The value chain is fully circular, with no waste – meaning zero carbon emissions and zero non-circular resources consumption. 4 Car design is closely coordinated with mobility providers and efficiency of use is optimized through fleet management. The full value chain, from design to recycling, is highly optimized.

100% of end-of-life materials are Design is highly optimized to reprocessed or recycled within Lifetime of application. A significant proportion Materials “same-quality”-level loops. components of vehicle content consists of without waste Transparency and traceability are and vehicle remanufactured components and ensured, with standardized, global recycled materials. product passports.

Material processing and production In cities, cars are part of multimodal platforms and all cars are fleet-based. CO2 Energy use are fully carbon-neutral, as is the Capacity use use phase. Use is optimized. Cars are no longer a consumer product, but a service.

Carbon efficiency < 20 CO2 / pkm Resource efficiency < 0.5g resources / pkm

To achieve Level 4 circularity, the value chain, market structure and vehicle are transformed – indeed they are hardly recognizable. This kind of revolution could characterize automobility by 2035–2040. Some elements of Level 4 circularity are already being pioneered by certain companies and research institutes. One challenge is achieving scale and building a new value chain to support Level 4 circularity. But with proper policy support, Level 4 circular cars could start to appear within the next few years.

Raising Ambitions: A new roadmap for the automotive circular economy 17 Level 5 circularity – net-positivity, part of a global circular economy

Cars help to optimize their surrounding ecosystem – improving system-level use of different transportation modes, upgrading materials and improving 5 energy grids. This means close integration and alignment with adjacent ecosystems and convergence of business models and services. The overall system is highly integrated, optimized and sustainable.

Suitable components of vehicles, such Lower-value materials or waste as electronics, motors or batteries, are streams from other industries (e.g. Lifetime of Materials enabled for external second-life end-of-life wind turbines) are components without waste applications at scale. Improving upcycled. Their utility is improved at and vehicle resource efficiency for other systems end of life. (beyond passenger km).

Car batteries are an integral Cars improve use of other modes of element of the energy grid and transport, through tight integration with CO2 Energy use Capacity use balance loads from renewable other mobility business models and energy generation at scale. aligned customer incentives.

Carbon efficiency < 0g CO2 / pkm Resource efficiency < 0g resources / pkm

Level 5 is an aspirational vision. Nevertheless, elements of it are already being tested and even in use today. Level 5 may be devel- oped in parallel with Levels 2–4 – and lower levels of circularity should not be considered as necessary intermediary steps. Some electric vehicles are already used to balance the grid and soak up renewable power that would otherwise go to waste. Through inspired industry leadership and supportive policy, clever business models and the ingenuity of automotive engineers, it is possible to achieve Level 5 circularity on a shorter time horizon than many would imagine.

Raising Ambitions: A new roadmap for the automotive circular economy 18 4 Next stop, a mobility revolution: pathways, solutions and business models There are four distinct but complementary strategies for increasing automotive circularity.

Raising Ambitions: A new roadmap for the automotive circular economy 19 4.1 Transformation pathways – key strategies towards circularity

Circularity This report defines a number of concrete pathways – Lifetime optimization – Extending vehicle and requires the for increasing circularity. These strategies have the component lifetimes. This pathway can be led implementation of potential to reduce carbon emissions by up to 75% by OEMs as well as by aftermarket service a set of solutions and non-circular resource consumption by up to providers. It requires close coordination and across the value 80% per passenger kilometre for a battery electric information exchange between producers and vehicle (BEV) (hatchback) by 2030 (achieving aftermarket servicers. Necessary interventions chain to achieve Level 3 circularity, compared to a 2020 internal on this path include modularizing vehicle environmental combustion engine vehicle/ICEV) (see Figure 8).6 design, strengthening workshops as circularity impact or to create hubs, scaling reuse and remanufacturing, business value. Operationalizing a circular economy is challenging and shifting to fleet-based and on-demand because its elements are so closely intertwined. mobility solutions. This pathway increases Often it is not worth pursuing individual solutions. per-vehicle passenger kilometres. It also Circularity requires the implementation of a set helps to reduce non-circular resource of solutions across the value chain to achieve consumption and carbon emissions. environmental impact or to create business value. – Utilization improvement – Drastically improving Potential transformation pathways consist of use of available capacity. This pathway is led clusters of interdependent solutions. Their by fleet operators and supported by OEMs implementation requires alignment across the and use-phase service partners. Purpose-built value chain. This orchestration can be driven by vehicles, fleets and vehicle/mobility on demand automotive OEMs, as well as by other players with solutions enable this pathway. This pathway an interest in making the full value chain circular. drives up per-vehicle passenger kilometres through improved use of seat capacity and Each pathway directly addresses one distinct increased operation, leading to dramatic variable related to circularity. increases in passenger kilometres delivered per vehicle per annum. – Energy decarbonization – A complete shift to renewable energy sources in the production and The improvements along these pathways are use phase. This pathway is led by the OEM, not always straightforward. For instance, the enabled by suppliers (through investments move away from combustion engines towards in low-carbon technologies) and supported electrification has the potential to significantly by the transformation of the energy system. reduce carbon emissions per passenger Decarbonization relies on significant investments kilometre, by up to 60%.7 This is dependent on in renewable energy sources, alternative decarbonization of electricity supply (with current drivetrains, low-carbon production processes average carbon intensity, the improvement is only and the integration of vehicles with the grid. This 9%).8 At the same time, non-circular resources pathway drives down carbon emissions. consumption increases with the shift to BEV by 20%. But if we account for the expected – Materials circularity – Achieving 100% circular longer lifetime of BEVs, non-circular resources material content (recycled or renewable consumption per passenger kilometre will decrease materials) and end-of-life processing (“same by 4% (BEV baseline vs. ICEV baseline – for both level” recycling). This process is led by OEMs baselines see Figure 8).9 and enabled by partners along the value chain (suppliers and end-of-life recyclers). It requires A balanced approach to all four pathways is adapting design for recyclability, investing in important. Investing heavily in only one pathway, materials and scrap recovery (in production and such as energy decarbonization, misses out on the at end of life), extensive reverse logistics and “low hanging fruits” of other pathways and might advanced recycling technologies, shifting to as- make improvements more costly. Also, the double a-service models for materials and components, benefit, of improving both carbon and resources and creating markets for and adequate stocks efficiency, should be appropriately considered – of all kinds of recycled materials. This pathway making utilization improvement, lifetime extension drives down non-circular resource consumption. and materials circularity ultimately complementary It can also positively affect carbon emissions. to energy decarbonization.

