Car makers must work together to avoid huge CO2 'over-spend'

Rivian’s chief sustainability officer Anisa Costa added: “We wanted to make sure that we were able to align as an industry around a common set of data. The Pathway report was a vehicle to do that."

She added: “We see every EV that’s sold, not just Rivian’s, as a win, because collaboration these days is ‘table stakes’. And I think that's the main takeaway: to remember we can compete on design, or what works best for any particular family, no matter where they sit around the globe. But one thing that we want to make sure that we're actually working together on is sustainability and climate.”

To prevent global temperatures climbing more than 1.5deg C, each high-emission global industry will look to meet a series of rigid emission-reduction targets over the coming decades – adding up to a collective 500GTCO2 (500 billion tonnes of CO2) – but, according to Kearney’s projections, the global passenger car industry is on track to spend its ‘forever’ carbon budget by 2035, and overshoot it by 75% over the subsequent 15 years.

Kearney estimates that the passenger car industry – which it says accounts for 15% of global greenhouse gas emissions – has 75-80GTCO2 in its remaining allowance, which it’s on track to spend by 2035 and overshoot by 75% by 2050, based on what the company calls “optimistic” projections.

There are a number of models in Kearney’s report, taking into account various possible scenarios, but even in the most generous of outcomes the pathway to keeping global temperatures from rising more than 1.5deg C is “tight”. “Few reports project a scenario that is achievable without accelerated action,” says the company. “Certainly, the trajectory is too close for comfort.”

Even an all-out global switch to electric cars (from today’s 6% market share) will only cut that overshoot to 50%, because the environmental impact of a car must take into account every facet of each phase of its life cycle, from the supply chain to its production, and throughout the use cycle into end-of-life recycling. And currently, none of those phases are universally emission-neutral. 

Kearney said: “So far, the primary focus for the industry has rightly been on electrification of the fleet, targeting the significant portion (60-65% for ICE vehicles) of emissions that come from the tailpipe.” But it said the time has come to shift focus to every other aspect of car production and usage, irrespective of powertrain: “When modelling a hypothetical well-to-wheel scenario of aggressive battery-electric vehicle adoption, powered by hypothetical full switch to fossil-free power sources in parallel, there is still a greenhouse gas emission overshoot, unless supply chain emissions are simultaneously tackled.”

Kearney’s sustainability director Angela Hultberg highlighted the report’s partner firms as evidence for its message: “We have two electric vehicle manufacturers (Polestar and Rivian) saying electrification is not enough.”

The first of three ‘levers’ Kearney says the car industry must pull to avoid over-spending is achieving a 100% EV sales mix by 2032, and that manufacturers should work together to facilitate that goal. 

It acknowledges that “such an ambition level and radical acceleration would also cause significant socioeconomic implications that vary by region, posing challenges especially in regions with high population density and relatively low disposable income”, and that global EV demand is still stifled by charging infrastructure shortcomings, range anxiety and the relatively higher prices of electric cars themselves, but says there are opportunities to overcome these obstacles.

Kearney says that existing charging partnerships between OEMs [Ionity, for example] demonstrate “that collaboration among OEMs and investors can be undertaken to accelerate the infrastructure roll-out.” It also encourages inter-OEM discussion on a range of initiatives including better education of prospective EV buyers and encouraging EV adoption in ‘harder-to-reach’ areas beyond the current core markets. 

Once that 100% EV sales mix is achieved, the next step – but one that should be worked towards concurrently, given the tight time frames laid out – is to ensure the energy used to charge these cars is ‘clean’, meaning fossil-free.  

Using today’s electricity generation mix to power an EV would only cut lifetime emissions by 25-46% compared with an equivalent ICE car over a 149,000-mile lifespan, estimates Kearney. It says the global EV charging network must go from 39% to 100% fossil-free electricity by 2033 to meet the 1.5deg C target - cutting the 2050 overshoot from 50% (assuming all cars are electric) to 25%. 

Kearney notes that certain vehicle manufacturers are already investing in clean-energy solutions – General Motors sells solar panels, for example, and Volkswagen recently supported the construction of a 100GWh wind farm in Sweden – and says they could go further by exploiting their direct contact with the consumer to influence a change in energy usage patterns. 

One good example it cites is selling EVs with a guarantee of clean energy provision, but OEMs could also look to influence consumers to adjust their charging schedules and provide live feedback on their driving style to encourage more efficient practices. 

“OEMs have a powerful role to integrate more behavioural nudges into elements such as the dashboard and interfaces to drive systemic change,” says Kearney. 

The third and final lever highlighted by Kearney’s report is a rapid and dramatic upheaval of global supply chains to minimise the emissions associated with car production - which must be cut by 81% before 2032 if the industry is to meet its targets.

The report says electric vehicle production emissions are currently 35-50% higher than for ICE vehicles, primarily due to battery material sourcing (see graph, below), but steel, iron and aluminium rank highly on the list of the most polluting materials in car production.

To bring emissions down in this sector, Kearney says car manufacturers should “reach 100% electrification of the cell and pack manufacturing process” as well as increasingly electrifying the extraction and processing of these materials. It also proposes the widespread use of lower-impact battery chemistries, or encouraging the use of smaller batteries in conjunction with a more prolific network of faster chargers. Toyota’s chief scientist Gill Pratt has been vocal in recent years about his support for a similar shift in battery material usage, favouring small-battery hybrids over large-battery pure EVs as he says this allows fleet emissions to be reduced more effectively. 

More generally, manufacturers need to rethink “the front end in the value chain” and “design for decarbonisation” and circularity, says Kearney, also suggesting the establishment of common standards, metrics and criteria - for example, a universal set of supplier emission evaluation criteria. 

As for the real-world viability of these proposed measures – which for many manufacturers would mean a root-and-branch overhaul of their current product and operation roadmaps – Klarén said: “There's a long list of solutions that were put into the report. There's not a lack of solutions here. Of course, there are some hindrances to implementing those solutions, but the important thing now is that we try to, as quickly as possible, overcome those hindrances and scale the solutions that we know are out there.

“We've really tried to be as informative as possible around that. There are so many things that we see already ongoing, that we just need to start taking collective action on.”

Hultberg emphasised that the report should be viewed as “a starting point for dialogue” rather than a list of commandments. “Not everyone will want to pull each lever,” she said, “but we can’t change the output if we use the exact same input.” 

Rivian, Polestar and Kearney have discussed the findings of the report with other manufacturers already, and “none of them have said no” to the prospect of collaboration with other firms. But Klarén emphasised the need to move quickly: “We don’t have time to set up structures and platforms for collaboration,” she said, calling this approach “old-school”. Rather, manufacturers should identify which of these areas they could look to invest time in and begin to hold discussions with like-minded third parties immediately.