Sustainability: Circular Economy Across Automotive Value Chain

Advances in the automobile sector, such as zero-emission automobiles and carbon-neutral production, highlight the growing significance of sustainable products. These trends are being powered not only by stricter regulations, but also by rising social awareness and customer demand for eco-friendly vehicles. Conversely, the industry’s shift towards digital transformation, electrification, and so on, calls for higher energy demands. However, much of the global energy production today is still from multiple non-renewable sources.

It is appealing to envision end-to-end sustainability, but is it truly possible soon?

Sustainability can be perceived as actions or processes through which natural resources can be conserved to keep an ecological balance while maintaining the quality of life in modern societies. The two critical areas that drive maximum sustainability impact for the industry are:

1. Ensuring electric vehicles are truly sustainable products
2. Incorporating circular economy practices in automotive value chain.

Although the automotive industry is investing heavily in electric vehicles and some areas of sustainable R&D and manufacturing, the adoption of sustainable practices in other parts of the value chain continues to lag. According to the CRI, an estimated USD50 billion will be needed over the next five years to meet sustainability targets, in addition to investments in electric vehicles, autonomous vehicles, and digital mobility services. Moreover, the industry’s digital transformation goals could go a long way towards eliminating inefficiencies and constructing a sustainable future.

Sustainability can be attained at every stage of the Automotive Value Chain, including R&D & Engineering, Supply Chain, Manufacturing & Operations, Marketing & Sales, and Vehicle Usage & Mobility Services.

Sustainability in Automotive R&D and Engineering

Sustainability in Automotive R&D and engineering means designing products in a way that minimizes negative environmental impact and maximizes natural resource utilization while ensuring recyclability. Incorporating the latest technologies, such as digital twin into product design, would also increase overall efficiency and aid in building sustainable products.

Sustainability in Automotive Supply Chain

Supply is a critical function in ensuring sustainability and circular economy. Sustainability can be achieved in various modes of supply chain as illustrated below:

Sustainability in Automotive, Manufacturing & Operations

By using the latest technologies such as AI/ML, blockchain, and so on, digital carbon footprint tracking and energy management can be done efficiently. Also, it monitors manufacturing process and measures KPIs in real time to provide a clear picture of where organizations can improve and adopt sustainability. Best practices, such as predictive maintenance, quality management, and lean manufacturing processes, ensure effective use of resources.

Sustainability in Marketing, Sales & Service

Organizations can promote sustainable products through marketing campaigns to increase their demand and sales. EVs with fewer moving parts are designed to last longer and require less maintenance than ICE vehicles. Creating a new revenue model in after-sales, such as vehicle refurbishment, could promote sustainability throughout the vehicle’s lifecycle.

Sustainability in vehicle Usage & Mobility Services

Monitoring vehicle usage data and preventive maintenance ensures longer lifetime of the vehicle along with emission control and better vehicle safety. Encouraging mobility services such as subscription or leasing models and ride sharing can optimize vehicle usage.

End-to-end sustainability can only be achieved by incorporating circular economy in each part of the value chain. To learn more about automotive sustainability best practices, reach out to our experts Baljeet Yadav and Somkalpa Laha:

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Reference:

*CRI Report: The automotive Industry in the Era of Sustainability