Raising Ambitions: A new roadmap for the automotive circular economy 20 FIGURE 8 Transformation pathways and potential solutions

Usage transition

Energy grid integration Level 5

Circular material stock

Energy decarbonizationLow-carbon materials Level 4

Component Product transformation Material circularity Alternative as-a-service Purpose-built vehicle drivetrains Modular End-of-life Level 3 vehicle design management Reuse and Low-carbon remanufacturing production Minimized at scale production scrap Workshops as a circularity hub Level 2 Mobility Lifetime optimization on demand Leasing and subscription Vehicle on demand Utlilization improvement

Level 1 Breathing fleets

Example solutions Positioning of circles represents high application level of solution

Source: Accenture Strategy analysis

FIGURE 9 Impact of transformation pathways on carbon and resources efficiency – for a Level 3 BEV hatchback by 2030 (baseline: Level 1 ICEV hatchback in 2020)

Level 3 impacts of pathways (2030) Carbon efficiency Resource efficiency shift from ICE hatchback (Level 1, 2020) Life-cycle CO2e emissions [g] / passenger km Non-circular resource consumption [g] / pkm to BEV hatchback (Level 3, 2030)

CO2 Energy decarbonization up to -60% around 0%

Material circularity up to -35% up to -75%

Lifetime optimization up to -35% up to -70%

Utlilization improvement up to -30% up to -50%

All four pathways combined up to -75% up to -80%

Source: Accenture Strategy analysis. Notes: ICEV hatchback (Level 1) with 1.70t weight (incl. repair components), 0.90t steel, 0.15t aluminium, 0.29t plastics, 200,000 life-cycle km and average occupancy of 1.5; BEV hatchback (Level 1) with 1.90t weight (including repair components), 0.70t steel, 0.19t aluminium, 0.32t plastics, 0.32t EV battery, 250,000 life-cycle km and average occupancy of 1.5

Raising Ambitions: A new roadmap for the automotive circular economy 21 FIGURE 10 Level 1 baseline carbon and resources efficiency for ICEV and BEV, both hatchback, in 2020

Carbon efficiency Resource efficiency Life-cycle CO2e [g] / passenger km Non-circular resource consumption [g] / passenger km

147 134 125 4.7 5.6 4.5

-9% -15% +20% -4%

Source: Accenture Strategy analysis. Notes: ICEV 86 hatchback (Level 1) with 119 1.70t weight (including 86 repair components), 0.90t steel, 0.15t aluminium, 0.29t plastics, 200,000 life-cycle km and average occupancy of 1.5; BEV With zero carbon hatchback (Level 1) with 49 electricity 1.90t weight (including 29 39 repair components), 0.70t steel, 0.19t aluminium, 0.32t plastics, 0.32t EV battery, ICEV BEV BEV ICEV BEV BEV +0% lifetime +25% lifetime +0% lifetime +25% lifetime 200,000/250,000 life-cycle km and average occupancy of 1.5; carbon intensity of Use phase Materials, assembly and end-of-life electricity based on current German energy mix

Raising Ambitions: A new roadmap for the automotive circular economy 22 4.2 Identified solutions and enablers – concrete actions for circularity

This report highlights 16 of the most promising future discussion and exploration. (Table 1 provides solutions for circularity. The following table a description of the 16 highlighted solutions.) provides an overview of these solutions and how they fit into the overarching levels of circularity Our research also identified some required enablers framework. Potential ranges for the carbon for these solutions to achieve their full impact. and resource efficiency improvements are also Together with the aforementioned solutions, they integrated. These ranges are, for the moment, help drive higher levels of circularity. An overview indicative and intended to serve as a basis for of these enablers can be found in Table 5 in the

TABLE 1 Overview of the most promising solutions for circularity

Solution Description

1 Low-carbon materials Recyclers and material suppliers deploy energy-efficiency measures and scale the use of renewable energy in the recycling of automotive materials. Where virgin materials cannot be replaced by recycled materials, new technologies are deployed to decarbonize energy-intensive processes in virgin material production.

2 Low-carbon OEMs and component suppliers deploy energy-efficiency measures and scale production the use of renewable energy in component production and vehicle assembly.

3 Minimized production OEMs and component suppliers collaborate with material suppliers to reduce scrap material scrap in production. Processes to optimize recycling rates and quality of unavoidable production scrap are established.

4 Modular vehicle OEMs and component suppliers integrate knowledge from repair and design recycling experts in the product development process. Cars are designed based on a modular concept that simplifies repair, disassembly and remanufacturing, and allows for refurbishment, component upgrades and purpose adjustments.

5 End-of-life OEMs, suppliers and recyclers work together to increase efficiency of management disassembly, sorting and reverse logistics processes and enable recovery at the highest possible value. Components and materials are channelled towards specialized facilities (e.g. remanufacturing plant, recycling facility).

6 Circular material A stock of material with fixed size is used and reused for cars. All materials stock are 100% recyclable (“same level recycling”). Waste (including downcycling) is reduced and materials are recycled at the highest level by specialized recyclers. A starting point is to establish circular stocks for selected materials (e.g. aluminium). Material-as-a-service enables closed-loop recycling of selected materials.

7 Component-as- Critical components – generally those with higher value – are sold as a a-service service, rather than as a product by OEMs. Batteries are an example of a high-value component with the potential for an extended life in automotive and non-automotive applications and closed-loop recycling at end of life. Probably, the focus will be on business to business (B2B) models with the battery manufacturer providing the battery to the OEM in a full-service model. The OEM sells the car including battery to the consumer and provides the guarantee for the service. Alternatively, OEMs could sell cars without batteries, allowing for aftermarket providers to provide and manage battery stocks.

Table 1 continues on the next page

Raising Ambitions: A new roadmap for the automotive circular economy 23 Solution Description

8 Reuse and OEMs, component suppliers (original equipment and independent aftermarket) remanufacturing at and workshops push for a vivid reuse and remanufacturing market. Necessary scale technologies are improved, processes automated and large-scale facilities established to increase cost-competitiveness. Reused, remanufactured or retreaded components are the default option in the aftermarket. Remanufactured components are introduced in new car production.

9 Workshops as a Workshops take a central role in optimizing the life cycle of cars and circularity hub components. Workshops increase cost efficiency, optimize maintenance services based on predictive analytics and use remanufactured parts as the default option.

10 Purpose-built vehicle OEMs provide purpose-built/purpose-adjusted vehicles to mobility providers that enable improved capacity use and optimized vehicle lifetime. OEMs assess use phase requirements and employ the insights from this to provide vehicle variations that better align vehicles with their purpose, especially in terms of size, repairability and durability.

