Road to Circular Car Economy: Challenges, opportunities for Indian automotive sector

In order to understand the term ‘Circular Car’ or ‘Circular Car Economy’ in a better way and more, Express Drives recently got in touch with Raghu Gullapalli, Managing Director and Lead APAC Middle East, Industrial & Mobility, Accenture. Here are the key takeaways from the interview.

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That electric mobility is the future and the next big thing and the next frontier is something we all have heard a lot over the last few years. Quite frankly though in present times no one is interested in knowing anymore whether or not electric mobility is the next step for the automotive industry. We all know by now that e-mobility is the obvious progression globally so the more pertinent question now is how to achieve a holistically efficient electric mobility infrastructure. When we talk of holistic efficiency, one has to look at well-to-wheel emissions of electric vehicles (EV) and not just the usage cycle. It’s well-known that EVs produce lower emissions than internal combustion (IC) vehicles during operation but the manufacturing process for such vehicles is more energy-intensive and hence leads to higher emissions than IC vehicles.

In an ideal scenario, a car that would have zero emissions during production, usage and disposal cycles will be termed a ‘Circular Car’. That said, there’s a lot more to being a circular car than just sporting a bunch of zeros on the emission front but at the same time chasing this title is especially important for emerging and huge automotive markets such as India. In order to understand the term Circular Car or Circular Car Economy better and the potential and challenges for it in India, we got in touch with Raghu Gullapalli, Managing Director and Lead APAC Middle East, Industrial & Mobility, Accenture. Mentioned below is an excerpt from the conversation.

Express Drives: Can India be made into a circular car manufacturing hub? What steps need to be adopted by carmakers in this regard?

Gullapalli: Circularity requires the implementation of a set of solutions across the value chain to achieve environmental impact or to create business value. This can be driven by automotive OEMs, as well as by other players with an interest in making the full value chain circular.

Our recent report identifies four pathways to address one distinct variable related to circularity. This includes:

Energy decarbonization: A complete shift to renewable energy sources in the production and use phase. This pathway is led by the OEM, enabled by suppliers (through investments in low-carbon technologies). Decarbonization relies on significant investments in renewable energy sources, low-carbon production processes and the integration of vehicles with the grid.

Materials circularity: This aims at achieving 100% circular material content (recycled or renewable materials). This process is led by OEMs and enabled by partners along the value chain (suppliers and end-of-life recyclers). It requires adapting the design for recyclability, investing in materials and scrap recovery (in production and at end of life), extensive reverse logistics and advanced recycling technologies, and shifting to as-a-service models for materials and components.

Lifetime optimization: Extending vehicle and component lifetimes, requires close coordination and information exchange between producers and aftermarket servicers. Necessary interventions on this path include modularizing vehicle design, strengthening workshops as circularity hubs, scaling reuse and remanufacturing.

Utilization improvement: This pathway aims at drastically improving the use of available capacity. This is led by fleet operators and supported by OEMs. Purpose-built vehicles, fleets and vehicle/mobility on-demand solutions enable this pathway.

It is important to explore all four pathways with a balanced approach, as the improvements they provide ultimately complement each other.

Will bringing in more electric vehicles be the solution to a circular vehicle strategy? 

The idea of a circular car or vehicle, in theory, is a vehicle that would produce zero materials waste and zero pollution during the manufacture, usage and disposal processes. In other words, a vehicle that has maximized materials as well as resources efficiency. While cars may never be fully “circular”, the automotive industry can significantly increase its degree of circularity, to deliver economic, societal, and ecological dividends.

Circularity and electrification will be the core strategies that enable the industry to decarbonize and prepare for the increasing mobility demand which is — in terms of both passenger miles and predicted vehicle stock — is expected to increase 70% globally by 2030. When we think about how to ‘decarbonize the car’, our research shows that Battery Electric Vehicles (BEVs) might use less energy in operation, but they use more energy in production. Shifting to low-carbon electricity for the use phase helps drastically, however, only circular-economy innovations (outlined in the four pathways) combined with such practices will help us get closer to circularity.

The ideal, or Level 5 circularity, is a scenario in which cars help to optimize their surrounding ecosystem – improving system-level use of different transportation modes, upgrading materials, and improving energy grids. This overall system is highly integrated, optimized, and sustainable. Through effective industry leadership, policies, business models and engineering, it is possible to achieve Level 5 circularity on a shorter time horizon than many would imagine.

Does bringing in sustainable guidelines including the scrappage policy help when it comes to circular vehicles?

Circular economy can not only help to serve the growing mobility demands of our country but also help in reducing resource consumption to a level that is truly sustainable. As the fourth largest automotive market in the world, the recent sustainable guidelines announced by the Government of India such as voluntary vehicle scrapping policy for subsidizing scrappage of old vehicles, implementation of BS-VI emission norms and FAME II policy to incentivize and fund EV manufacturing, ushers in the next era of circular cars.

To achieve circularity, automotive companies need to embrace a consistent and holistic approach leveraging best-in-class technology tools that requires collaboration with the broader ecosystem over the coming years.

What measures can be taken for electric battery recycling? How is the progress on the same?

The revolution in automotive sustainability is right now at a critical juncture with the automotive industry dramatically overshooting its estimated carbon and resource budgets. Critical components, those generally considered of higher value, are sold as a service rather than as a product by original equipment manufacturers (OEMs). Batteries are an example of a high-value component with the potential for an extended life in automotive and non-automotive applications such as an energy storage for households.

Batteries enable the entire low-carbon energy system, including electric cars. At the same time, they are, although the price per GW is decreasing, still relatively expensive and more energy-intensive to produce. Example: In a combustion engine vehicle, about 17% of the overall emissions are generated before the car’s ignition has been started for the very first time. With electric vehicles, this number is even rising to about 30-35%, mainly driven by the very energy-intensive production of the battery, as laid out in Raising Ambitions: A new roadmap for the automotive circular economy, a joint research from the World Economic Forum and Accenture. The trend of ever-increasing electric vehicle (EV) ranges, gaining significant momentum is not necessarily environmentally desirable and increases EV cost unnecessarily. Viewing batteries through a component-as-a-service lens allows for a more economically rational, inclusive and environmentally friendly approach to electrification. A major enabler of this system is battery swapping, where consumers no longer own their battery, but pay for electricity and battery use on a subscription basis, which helps on two additional fronts: it tackles the “range-anxiety” and makes “topping-up” an EV as convenient as fuelling an ICE.

This subscription-based model can be adopted by B2Bs with the battery manufacturer providing the battery to the OEM in a full-service model and the OEM selling the car including battery to the consumer.

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