Zero Carbon Cars

Authors

E. Hannon, S. Nekovar - McKinsey & Company

Summary

After working hard to reduce tailpipe and indirect fuel supply emissions, the automotive industry is facing a new issue associated with raw material emissions.

Two critical forces are compelling OEMs and suppliers to tackle this latest hurdle now before conditions turn against them:

Green materials market dynamics: The supply of decarbonized materials will fall short of demand across most key automotive inputs. This high demand will drive significant green premiums. Anecdotal references reveal some materials could see increases of up to 100-200 percent

Circular economy and product end-of-life issues: Circularity opportunities across the supply chain, manufacturing operations, and sales operations could have a significant impact on CO2 reduction and on improving costs and revenues. Companies need to act on these opportunities now because the new cars sold today will be the scrap cars of 2035

OEMs and suppliers can learn from several industry champions that have taken the lead in their holistic decarbonization efforts.