11 Alternative drivetrain OEMs scale alternative drivetrain solutions with substantially lower – ultimately zero – exhaust emissions to reduce use phase emissions. Drivetrain optimization considers the full market picture – i.e. energy use of the full vehicle portfolio on the streets and available supply of green energy (e.g. renewable electricity, green hydrogen).

12 Energy grid OEMs scale smart charging and vehicle-to-grid (V2G) technology for battery- integration electric vehicles, plug-in hybrids and fuel cell-electric vehicles. Emissions from electricity generation in electric mobility (well-to-tank) are reduced and cars help to balance loads in the energy grid. Fleet management companies (mobility services, financial services) make use of this integration for their fleets.

13 Leasing and OEMs and fleet management companies (mobility services, financial services) subscription increase their offerings for fleet-based private mobility. New forms of ownership align incentives for value chain players to the principles of a circular economy. The most prominent models in this area to date are (lifetime-) leasing and subscription-based ownership, which have the potential to transform the automotive market at scale to as-a-service models.

14 Vehicle on demand Mobility service providers increase capacity use of vehicles by offering vehicles on demand to customers. A variety of on-demand solutions are already on the market, including car rental, car sharing, P2P sharing and micro mobility. The consolidation of these business models into holistic vehicle on-demand offerings that integrate different rental durations or vehicle types enables scaling of these models.

15 Mobility on demand Mobility service providers increase capacity use through mobility-on-demand solutions. To date, these business models include ride hailing, ride sharing and demand-responsive transport/ride pooling. Ride pooling in particular has the potential to optimize capacity use of the vehicle by increasing the life- cycle kilometre per vehicle as well as the number of average passengers.

16 Breathing fleets Fleet management companies increase capacity use of their fleets by sharing the fleet across multiple service offerings. Depending on demand cycles (e.g. weekends vs. workdays) and age/quality requirements, cars are shifted from one service offering to another, thereby achieving higher-capacity use for each car over its life cycle.

Source: Accenture Strategy analysis, based on interviews and research

Raising Ambitions: A new roadmap for the automotive circular economy 24 4.3 Case studies

CASE STUDY Swapping platform and battery-as-a-service – Ample and NIO

Batteries enable the entire low-carbon energy platform that delivers a full charge to any electric system, including electric cars. At the same car in minutes through battery swapping. Ample time, they are expensive and carbon-intensive uses autonomous robotics and smart-battery to produce. Accordingly, the trend of ever- technology to swap batteries. Its “pods” filled increasing electric vehicle (EV) ranges is not with batteries can absorb energy from the grid necessarily environmentally desirable and when it is cheap or particularly low-carbon, and increases EV cost unnecessarily. Viewing dispense it faster than much more costly fast- batteries through a component-as-a-service charge systems. The approach also reduces lens and managing them via fleets allows for consumer risk by eliminating battery ownership a more economically rational, inclusive and and potentially enables the consumer to use environmentally friendly approach to electrification. shorter-range batteries for urban commuting while accessing long-range batteries for extended trips A major enabler of this system is battery swapping: – thus significantly reducing the total number of where consumers no longer own their battery, but kilowatt hours required to run a fleet. Uber recently pay for electricity and battery use by subscription revealed that it is closely collaborating with Ample, or the mile. This approach is being widely adopted in China by companies including NIO, which has using Ample’s battery-swapping stations as part just completed its 1 millionth battery swap in a of Uber’s 2040 zero-emission fleet strategy. Ample consumer vehicle. is collaborating with asset financiers and fleets to optimize its battery-as-a-service model. The Another example is Ample, a San Francisco-based company emphasizes the importance of designing start-up that has invented a rapidly deployable batteries for second-life use and high recyclability.

Raising Ambitions: A new roadmap for the automotive circular economy 25 CASE STUDY Green workshop: use extension and recycling one-stop shop – Nexus

Nexus Automotive International is an international The green workshop could play a central role in a alliance of car and truck parts suppliers and circular automotive industry by optimizing the life distributers in the automotive aftermarket. Nexus cycle of cars, components and materials. Nexus is functions as a platform for its members to organize planning to develop a digital ecosystem to connect bulk purchases of aftermarket components vehicle owners with green workshop members and supports projects in the areas of industry and suppliers, in order to support innovative innovation and training. It is developing a concept approaches to predictive maintenance, to provide it calls the “green workshop” – a new, eco- special offers and services for remanufactured responsible way to approach car maintenance and parts and to support collaboration and knowledge support sustainable development for entrepreneurs exchange in the areas of renewable energy in the aftermarket. procurement or end-of-life collection.

CASE STUDY Factory transformation – Renault

As part of a major restructuring programme, In 2020, about 2,600 employees worked in Flins. Renault has announced that it plans to phase out The transformation strategy for the plant will new vehicle production at its oldest manufacturing enable Renault to protect the majority of jobs while plant in Flins near Paris. Instead, the factory will be reducing capacity, costs and pivoting towards transformed into a “circularity ecosystem”. It will increased circularity of its products and services. focus on manufacturing prototypes, reconditioning old vehicles and remanufacturing used parts – including EV batteries.

Raising Ambitions: A new roadmap for the automotive circular economy 26 5 Raising ambitions for a circular cars agenda It is time for automotive players to embrace a systemic approach to circularity.

Raising Ambitions: A new roadmap for the automotive circular economy 27 The five-level circularity taxonomy is explicitly – Developing data-sharing standards across the directed at addressing the exigencies of climate value chain change and economic inequality. This will require a reimagination of the system that is both Part of realizing this vision also includes: profound and should be inspiring. Members of the automobility ecosystem need to raise – Agreeing on concrete thresholds for levels of their ambition and, with the support of policy- circularity makers, build a new automobility ecosystem that seeks not merely to do less harm but rather – Providing data basis and methodology to enable a bright new world of possibilities. to evaluate the degree of recovery of different circular loops such as reuse, repair, Some of the main actions required to do this remanufacture and recycle include: – Developing a life-cycle “car governance – Developing and aligning common measures framework” that helps to orchestrate the regarding circularity in the automotive value chain actions taken by players and enables optimal application levels of different solutions across – Testing and developing potential solutions in the life cycle cross-industry initiatives and at scale

Key recommendations of this report:

