Automotive Industry Embraces the Circular Economy

Author photo: Dick Slansky
By Dick Slansky


Many manufacturers are shifting away from a “take, make, and throw away” mentality to move toward a circular economy. In this economy, waste is considered a valuable resource, and companies research new and more efficient ways to extend a product’s useful life. They can design products and use materials with end-of-life and disposability and impact to the environment as a design criterion. There is also a move to a service-based model where products are leased instead of sold, where they can be more easily refurbished, remanufactured, or recycled by the manufacturer when they reach end-of-life or break down.

Sustainability and circular economy strategies go hand in hand, with cars being a product that lends itself to being reused, Circular Economyremanufactured, and recycled to a significant degree. Additionally, car makers are placing an increasing focus on cleaning up vehicle production and supply chains.

While the automotive industry faces numerous challenges as they transition to more eco-friendly forms of electromobility, the common consensus is that the industry needs to look well beyond battery-electric vehicles (BEVs) to decarbonize transportation. BEVs may not emit CO2 but the factories that make them do, along with the sprawling automotive supply chain that manufactures the components for the vehicles. Establishing workable and concise circular economy strategies can help the automotive sector drive down lifecycle carbon emissions for the manufacture of passenger vehicles. But what does it take to produce a vehicle that fits the goals of a circular lifecycle?

By examining how new technologies and business models can repurpose the materials used to both make and recycle cars, along with methods to reduce CO2 emissions in production systems, the basic notion and central idea is that of a zero-carbon car – a vehicle that has attained its full potential with respect to carbon efficiency. While there are experts in the industry that concede that the automotive value chain may never be totally free of emissions, it can be significantly improved by focusing on net zero materials waste. And the automotive industry appears to be facing this challenge head on.

Implementation of a Circular Economy Requires a Holistic Approach

A linear economy – which involves taking raw materials and manufacturing a product only for it to be thrown away at end-of-life has been the industry norm for decades. In contrast, a circular economy is based on the principle of reusing and recycling resources. For the automotive industry that can include everything from the vehicle body to tires, with the goal of extending the life of the vehicle and its components. It can involve sharing, leasing, repairing, refurbishing, and recycling the materials that make up the product for as long as possible.

Car makers that are implementing circular economy strategies for their products understand that this must be a holistic approach that spans the entire design/build/maintain/disposal product lifecycle. Every phase of this lifecycle must be involved, starting with designing for sustainability. Next, a manufacturing phase that uses recycled and eco-friendly materials along with re-manufacturing and refurbishing processes. The end-result of this holistic lifecycle is a product that at end-of-life becomes the source for materials and components for the next generation of vehicles.

Some car makers are already actively engaged in applying the principles of a circular economy. Czech automotive OEM Skoda, part of the Volkswagen Group, is applying some of these key principles: work to minimize negative impacts on the environment, reduce raw resource use and subsequent loss of these resources, and increase the re-use of materials and components. Some specific examples of circularity include zero production waste to landfill where all waste from production is reused from material to energy. Other examples include seat covers made from recycled PET bottles and reusing end-of-life glass from vehicles for newly manufactured cars.  

BMW wants to “become the most sustainable automotive OEM in world.” BMW is taking a holistic approach to what a circular car should look like. At last year’s IAA Mobility event BMW introduced a fully recyclable BEV- the iVision Circular. This was a concept car that won’t be launched until 2040, but the idea was to present a vision for a circular car. The design uses 100 percent recycled materials, both repurposed and renewable. The exterior body is stamped from secondary aluminum and the tires are made from all-natural rubber. The interior is sustainable, with the dashboard 3-D printed from recycled plastic. Even the steering wheel is printed from wood powder. Currently, the vehicle is made from around 30 percent recycled and reused materials, and BMW’s plan is to steadily increase the recycled materials to 50 percent and higher.  

Circularity Is Critical to Meeting Environmental Challenges 

In the traditional “take-make-throw away” economy, materials flow in linear manner from resource extraction to manufacturing and then to waste. The automotive industry is responsible for a significant share of resource consumption with high usage of steel, aluminum, plastic, rubber, and glass, among others. Currently, the automotive OEMs generate about five percent of industrial waste globally, but the biggest polluter in the automotive sector is the automotive maintenance and repair sector according to the EPA. Looking toward the future and the increasing demand for BEVs, the automotive industry must face the issue of large-scale battery material consumption and, moreover, what to do with end-of-life battery disposal.  

The US produces around 65 million tons of metal, plastic, glass, and textile waste per year with a percentage of that total attributed to mobility and transportation vehicles at end-of-life. Presently, the world is only about 8.6 percent circular, so taking care of resources is becoming a critical issue for the global economy. Currently, end-of-life directives for transportation and mobility manufacturing in the EU states that 95 percent of the material in passenger cars and vans needs to be reusable or recoverable depending on the vehicle weight. Setting clear and achievable targets and goals will limit waste from vehicles and their components as car makers increasingly work towards improving their degree of circularity in both design and manufacturing. 

Circularity is a key factor in meeting the environmental challenges posed by manufacturing across all industries, not just automotive, by maximizing the value retention throughout the total lifecycle of products and materials. Accordingly, the use of secondary and recycled materials avoids excessive use of limited natural resources and minimizes waste at a vehicle’s end-of-life while reducing emissions from the manufacturing process.  

According to the Ellen MacArthur Foundation, the implementation of circular business practices could prevent up to 45 percent of carbon emissions and 90 percent of wasted materials. Further, a digital data driven approach to reuse, remanufacturing, and recycling using a circular approach can help businesses meet their sustainability goals and generate business opportunities, especially for industries like automotive and its expansive supply chain.  


Manufacturing across all industries should seriously consider adopting a circular economy approach across their product lifecycle. The automotive industry is in a unique position to apply circular business models and apply these principles to their product design and production processes. The industry is already undergoing a generational transformative change as they move to the production of BEVs, build new greenfield factories, and introduce next generation production technologies like additive manufacturing and advanced material science. All of this will enable the automotive industry to lead the way for other industries to make the transformation to a circular economy.  

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