HOW THE AFTERMARKET CAN HELP SQUARE THE DECARBONISATION CIRCLE
At N!BF 2020 Dr Levy Tillman, of the World Economic Forum, and Matthias Ballweg, from the ‘think tank’ Systemiq, spoke about the WEF’s Circular Car Initiative, which NEXUS is supporting. They emphasised the importance of the aftermarket playing a key role in this drive to decarbonise the automotive manufacturing industry, to help prevent climate change. Below is a summary of the key points.
Why do you think the aftermarket has a strong role to play in the Circular Car Initiative?
If the aftermarket does not seek to evolve rapidly in the next decade then it is going to be out of business. The risk that I am talking about is much bigger (than then normal risks you are used to) and the consequences are very serious. The ‘killing curve’ is the measurement of the carbon dioxide concentration level. What it shows is 62 years of increases in the carbon dioxide level in the atmosphere. Humanity is having a huge impact on the atmosphere of our planet. We have roughly 10 years to bend this curve downward. This curve, measuring sustainability and climate change, is the number one risk in the decades to come.
We need you in the global aftermarket to help us solve this problem.
What steps do we need to take to decarbonise the aftermarket industry?
One step is to go from traditional engines to electric vehicles. In this way we will be able to decarbonize the electricity supply, reducing the amount of carbon dioxide by two thirds. But to eliminate it fully we need to completely decarbonize the manufacturing process, and the aftermarket will be a critical part of that.
It will require trillions of dollars of investment and new policies that are going to affect billions of lives. However, a new generation of customers are not going to support an industry which is operating in opposition to their fundamental long-term interest and values.
Today, the automotive industry is the second most intense consumer of resources in the world after food, so we have to change to be part of the solution. When you sell a car in the United States, on average it costs $36,000. Almost half of that cost is in materials but 18 years later, when the vehicle goes into a junkyard, that vehicle cost is less than $10,000.
So, the good news is there is a lot of value that we can recapture if we invest more in the design and the materials used, and the automotive aftermarket can be part of that process.
If we do circularity correctly, and get the business model and the materials side right, then this business can be a trillion dollars opportunity. That is why the WEF is collaborating with NEXUS and other partners to create three different communities that will shape the future of automotive circularity.
What will be the first step?
Firstly, we are going to create a policy roadmap that will guide the circularity future for materials and new business models. We are going to ensure that as this process transpires, the aftermarket will be one of the critical lenses through which we will overview this transformation.
At the end of the day, the world that we intend to create will see the average vehicle managed as part of a fleet, and the maintenance and management of the fleets will be significantly more rationalized.
This means there will be a view of full lifecycle ownership. With a fleet management approach, the value of the vehicle will change completely. The entire system has to be re-educated with a proper policy.
The circularity process is critical for the future of the environment, for the future of your children and for business.
Will electrification play a bigger role than circularity?
Both will play an essential role. Fleet managers look at their vehicles in a different way. When I want a car, I want something fast and luxurious, while a fleet manager wants something which is functional, something not very expensive and is going to maintain its value and something which is going to make value at the end of its life. The electric vehicle works in a much better way in this sense. The battery you can recycle, and it is much less expensive to maintain and to fuel.
With wide-ranging experience providing consultancy to major businesses, Matthias Ballweg uses his expertise to enable leaders to bridge sustainability / profitability trade-offs, while realising the future of mobility.
Since 2019 he has worked for the ‘thinktank’ Systemiq, which is dedicated to achieving the objective of the Paris Agreement, which is to limit any rise in global temperatures to 1.5 °C.
Dr Levi Tillemann
Has more than a decade’s experience in automotive innovation and policy. He leads the WEF’s Circular Car Initiative and is a globally recognised expert on micromobility, autonomy and electric vehicles. He is a founder of, and senior advisor to, the consulting group Valence Strategic. Dr Tillemann served in the Obama administration as an advisor to the Department of Energy and is author of The Great Race: The Global Quest for the Car of the Future.