Building a circular future for vehicle manufacturing

Manufacturers and governments can and must do more to make automotive supply chains both less wasteful and more profitable.  

That was the conclusion of a panel discussion at FT Future of the Car entitled “Defining circular supply chains in the age of the net-zero vehicle”. 

Such supply chains prioritise reuse, repair, remanufacture, and recycling to minimize waste and resource extraction. The traditional automotive industry supply chain was ‘linear’, i.e., elements are mined to make components, cars are built and sold, and then at end-of-life, some parts are salvaged, but most materials aren’t reused.  

The FT Future of the Car audience heard that partnerships between industries are crucial to circularity and require huge investment. 

Cox Automotive’s Strategy Director Craig Mailey joined a discussion that included Paul Warton, Executive Vice President, Hydro Extrusions; Kunal Sinha, Global Head of Recycling, Glencore; and moderator FT’s Commodities Correspondent Harry Dempsey. 

On the topic of OEMs acting more ‘circular’ and the growing used market for EVs, Craig said: “At Cox Automotive, in this area, we’re looking at the life of a vehicle up to the point of recycling and how we can extend that life for as long as possible. OEMs look at us and ask, ‘How can you help with that? How do we get that battery repaired if it goes wrong? How do we repurpose it, and how can you help us get it to the point of recycling?’ 

“Residual values are a real challenge when it comes to used EVs. Ultimately, I’m sure we will solve it. “It’s a problem everywhere where EVs are bought and sold but they will find their value.  

“Much emphasis has been put on new EV production and their supply numbers but not nearly enough on the used end of the market. That supply is inevitably increasing and the used sector is just starting to understand the value proposition of second-hand EVs.  

“In terms of encouraging greater adoption, it’s not just down to us as an industry; governments should be offering more support, whether that’s by improving the charging infrastructure or driving down the actual cost of charging.” 

Glencore’s Kunal Sinha said circular supply chains where parts are reused, repurposed or recycled; and the more traditional model of using ‘fresh’ materials in manufacturing need not be competing processes. 

“They are complimentary,” he insisted. “What we are witnessing is a transition, a project to get as much as we can from the primary supply chain and to do it in an increasingly responsible manner. 

He added that not enough primary mined metal exists to meet manufacturing demand, so recycling is unavoidable; manufacturers, therefore, need greater circularity.  

“OEMs are expecting higher recycled content and specifications with minimum recycled content levels are coming in. And, of course, they are aiming for lower carbon in the supply chain.  

“They’re also looking for full traceability and transparency. So, OEMs want to see it because they have made commitments on when they will be net zero. Circularity helps shorten the supply chain, too.” 

Harry Dempsey asked the panel if OEMs are willing to pay the additional cost associated with building cars with a lower environmental impact. 

Paul Warton said, " Recycling end-of-life scrap is costly. You have to make huge investments, dig deep into the scrap pile to regain the right materials and recycle them so the car industry can use them. 

He added that the Property and Casualty (P&C) insurance industry has moved much faster towards circularity than automotive. 

“This building that we’re in,” he said. “When the windows need replacing, they must be made with the same material. That’s perfect circularity and automotive needs to learn from that.” 

Kunal Sinha spoke of the inevitability of circularity and how these supply chains compare to linear. 

“When the supply chain was more linear, things were straightforward. All I needed to know was who my supplier was and who my customer was. When you go to a circular value chain, that’s no longer sufficient because you have to understand what you do and the consequences of what you do on everyone downstream and what will come back upstream because it’s all circular.”  

Craig Mailey said cars are traditionally designed for efficient production, not repair. That creates a challenge: how to make them durable while ensuring they can be fixed when needed. 

“We have, however, seen the emergence of ‘green parts’,” Craig said. There are about 18,000 car breakers in Europe that have been around for decades. That sector is quite efficient, but as part of the circular economy, there is additional growth because of the environmental and financial benefits of utilising a used part; for automotive, extracting more value from the asset in life and at the end of life is a renewed goal shared by us all.” 

Asked what the government can do to drive circularity, Craig commented: “The government has a huge role to play. The attractiveness of new EVs needs to be trumpeted. However, there also needs to be greater focus and help for the used market. For people on lower incomes, it’s arguably more about the price point than sustainability. So, we have to make owning an EV more economical. 

“We’re doing this because it’s the right thing to do, and that means some compromises will have to be made. People need to feel that these vehicles are going to be around for a very long time. The current narrative is that EV adoption is still up for debate. We moved the ICE ban deadline a little bit but given the investment—the billions that have been invested—there’s no turning back on this.  

“It may not happen at the pace that we all expect, but we will all have to get used to driving a zero-emission vehicle at some point.”