For industry and value-chain ecosystem: – Consider two pathways for material recovery (in reuse, remanufacturing, recycling): – Develop strategies to enable increased data transparency and information-sharing with – An ICE pathway aimed at efficiently other players along the automobility supply decommissioning vehicles chain up to, and perhaps including, joint standards – An EV pathway aimed at life-extension, second-life battery use and finally recycling – Carefully examine which aspects of your business can be transitioned to “as-a-service” – In order to accelerate technological business models and what regulatory/systemic development and achieve scale, enable enablers are necessary industry consortium efforts to invest in: materials and energy decarbonization; – Design vehicles with full life-cycle value advanced recycling technology; flexible optimization in mind (including end-of-life production technology (e.g. 3D printing); disposal). Consider especially what role alternative drivetrains; product passports; and modularity can play mobility platform

– Explore coordinated investments in – Re-examine the underlying premise of anti-trust breakthrough technologies: materials and regulation and how it fits into a world of scaling energy decarbonization; advanced recycling clean technologies, as this task will require technology; flexible production technology (e.g. immense collaboration across the supply chain 3D printing); alternative drivetrains; product and between competitors passports; and mobility platforms – Establish carbon pricing schemes that also aim – Consider the impacts of autonomous driving to prevent carbon leakage at a global scale to post 2030 properly price in the costs of carbon emissions to mobility and traffic For policy-makers: – Incentivize leasing and subscription services – Prioritize the greatest opportunities and vehicle on-demand services for decarbonization first while considering economic, social and other environmental trade-offs

– Proactively enable data transparency and sharing efforts throughout the automobility value-chain actors, as well as among vehicles and fleets

Raising Ambitions: A new roadmap for the automotive circular economy 28 6 Next steps for the Circular Car Initiative Achieving circularity is not a one-time effort – it requires intensive collaboration from the automotive industry over the coming years and decades.

Raising Ambitions: A new roadmap for the automotive circular economy 29 The Circular Car The Circular Car Initiative is set out as 2. Establishment of an “Automotive Initiative aims to lay a multi-year initiative for private and Circularity Board” the foundation for public stakeholder collaboration. concrete actions With the foundation of an “Automotive Circularity and the further Throughout 2020, the initiative’s 40-plus member Board”, the initiative will elevate automotive companies helped to establish a common basis circularity to the C-level agenda, channel establishment for understanding circularity in the automotive investment needs and form a common voice of relevant sector through half a dozen workshops and more with regard to third-party institutions. methodology to than 50 in-depth interviews. During the interviews realize the shared and workshops, it became apparent that there 3. Running of a pilot project programme vision of a circular is a great interest in working on concrete pilot car industry. projects in the future to overcome barriers and Pilot projects will aim to achieve proofs of restrictions that currently prevent the industry concept for specific solutions as pieces of from operating in a more circular way. the puzzle. Throughout the workshops and interviews in 2020, a set of around 20 potential For 2021, the initiative will focus on three key areas: pilot projects were identified. Some of these pilot project ideas will be taken forward by member 1. Operationalization of Accenture’s companies throughout 2021 and supported by circularity taxonomy, transformation the Circular Cars Initiative. Figure 11 provides pathways and solutions a first view on these pilot project ideas.

The proposed five-level taxonomy, four The Circular Car Initiative aims to lay the foundation transformation pathways and 16 solutions for for concrete action and the further establishment circular cars need to be detailed and operationalized. of relevant methodology to realize a shared vision for a circular automotive industry. FIGURE 11 Overview of pilot project ideas (non-exhaustive)

Blockchain solution for sustainable plastics Battery metals as-a-service Digital direct manufacturing Currently low Test blockchain High value component Proof of concept for New production Test benefits of micro transparency and low solution, enable with risk for vehicle feasibility and technologies such as factories, e.g. for traceability of plastics better recyclability residual value economic viability 3D printing available mobility-as-a-service

Efficient secondary materials markets Local circular car pilot with a city Assembly Most materials Create marketplace Economic and social Test holistic set of currently downcycled and enable higher- Component Distribution value of full circularity measures in a closed after disassembly value loops manufacturing unproven environment

Design Material Use phase processing

Best-practice disassembly and recycling Shared commercial fleet Resource Cars are often only Detail and coach best recovery Capacity use of Proof of concept for stripped for most methods of disassembly commercial vehicles shared company Collection valuable components and recycling often low /commercial pools

Closing the loop for end-of-life vehicles Green workshop Second life as-a-service Only 60–70% of fleet Develop strategies to Workshops will need Increase vehicle Mobility services Test customer enters recycling close the gap on a to play major role in lifetime and prioritize mainly supplied by acceptance and infrastructure global scale enabling circularity circular inputs costly new cars increase residual value

Transformation pathways: Energy decarbonization Material circularity Lifetime optimization Utlilization improvement

Source: Input collected during workshops and interviews

Raising Ambitions: A new roadmap for the automotive circular economy 30 FIGURE 12 Example pilot project idea: green workshop

Green workshop

Solution: Transformation pathways: Impact on measures: – Workshops as a – Materials circularity – Decrease non-circular materials in the car circularity hub – Lifetime optimization – Decrease CO2 from materials – Increase life-cycle km

Pilot objective Enablers and synergies – The objective is to pilot how workshops can serve as a circularity – Digital ecosystem that connects vehicle owners through a green hub, aiming for maximum vehicle lifetime and prioritizing circular workshop network to the broader mobility community inputs over new parts

Owners and contributors of pilot Benefits – Owner: NEXUS, potentially further partners – Environmental benefit from longer lifetime of cars and from – Contributors: supplier, OEMs, aftermarket, fleet operators increased use of remanufactured components

Next steps Barriers 1. Define the characteristics of a green workshop – Need for advanced technology for automization and 2. Transform one workshop into a green workshop and document predictive maintenance the transformation as an example of best practice – Upskilling of workers with respect to battery electric vehicles 3. Understand customer acceptance of the green workshop concept 4. Discuss how to scale the number of green workshops

Raising Ambitions: A new roadmap for the automotive circular economy 31 Appendix: Solutions and pathways

The solutions and pathways can be distilled into Components-as-a-service: component leasing five business-model archetypes or pay-per-use models, as well as materials-as- a-service. Five circular-economy business-model archetypes offer a comprehensive view of how a fully circular Sharing platforms: peer-to-peer car sharing, as value chain in the automotive sector might look well as peer-to-peer ride hailing or sharing. (see Table 2). Product use extension: through maintenance, The archetypes are: refurbishment or used car sales; at the component level resale and reuse, and remanufacturing/ Circular inputs: using renewable, recycled, repurposing. recyclable materials, as well as renewable energy/fuel. Resource recovery: closed-loop recycling of Product-as-a-service, including: manufacturing scrap and end-of-life vehicles, but also open-loop recycling or even energy recovery. Cars-as-a-service: such as corporate and consumer leasing, car rental and sharing, as well as ride hailing and sharing.

