Transportation is one of the most difficult sectors to decarbonise, it relies almost exclusively on oil, as well as on a multi-trillion infrastructure that cannot be replaced overnight.

Due to increased investor and end-user scrutiny, the car industry is one of the pioneers in terms of carbon reporting and target-setting. Therefore, whilst freight will be the object of a future article, we want to provide you with expert insight of how the transport of people can align with global net zero goals. We also outline practical advice for automotive companies to transform into a truly sustainable business.

Electric vehicles are not a silver bullet solution

There are 1.2 billion cars on the world’s roads today. They produce 4 GtCO₂e annually through fuel production and combustion – 8% of global greenhouse gas emissions. This is on an upward trajectory, because of the rising share of SUVs in global car sales: 46% in 2021, up from 27% in 2015. An SUV burns up to 23% more fuel than a medium-sized vehicle, which dwarfs any improvement enabled by energy efficiencies.

Today, only 0.5% of the global passenger fleet are battery electric vehicles (BEV). This is increasing fast, but BEVs are not carbon-free, and produce 1 tonne CO₂e p.a. on average (vs. 3 tonnes for internal combustion engine vehicles, or ICEVs). This is because most of the electricity used to charge them is still generated in coal or gas fired power plants. Besides, the manufacturing of BEVs emits up to 40% more than ICEVs, due to the production of batteries.

The automotive industry creates other important issues beyond carbon. It consumes huge quantities of resources (minerals and plastics for cars; rare earths and rare metals for batteries; crude oil for fuel; cement, steel and petroleum derivatives for road infrastructures, etc), creating a risk of supply shortages or price spikes. Besides, natural resource mining and refining often happens in places with very limited environmental and social regulations, which threatens the health and living conditions of both employees and local populations. We can’t grow indefinitely in a finite world, nor continue to always produce more cars, always bigger.

Fleet electrification needs to go along with a transformation of our mobility models

Electric vehicles will take a key role in the net zero transition, but only under certain conditions.

First, they must be powered by clean electricity. This is not straightforward: if all the passenger cars of the world were changed to EVs tomorrow, we would need 3,300 TWh more electricity per year to charge them, the equivalent of ten years of electricity consumption in the UK. It means we would need to increase the renewable generation capacity by 30% just to meet passenger transportation needs: it would require huge quantities of materials to build windmills or solar panels, as well as the grid infrastructure needed to connect them.

Second, the automotive sector (like all sectors) needs to embrace circular models to reduce the strain on natural resources, the energy needed to produce them, and the pollution their processing generate. This is particularly important with electric vehicles, due to the amount of rare earths and rare metals that battery manufacturing requires.

Third, the increase of SUV sales must be stopped and reversed: we need to go back to lighter vehicles, that can be powered by smaller batteries.

Finally, transport needs to be increasingly car-free in both urban and rural areas: walking, cycling, rail and public transport must be prioritised. Where modal switches are not possible, new models like car-sharing or car-pooling will be crucial to reduce total fuel consumption and create added benefits, like lower traffic and a reduction of air pollution due to brake and tyre wear.

What can your automotive business do to help reach net zero?

Reduce in-life emissions

• Take an active part in the “green” vehicle roll-out by accelerating R&D on EVs, bio-fuels or hydrogen, and by adapting your production lines. If you’re customer-facing, complete your offer with bundled solutions to make the transition easier for users, like the installation of home charging points or the supply of renewable electricity tariffs. Tesla has led the way in terms of electric vehicle offering, but many OEMs follow suit with ambitious roll out targets.
• Reduce the weight of your products by looking into smaller components and lighter materials, to reduce the total weight of the car, and therefore its fuel consumption. If you’re customer-facing, take the bold stance to promote small vehicles over SUVs. To go even further, set science-based targets covering your downstream scope 3 emissions, as many automotive OEMs already did, like Ford, Volvo, Mercedes, General Motors, BMW, etc.
• Support community projects, for example, programmes that encourage drivers to drive more efficiently and leave the car more often post purchase.

Reduce embedded emissions

• Decarbonise operations as much as possible: switch to renewable electricity, move away from fossil fuel heating, insulate your buildings, buy energy efficient equipment, optimise your processes, decarbonise your vehicle fleet, implement bold corporate travel policies, buy second-hand equipment and use it longer. Volkswagen even claims it will put “climate-neutral cars” on the road, thanks to the use of green energy in the production of battery cells as well as in its operations.
• Set new procurement criteria: buy only from suppliers that use renewable electricity, procure sustainable or recycled materials, choose logistics providers that propose greener freight modes. For example, Adient and Faurecia, two leading automotive part manufacturers, have taken the bold commitment to reduce absolute supply chain emissions in line with a 1.5⁰C temperature trajectory.
• Develop the circular economy by finding partners in your supply chain to collaborate on programmes to reduce the use of raw materials through recycling and the reuse of parts. Renault is tackling this challenge in several ways, including the utilisation of recycled plastics and used parts, the design of vehicles that are easy to repair and dismantle, and the innovation in better recycling processes.

Contribute to reducing the global vehicle fleet

• “Sell fewer cars” may seem an impossible ask… But if we are to achieve net zero our societies must reduce their reliance on private ownership models. As a manufacturer in the Automotive sector, you would be wise to build resilience by developing alternative revenue streams. If some of your competencies are transferable, develop your activity in green transport segments, like bicycles, trains or buses. You should also consider recurring revenue models to complement your one-off sales, with new offers in car rentals or peer-to-peer services.

Although individual automotive companies can reduce their environmental impact, the sector can’t become truly sustainable without a radical change of business model across the entire supply chain.