Driving Towards a Sustainable Future: The Transformation of the Automotive Industry

Sustainability is nowadays becoming one of the most pressing issues in the media and society as a whole, and it is being debated constantly in all sectors. Especially for the automotive industry, sustainability becomes more and more significant particularly as topics like as electric motors, lightweight construction and CO2 emission reduction get more prominent key issues. 

Four major themes are driving this transformation: electromobility, shared mobility services, autonomous driving, and connected cars. The rising demand for electric vehicles and new transportation solutions demonstrates how critical the subject of sustainability has become. Meanwhile, financiers and lenders are also paying closer attention: they want to understand the climate risks that vehicle manufacturers and suppliers face, as well as avoid reputational harm from partnering with climate-unfriendly organizations.

This tendency is being pushed by both shifting consumer choices and governmental policy. To some extent, certain manufacturers and suppliers have already responded to these changes. For example, they are expanding their variety of electric vehicles and offering flexible mobility solutions. They advise their suppliers on environmental challenges and empower them to take action.  BMW, for example, requires all of its battery and many of its steel and aluminium suppliers to use renewable energy, while Volvo aims for 25 percent recyclable plastic in its cars by 2025. Several suppliers are seen making big efforts to green up their operations, from manufacturing recyclable parts to connecting their companies to renewable energy.

1. Climate change and carbon emissions
Climate change and its impacts have been part of a broader societal debate for some time. As a result, lawmakers have made carbon emissions regulations considerably more onerous in recent years. Car manufacturers are required to reduce their carbon emissions both during vehicle manufacture and the emissions of the vehicles themselves. In this context, the use of alternative powertrains such as fuel cells play an important role.

2. Sustainability along the value chain
As natural resources become more and more scarce, sustainable value chains are becoming more and more important for the automotive industry. They are based on the principle of reusing and recycling resources. Creating transparency along the supply chain is critical. This is the only way to trace the origin of parts and ensure sustainability along the value chain. With this in mind, car manufacturers and suppliers are considering how to implement innovative solutions such as a circular economy, battery recycling, biodegradable components and sustainable processes in research, development and manufacture.

3. Digital responsibility
As self-driving and connected vehicles become more common, the focus will shift to issues such as unlocking digital value, data protection and data security. On the one hand, car manufacturers and suppliers have to define digital functionalities and technologies that are necessary in order to implement sustainable solutions. At the same time, however, strict guidelines are needed in order to prevent violations of data laws.

It appears that there is still a long way to go until the automotive sector is transformed into a truly sustainable business, but efforts are quite prevailing.