TABLE 2 Archetypes, business models, solutions/enablers and pathways

Product Product Business model Circular Sharing Resource -as-a- use archetypes inputs platforms recovery service extension

– Modular vehicle design – Component – Low-carbon material – End-of-life logistics -as-a-service – Energy grid integration – Minimized production – Low-carbon production Reuse and – Leasing and subscription – Vehicle on demand – scrap Solutions – Circular material stock remanufacturing at scale – Vehicle on demand – Mobility on demand – End-of-life logistics – Alternative drivetrain – Workshops as a – Mobility on demand – Breathing fleets – Circular material stock – Energy grid integration circularity hub – Breathing fleets – Purpose-built vehicle

– Recoverable and recyclable materials – Recoverable and – Product passport recyclable materials – Product passport – Advanced recycling – Product passport technology and – Autonomous driving – Autonomous driving – Advanced recycling Enablers – Balanced production infrastructure – Mobility platform – Mobility platform technology and capacity – Market maker for infrastructure circular inputs – Market maker for – Renewable energy at circular inputs scale

Transformation – Energy decarbonization – Utilization improvement – Utilization improvement – Lifetime optimization – Materials circularity pathways – Materials circularity – Materials circularity

Source: Accenture Strategy

Raising Ambitions: A new roadmap for the automotive circular economy 32 Details on solutions and enablers:

TABLE 3 Overview of solutions and enablers, matched to pathways and levels

Levels of circularity 1 2 3 4 5

Energy – Low carbon production – Low-carbon materials – Renewable energy CO – Energy grid integration 2 decarbonization – Alternative drivetrain at scale

– Minimized production scrap – Workshops as a circularity hub – Leasing and – Circular material stock Materials subscription – Component-as-a-service – Product passport circulation – Vehicle on demand – End-of-life logistics – Market maker for – Recoverable and circular inputs recyclable materials – Advanced recycling technology and infrastructure

– Workshops as a – Reuse and – Purpose-built vehicle Lifetime circularity hub remanufacturing – Market maker for circular inputs optimization – Leasing and at scale subscription – End-of-life logistics – Balanced production – Vehicle on demand – Modular vehicle design capacity: new vs. reman

– Breathing fleets – Purpose-built vehicle Utilization – Mobility platforms – Vehicle on demand – Mobility on demand improvement – Balanced production capacity: small vs. large-scale

Normal text: Solution; Bold text: Enabler

Source: Accenture Strategy analysis, based on interviews and research

Raising Ambitions: A new roadmap for the automotive circular economy 33 TABLE 4 Descriptions of selected solutions

Solution Description Impact description

1 Low-carbon materials Recyclers and material suppliers This solution focuses on decarbonizing deploy energy efficiency measures and energy use in material recycling as Business model scale the use of renewable energy in well as in virgin material production – Circular inputs the recycling of automotive materials. (where recycling does not represent Where virgin materials cannot be a feasible solution). This can help Definition element replaced by recycled materials, lower CO2 from materials. In fact, this – Energy use new technologies are deployed solution will eliminate the CO2 that is Measure to decarbonize energy-intensive not abated by the solution “circular – Carbon efficiency: processes in virgin material production. material stock”. It is assumed that CO2 from materials by combining this solution with the solution “circular material stock”, 100% of CO2 from materials can be abated.

2 Low-carbon production OEMs and component suppliers This solution focuses on decarbonizing deploy energy efficiency measures energy use in component production Business model and scale the use of renewable and assembly. CO2 emissions – Circular inputs energy in component production from production and assembly and vehicle assembly. that are caused by the current Definition element energy mix are eliminated. – Energy use

Measure – Carbon efficiency: CO2 from component production and assembly

3 Minimized production scrap OEMs and component suppliers This solution focuses on minimizing collaborate with material suppliers to production scrap and increasing Business model reduce material scrap in production. recycling rates where production – Resource recovery Processes to optimize recycling scrap cannot be avoided. The rates and quality of unavoidable reduction of total production scrap Definition element production scrap are established. leads to a reduction in CO2 from – Materials materials. Improved recycling of Measure production scrap reduces the amount – Carbon efficiency: of non-circular outflows per car. CO2 from materials – Resource efficiency: Total scrap, % non-circular outflow

4 Modular vehicle design OEMs and component suppliers The modular design achieved by this integrate knowledge from repair solution makes repair, maintenance Business model and recycling experts in the product and upgrades of outdated parts or – Product-use extension development process. Cars are systems economically viable, thereby designed based on a modular concept enabling longer use time (measured Definition element that simplifies repair, disassembly in life-cycle km). Total material use – Materials and remanufacturing, and allows for and CO2 from material increases Measure refurbishment, component upgrades slightly due to more replacement – Carbon and resource efficiency: and purpose adjustments. parts used over the life cycle. km driven over life cycle

– Carbon efficiency: CO2 from materials, CO2 from component production and assembly, CO2 from end-of life treatment – Resource efficiency: total material in the car, total scrap

Table 4 continues on the next page

Raising Ambitions: A new roadmap for the automotive circular economy 34 Solution Description Impact description

5 End-of-life management OEMs, suppliers and recyclers work This solution improves circularity of together to increase efficiency of outflows from end-of-life vehicles. Business model disassembly, sorting and reverse Non-circular car outflows are – Resource recovery logistics processes and enable reduced, resulting in lower CO2 – Product use extension recovery at the highest possible from end-of-life treatment. value. Components and materials Definition element are channelled towards specialized – Materials facilities (e.g. remanufacturing – Lifetime plant, recycling facility). Measure – Carbon efficiency: CO2 from end-of-life treatment – Resource efficiency: % non-circular outflow

6 Circular material stock A stock of material with fixed size is In the assumed best-case scenario used and reused for cars. All materials of this solution, 100% of materials Business model are 100% recyclable (“same value in a car are circular. This means that – Product-as-a-service loop recycling”). Waste (including non-circular car inflows and non- – (Circular inputs) downcycling) is reduced and materials circular car outflows are eliminated. – (Resource recovery) are recycled at the highest level by CO2 from materials is strongly specialized recyclers. A starting point reduced to lower carbon intensity Definition element is to establish circular stocks for of recycled materials. CO2 from – Materials selected materials (e.g. aluminium). end-of-life treatment is reduced. Measure Materials-as-a-service enables closed- – Carbon efficiency: loop recycling of selected materials. CO2 from materials – Resource efficiency: % non-circular inflow, % non-circular outflow

