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  • Writer's picturebarriewilkinson

Batteries included

Today we'll be looking at the transition plans of the automotive sector as car and truck manufacturers set out on the road towards net-zero emissions.

The auto sector is in many ways well-position for a relatively speedy transition assuming increasing numbers of drivers can be convinced to swap their old gas-guzzling vehicles for an electric equivalent.

But as with all others sectors, there are still many obstacles that will need to be overcome to keep the transition plans on track. For example, uncertainties remain for freight vehicles since, at present, vehicle batteries are not able to cater for the movement of heavy loads over long distances. Eliminating emissions for electric vehicles also relies on being able to re-charge the car from a clean energy grid. Our analysis below shown later in this post shows that plugging an electric vehicle into a largely coal-powered power grid leads to a similar level of emissions to a traditional petrol or diesel car over its lifetime. And it's not just where the car is recharged that that matters. A material portion of a car's emissions are created before the car leaves the factory so we'll also be looking into the supply chain of a few different vehicle to see what can be done to cut emissions during production. As with most sectors, re-cycling also has a major roll to play both in terms of using recycled input materials and ensuring that the majority of waste and end-of-life components can be re-cycled or re-used.

In developing our model of the automotive sector we were greatly inspired by the study published by Polestar (the Electric Vehicle (EV) subsidiary of Volvo) which released results of their emissions Life Cycle Analysis comparing the Polestar 2 EV to the traditional Volvo XC40.

Polestar - Life Cycle Analysis Framework

Polestar - Life Cycle Analysis

The yellow bar in the chart above represents the increase in emissions associated with the manufacture of the lithium-ion battery creating an extra emissions overhead for the EV before it leaves the factory. At some point the tailpipe emissions from the XC40 that occur during the use phase allow the Polestar 2 to outperform the XC40 in terms of lifetime emissions but you can see that the gap is smaller if the EV is re-charged in a location with a dirty power grid.

Given the importance of power generation in the automotive sector transition plans, we were keen to understand what this type of Life Cycle Analysis would look like covering all the different possible re-charge locations building on our bottom-up model of national power grids.

Re-charge location analysis

Supply chain analysis

As can be seen from the above analysis, the emissions that are generated during the manufacturing of a vehicle form a material component of the lifetime emissions. And this will become more true overtime as tailpipe emissions are eliminated through electrification.

To help drill into this we have conducted a detailed analysis of the supply chain and component contributions to both emissions and cost for a number of different vehicle types.

source: OpenLCA, Ecoinvent and Oliver Wyman analysis

Carbon pricing in the Automotive sector

Of all the conversations we are having across the different sectors I would say that the automotive industry is the furthest progressed in considering the adoption of internal/shadow carbon pricing. There are two main applications for shadow carbon pricing within automotive: Firstly, to drive behavior changes throughout the supply chain using the type of emissions data we shared above; Secondly, to drive changes in operational decision making such as the choice of factory location.

You can see below the factory locations of the largest automotive manufactures. We've connected this to our model of the power grid by country to produce differential carbon calculations by country that individual OEM can use to refine their decisions regarding where to expand manufacturing capacity.

OEM Factory Locations

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