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Going carbon neutral in the European automotive supply chain

In Europe, rules and systems are being developed to become carbon neutral (CN) throughout the entire vehicle life cycle.

The EU intends to compile a common methodology for assessing CO2 emissions over the entire life cycle of passenger cars/vans by 2025 and introduce it from 2026 onwards. Legislation on the recovery/recycling of batteries, components and raw materials is also being developed to put the Circular Economy into practice.

All car manufacturers are accelerating their efforts to achieve CN throughout the entire lifecycle, covering processes from procurement to re-use. To reduce the carbon footprint at the product level, all companies are imposing certain CO2 reduction targets on their suppliers in the procurement of parts and materials with a large CFP.

Europe is seeking to maintain and strengthen its industrial competitiveness by aiming to become carbon neutral throughout the entire vehicle lifecycle, with a focus on BEVs. Policies and regulations for lifecycle CO2 neutralisation, such as the direction towards zero emissions by 2035 in vehicle CO2 regulations, promotion of renewable energy use and rules to encourage recycling of raw materials and batteries, have been quickly introduced, forcing car manufacturers and suppliers to respond. Meanwhile, Europe has been heavily affected by inflation and geopolitical issues, and faces a more difficult situation than the US, where the IRA has attracted more investment, and China, where emerging BEV manufacturers are gaining momentum.

Nevertheless, all European car manufacturers are maintaining their long-term shift to BEVs. To decarbonise their supply chains, they are demanding that their suppliers take steps to reduce GHG emissions in the procurement of components and materials with a large carbon footprint, such as batteries for BEVs. Carbon footprint and recyclability will be even more important in the future when selecting suppliers to place orders. Cooperation between car manufacturers and suppliers is essential to reduce the carbon footprint (PCF) of each product, and collaboration is underway to share data and information to accurately calculate PCF.

The focus is on analysing the strategies and policies of OEMs and Tier 1s to become carbon neutral in the automotive supply chain in Europe. It covers the latest developments in the promotion of each company’s LCA approach, cooperation between OEMs/suppliers and across the industry towards supply chain CN, and circular economy practices, and provides a perspective on the direction of CN for the entire automotive supply chain.