7 Component-as-a-service Critical components – generally The solution modelling focuses those with higher value – are sold as on battery-as-a-service as a main Business model a service, rather than as a product example. In the assumed best-case – Product-as-a-service by OEMs. Batteries are an example scenario, 100% of battery materials – (Circular inputs) of a high-value component with are circular. Non-circular car inflows – (Resource recovery) the potential for an extended life and non-circular car outflows are in automotive and non-automotive reduced respectively. CO2 from Definition element applications and closed-loop recycling materials is reduced to lower carbon – Materials at end of life. Probably, the focus will intensity of battery materials. CO2 – Lifetime be on business-to-business (B2B) from end-of-life treatment is reduced. Measure models, with the battery manufacturer – Carbon efficiency: providing the battery to the OEM CO2 from materials in a full-service model. The OEM – Resource efficiency: sells the car including battery to the % non-circular inflow, consumer and provides the guarantee % non-circular outflow for the service. Alternatively, OEMs could sell cars without batteries, allowing aftermarket providers to supply and manage battery stocks.

8 Reuse and remanufacturing at scale OEMs, component suppliers This solution focuses on scaling (original equipment and independent remanufactured inflows and outflows. Business model aftermarket) and workshops push for As reman shares of inflows and – Product use extension a vibrant reuse and remanufacturing outflows increase, non-circular car Definition element market. Necessary technologies are inflows and non-circular car outflows – Lifetime improved, processes automated are reduced respectively. CO2 from and large-scale facilities established materials is reduced due to lower Measure to increase cost-competitiveness. carbon intensity of reman components. – Carbon efficiency: Reused, remanufactured or CO2 from materials retreaded components are the – Resource efficiency: default option in the aftermarket. % non-circular inflow, Remanufactured components are % non-circular outflow introduced in new car production. Table 4 continues on the next page

Raising Ambitions: A new roadmap for the automotive circular economy 35 Solution Description Impact description

9 Workshops as a circularity hub Workshops take a central role in This solution models the positive optimizing the life cycle of cars and impacts workshops can have on non- Business model components. Workshops increase circular resource consumption and life- – Product use extension cost efficiency, optimize maintenance cycle carbon emissions. It is assumed services based on predictive that optimized maintenance enables Definition element analytics and use remanufactured longer lifetime of vehicles (measured – Lifetime parts as the default option. in life-cycle km). The increased use of Measure remanufactured components instead of – Carbon and resource efficiency: new components reduces non-circular km driven over life cycle car inflows and reduces CO2 from – Carbon efficiency: materials due to lower carbon intensity CO2 from materials of remanufactured components. Resource efficiency: % non-circular inflow

10 Purpose-built vehicle OEMs provide purpose-built/purpose- As seat capacity usage rates for adjusted vehicles to mobility providers vehicles today are low, the average Business model that enable improved capacity use purpose-built vehicle is assumed – Product use extension and optimized vehicle lifetime. OEMs to be considerably smaller than the assess use phase requirements average vehicles today. This can Definition element and use insights to provide vehicle lead to a reduction of total materials – Lifetime variations that better align vehicles in the car and a respective reduction – Usage with their purpose, especially in terms of CO2 from materials, CO2 from Measure of size, repairability and durability. component production and assembly – Carbon and resource efficiency: and CO2 from end-of-life treatment. km driven over life cycle – Carbon efficiency: CO2 from materials, CO2 from component production and assembly – Resource efficiency: total mass of the vehicle, total scrap % non-circular inflow

11 Alternative drivetrain OEMs scale alternative drivetrain The impact is modelled based on solutions with substantially lower – a battery-electric vehicle (BEV). Business model ultimately zero – exhaust emissions to Transitioning from the internal – Circular inputs reduce use phase emissions. Drivetrain combustion engine vehicle (ICEV) to optimization considers the full market the BEV reduces exhaust emissions to Definition element picture – i.e. energy use of the full zero. Emissions from energy generation – Energy use vehicle portfolio on the streets and probably increase depending on the Measure available supply of green energy (e.g. energy mix of the local grid. CO2 – Carbon efficiency: renewable electricity, green hydrogen). emissions from materials, component CO2 from materials, exhaust production and assembly and end-of- emissions, energy generation life treatment are assumed to increase emissions due to the higher weight of the BEV – Resource efficiency: and the production of the battery. total mass of the vehicle, % non- circular inflow, % non-circular outflow

12 Energy grid integration OEMs scale smart charging and It is assumed that due to optimum vehicle-to-grid (V2G) technology integration of car and energy grid, cars Business model for battery-electric vehicles, plug-in are charged when renewable energy – Sharing platform hybrids and fuel cell-electric vehicles. is available, thereby reducing the CO2 – Circular inputs Emissions from electricity generation emissions from energy generation. in electric mobility (well-to-tank) are Definition element reduced and cars help to balance – Energy use loads in the energy grid. Fleet – Usage management companies (mobility Measure services, financial services) make use – Carbon efficiency: of this integration for their fleets. energy generation emissions

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Raising Ambitions: A new roadmap for the automotive circular economy 36 Solution Description Impact description

13 Leasing and subscription OEMs and fleet management This solution models the positive companies (mobility services, financial impacts workshops can have on non- Business model services) increase their offerings for circular resource consumption and life- – Product-as-a-service fleet-based private mobility. New cycle carbon emissions. It is assumed forms of ownership align incentives for that optimized maintenance enables Definition element value chain players to the principles longer lifetime of vehicles (measured – Lifetime of a circular economy. The most in life-cycle km). The increased use of Measure prominent models in this area to date remanufactured components instead of – Carbon and resource efficiency: are (lifetime-) leasing and subscription- new components reduces non-circular km driven over life cycle based ownership that have the car inflows and reduces CO2 from potential to transform the automotive materials due to lower carbon intensity market at scale to as-a-service models. of remanufactured components.

14 Vehicle on demand Mobility service providers increase This solution focuses on vehicles capacity use of vehicles through that are shared by a variety of users Business model offering vehicles on demand to for short periods and are managed – Product-as-a-service customers. A variety of on-demand as part of a fleet. It is assumed that – Sharing platform solutions are already on the market, the shared vehicle is treated more including car rental, car sharing, inconsiderately but receives better Definition element P2P sharing and micro mobility. maintenance, repair and refurbishment – Lifetime The consolidation of these business compared to a privately owned – Usage models into holistic vehicle on- vehicle. Capacity use (in average Measure demand offerings that integrate km/year) is increased. Overall, an – Carbon and resource efficiency: different rental durations or vehicle increase in lifetime (measured in km driven over life cycle types enables scaling these models. life-cycle km) can be achieved.

