Transforming the Automotive Industry with the Circular Economy Model

Type de publication:

Conference Paper


Gerpisa colloquium, Brussels (2023)


automotive, circular economy, decarbonisation, electrification, End-of-life vehicle, mobility, recycling, reuse, second-life battery


The circular economy is a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible (European Parliament, 2015). This model brings multiple benefits, in particular: less consumption and lower dependence of raw materials; less waste, fewer emissions, thus less environmental pressure; lower costs with second-life materials; green job creations. Its origin not traceable, the concept has been popularised and largely diffused by The Ellen MacArthur Foundation. Besides the increasing concerns of climate change, the circular economy model has gained unprecedented attention under recent major geopolitical issues including the explosion of raw material prices, the Chinese control of rare earth materials, the US-China trade and technology war, the COVID-19 crisis, the Russia-Ukraine War and the consequent global energy crisis. To accelerate and scale up the implications of circular economy, the EU has launched a New Circular Economy Action Plan in 2020 with a particular focus on high-impact sectors such as textiles, construction, and electronics.
This paper aims to (1) analyse the necessity for the automotive industry to urgently adopt the circular economy model, (2) make observations of existing or under-development practices of circular economy in the automotive industry and closely related manufacturing sectors, (3) examine the key factors contributing to a favourable ecosystem for transforming the automotive industry with the circular economy model, (4) make recommendations for policy making.
The automotive industry has always been a key contributor to economic growth, job creation, technology advancement and modern life style. Yet, it is also largely responsible for air and industrial pollutions, material wastes and irrational consumerism. Even though the EU Directive on end-of-life vehicles (2020) set targets for the reuse, recycling and recovery of the ELV materials, more than 260,000 tonnes of automotive components were disposed and sent to landfills without any further processing (Mehlhart, Möck and Goldmann, 2018). Under the common objective of lowering global carbon emissions, and to reach carbon neutral around the middle of this century for some more engaged countries, automotive industry must become more ecological and resource-efficient. The electrification of vehicles is no more an option, but it is not enough; the whole sourcing and production process, and the handling of end-of-life vehicles need all to be decarbonised.
For the automotive industry, the circular economy model provides an operational framework to deal with various problems including raw material crisis, material wastes, end-of-life vehicles, battery reuse and recycling, and pollutions. More largely, it invites the whole automotive value chain and related mobility providers to rethink, redesign and rebuild their business models, based on local resources and know-hows, climate and social impact, higher economic, energetic and ecological efficiency.
Indeed, we see that major OEMs, after having set their respective date of ICE phasing-out date, are all gradually adopting the circular economy model in their corporate strategy; some of them already have a dedicated circular economy business line; some others are supporting the incubation of startups in the domain of circular economy. The suppliers of OEMs, pushed by the sourcing requirements of their clients, are also moving to decarbonise their products and services through circular economy. The use of renewable energy and recycled materials in the production process, and different applications of second-life batteries, are some of the examples. Other actors in related manufacturing sectors make use of material waste from auto production or materials from retired cars for designing innovative objectives. We map the abovementioned projects and activities to obtain a general picture of how the automotive industry is embracing the circular economy model.
Furthermore, we analyse the local drivers that promote these progress. First, regarding the background, we find that local industrial tissues play a crucial role in anchoring certain type of circular economy projects. Second, regarding the content, we underline that there is an increasing co-development of local policy and projects tackling energy transition, mobility transition and circular economy at the same time. Synergy is created through collaborations of actors from different sectors united by these “cross-border” projects. Third, regarding the financing, we argue that public funding for pilot projects, such as Horizon 2020, serves as a starting point to incubate tech startups providing innovative solutions, which later relies on local funding, venture capital or other strategical investors to further support the maturation and the scale up of the project.
Through our observations and analyses, we confirm that the circular economy model will become the new norm and deeply transform the automotive industry. Some recommendations are made at the end for policy making and regional alliance in favour of this transformation.

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