15 Mobility on demand Mobility service providers increase This solution focuses on vehicles used capacity use through mobility on- by drivers in mobility-as-a-service Business model demand solutions. To date, these applications. Maintenance, repair – Product-as-a-service business models include ride and refurbishment are assumed to – Sharing platform hailing, ride sharing and demand- be optimized compared to a privately responsive transport/ride pooling. owned vehicle. Capacity use (in Definition element Ride pooling in particular has the average km/year) is increased. Overall, – Lifetime potential to optimize capacity use of an increase in lifetime (measured – Usage the vehicle through increasing life- in life-cycle km) can be achieved. Measure cycle km per vehicle as well as the In addition, the average number of – Carbon and resource efficiency: number of average passengers. passengers can be increased. km driven over life cycle, average # of passengers in the vehicle

16 Breathing fleets Fleet management companies increase This solution focuses on the optimized capacity use of their fleets through use management of car fleets. Business model sharing the fleet across multiple service Capacity use (in average km/year) is – Product-as-a-service offerings. Depending on demand cycles also increased, compared to using – Sharing platform (e.g. weekends vs. workdays) and age/ “vehicle-on-demand” and “mobility-on- quality requirements, cars are shifted demand” solutions separately. Overall, Definition element from one service offering to another, an increase in lifetime (measured in – Usage thereby achieving higher capacity life-cycle km) can be expected. Measure use for each car over its life cycle. – Carbon and resource efficiency: km driven over life cycle

Raising Ambitions: A new roadmap for the automotive circular economy 37 TABLE 5 Descriptions of selected enablers

Enabler Description Supported solutions

1 Recoverable and OEMs, component suppliers and – Circular material stock recyclable materials material suppliers collaborate and combine knowledge of the vehicle – Component-as-a- Business model design process to improve material service (e.g. battery) – Circular inputs recoverability and recyclability. The – Resource recovery variability and complexity of the material mix in a car is reduced, and new Definition element innovative materials are developed. – Materials

Measure – Carbon efficiency: CO2 from materials – Resource efficiency: % non-circular inflows, % non- circular outflows

2 Product passport OEMs, component and material – Circular material stock suppliers and recyclers collaborate in Business model the development and implementation – Component-as-a- – Product use extension of a product passport for vehicles and/ service (e.g. battery) – Resource recovery or components and materials. Relevant – Optimized component reuse – (Circular inputs) information (e.g. origin, material and remanufacturing composition) is shared to optimize Definition element reuse, improve recycling rate and – Materials – Professional EOL collection, quality, and enable better traceability. – Lifetime sorting and reverse logistics

Measure – Carbon efficiency: CO2 from materials, CO2 from end-of-life treatment – Resource efficiency: % non-circular inflows, % non-circular outflows

3 Advanced recycling technology Research organizations, chemical – Circular material stock and infrastructure companies and recyclers develop advanced recycling technologies to – Component-as-a- Business model improve recycling rates and the quality service (e.g. battery) – Resource recovery of recycled materials from end-of-life – (Circular inputs) cars. Players from the automotive industry (especially OEMs, material Definition element suppliers) integrate their practical – Materials knowledge, explore options for co- Measure funding and support pilot projects. – Carbon efficiency: CO2 from materials, CO2 from end- of-life treatment – Resource efficiency: % non-circular inflows, % non-circular outflows

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Raising Ambitions: A new roadmap for the automotive circular economy 38 Enabler Description Supported solutions

4 Market maker for circular inputs OEMs, material suppliers or recyclers – Circular material stock to develop a platform that improves Business model transparency for disassembly and – Component-as-a- – Circular inputs recycling and matches supply and service (e.g. battery) – (Resource recovery) demand for circular inputs (e.g. – Optimized component reuse – (Product use extension) remanufactured components, recycled and remanufacturing material). A two-sided platform Definition element connects all interested value-chain – Materials players. Recovery-relevant product – Lifetime specification as well as available Measure and required volumes of circular – Carbon efficiency: inputs are shared. Circular inputs CO2 from materials can be traded via the platform. – Resource efficiency: % non-circular inflows, % non-circular outflows

5 Balanced production capacity OEMs and component suppliers – Modularity for life-cycle optimization optimize production capacities for Business model long-term success in a circular – Purpose-built vehicle – Product use extension automotive industry. Large-scale – Vehicle on demand and small-scale production as well Definition element as new car/component production – Usage – Mobility on demand and remanufactured/refurbishment Measure facilities are balanced depending – Carbon and resource efficiency: on local demand. Overproduction km driven over life cycle of new cars is avoided, thereby reducing pressure for new car sales and supporting the success of new business models focused on product- use extension or product-as-a-service.

6 Renewable energy at scale Energy providers increase the supply – Low-carbon materials of renewable energy for production Business model and vehicle charging (e.g. clean – Low-carbon production – Circular inputs electricity, green hydrogen) to – Alternative drivetrain decarbonize emissions from energy Definition element generation. Governments invest in – Energy use national infrastructure and increase Measure incentives for renewable energy – Carbon efficiency: production and storage solutions. CO2 from materials, CO2 Energy providers, OEMs and mobility from component production services collaborate in the development and assembly, energy of low-carbon production solutions and generation emissions renewable charging infrastructure.

7 Autonomous driving OEMs, national and local – Vehicle on demand governments integrate autonomous Business model driving in future mobility scenarios. – Mobility on demand breathing fleets – Product-as-a-service Autonomous driving will accelerate – Sharing platform the distribution of vehicle-on-demand and mobility-on-demand business Definition element models and enable the uptake of – Usage these business models at scale. Measure – Carbon and resource efficiency: km driven over life cycle, average # of passengers in the vehicle

Table 5 continues on the next page

Raising Ambitions: A new roadmap for the automotive circular economy 39 Enabler Description Supported solutions

8 Mobility platform Mobility providers combine different – Vehicle on demand services (e.g. vehicle on demand, Business model mobility on demand, micro mobility, – Mobility on demand breathing fleets – Product-as-a-service public transport) in one multimodal – Sharing platform platform. Customers are encouraged to take the greenest route where sensible. Definition element – Usage

Measure – Carbon and resource efficiency: km driven over life cycle, average # of passengers in the vehicle

Source: Accenture Strategy analysis, based on interviews and research

Raising Ambitions: A new roadmap for the automotive circular economy 40 Contributors

Alexander Holst Managing Director, Accenture, Germany

Peter Lacy Senior Managing Director, Accenture, United Kingdom

Juergen Reers Managing Director, Accenture, Germany

Axel Schmidt Senior Managing Director, Accenture, Germany

Levi Tillemann Lead, Circular Cars Initiative, World Economic Forum

Christoph Wolff Global Head of Mobility and Member of the Executive Committee at the World Economic Forum

Accenture Project Team

Wolfgang Machur, Germany

Marius Peters, Germany

Franziska Zengerle, Germany

Maximilian Krempel, Germany

Raising Ambitions: A new roadmap for the automotive circular economy 41 Acknowledgements

The authors would like to thank the following LANXESS interview partners for their insights, which have contributed to the findings of this study: Laudes Foundation

Accenture LeasePlan Corporation

Agence de l’Environnement et de la Maîtrise de LM Industries l’Énergie (ADEME) Local Motors Agora Energiewende Macquarie Group ALBIS PLASTIC Maxion Wheels Alvance Aluminium Group McKinsey & Company Ample Michelin ArcelorMittal Microsoft AUDI National Institute for Public Health and the Bax Environment (RIVM)

BMW Bayerische Motoren Werke NEXUS Automotive International

Bridgestone Polestar Automotive

CEA Premier Info

Centre for Excellence for Low Carbon and Fuel Cell RISE Research Institutes of Sweden Technologies (CENEX) Riversimple Climate-KIC Ruchi Soya Industries ClimateWorks Foundation SBB CFF FFS Columbia University SIXT Corporación Gestamp Sofies Covestro Solvay Daimler Stena DeepGreen Metals SYSTEMIQ Deme Group TDI Sustainability ECODOM Umicore EN+ GROUP IPJSC United Nations Economic Commission for Europe European Climate Foundation (UNECE) European Remanufacturing Council Vito FreeNow Volkswagen Gemini Corporation Volvo Cars Gränges WISE Europa Groupe Renault World Business Council for Sustainable Honda Motor Development (WBCSD)

International Energy Agency WWF International

International Resource Panel ZF Friedrichshafen

Raising Ambitions: A new roadmap for the automotive circular economy 42 Endnotes

1. Accenture Strategy analysis based on (most relevant sources): ADAC and Joanneum Research, “Elektroautos Brauchen Die Energiewende: Die Klimabilanz”, 2019; Argonne National Laboratory, “GREET. Vehicle-Cycle Model, 2020”; European Environment Agency, “Car Occupancy Rates”, 2 September 2010: https://www.eea.europa.eu/data-and- maps/figures/term29-occupancy-rates-in-passenger-transport-1 (link as of 2/11/20); Davis, Stacy and Boundy, Robert, “Transportation Energy Data Book” (Edition 38), Oak Ridge National Laboratory, 2020; Gallone, Toni and Zeni-Guido, Agathe, “Closed-Loop Polypropylene, an Opportunity for the Automotive Sector”, Field Actions Science Reports, Special Issue 19, 2019, pp. 48–53; Girardi, Pierpaolo, Gargiulo, Alessia and Brambilla, Paola Cristina, “A Comparative LCA of an Electric Vehicle and an Internal Combustion Engine Vehicle Using the Appropriate Power Mix: The Italian Case Study”, The International Journal of Life Cycle Assessment, vol. 20, no. 8, 2015, pp. 1–11; Hovorun, Tetiana Pavlivna et al., “Modern Materials for Automotive Industry”, Journal for Engineering Sciences, vol. 4, no. 2, 2017, pp. 8–18; Material Economics, “The Circular Economy: A Powerful Force for Climate Mitigation, 2018”; Transport and Environment, “CO2 Emissions from Cars: The Facts”, 2018; Qiao, Qinyu et al., “Comparative Study on Life Cycle CO2 Emissions from the Production of Electric and Conventional Vehicles in China”, Energy Procedia, vol. 105, 2017, pp. 3584–3595. 2. Accenture Strategy analysis based on: BloombergNEF, “Electric Vehicle Outlook 2020”, 2020; OECD, “ITF Transport Outlook 2019”, 2019. 3. Accenture Strategy analysis based on: European Commission, “Global CO2 Emissions Continue to Rise but EU Bucks Global Trend”, 9 September 2020: https://ec.europa.eu/jrc/en/news/global-co2-emissions-continue-rise-eu-bucks-global- trend#:~:text=This%20trend%20continued%20in%202019,total%20of%2038.0%20Gt%20CO2 (link as of 2/11/20); Greenpeace, “Crashing the Climate: How the Car Industry Is Driving the Climate Crisis”, 2019; International Energy Agency, “Transport Sector CO2 Emissions by Mode in the Sustainable Development Scenario, 2000-2030”, 22 November 2019: https://www.iea.org/data-and-statistics/charts/transport-sector-co2-emissions-by-mode-in-the-sustainable- development-scenario-2000-2030 (link as of 2/11/20); IPCC, “Global Warming of 1.5 ºC”, 2018 (links as of 2/11/20). 4. Accenture Strategy analysis. 5. Accenture Strategy analysis based on: European Environment Agency, “Car Occupancy Rates”, 2 September 2010: https://www.eea.europa.eu/data-and-maps/figures/term29-occupancy-rates-in-passenger-transport-1 (link as of 2/11/20); Pasaoglu, Guzay et al., “Driving and Parking Patterns of European Car Drivers: A Mobility Survey”, Joint Research Centre of the European Commission, 2012. 6. Accenture Strategy analysis. 7. Accenture Strategy analysis based on (most relevant sources): Expert interviews; ADAC and Joanneum Research, “Elektroautos Brauchen die Energiewende: Die Klimabilanz”, 2019; Girardi, Pierpaolo, Gargiulo, Alessia and Brambilla, Paola Cristina, “A Comparative LCA of an Electric Vehicle and an Internal Combustion Engine Vehicle Using the Appropriate Power Mix: The Italian Case Study”, The International Journal of Life Cycle Assessment, vol. 20, no. 8, 2015, pp. 1–11. 8. Accenture Strategy analysis based on: ADAC and Joanneum Research, “Elektroautos Brauchen die Energiewende: Die Klimabilanz”, 2019. 9. Accenture Strategy analysis based on (most relevant sources): Expert interviews; Girardi, Pierpaolo, Gargiulo, Alessia and Brambilla, Paola Cristina, “A Comparative LCA of an Electric Vehicle and an Internal Combustion Engine Vehicle Using the Appropriate Power Mix: The Italian Case Study”, The International Journal of Life Cycle Assessment, vol. 20, no. 8, 2015, pp. 1–11.

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