Defining circularity for the automotive industry: what constitutes a circular car?

A circular car maximizes value to society, the environment, the economy, and it efficiently utilizes resources and public goods. Our definition therefore encompasses four relevant aspects: energy, materials, lifetime and utilization. Its degree of circularity should be measured in terms of its externalities caused (lifecycle Co2 emissions; non-circular resource consumption) per unit of service provided (passenger km).

Five levels of circularity

To overcome challenges to achieving circularity, it will be necessary for players along the automotive value chain to establish a common language related to the circular economy and relevant business models. The transformation will be decadal rather than short-term—and the ecosystem needs to come together around a common understanding of where to go.

Our study, together with 40 companies from the automotive value chain, proposes a taxonomy with five levels of circularity based on our two primary measures (carbon and resource efficiency) to evaluate and improve the circularity of cars. The proposed levels range from single owner use and disposal (Level 0) to an aspirational goal of an automobility ecosystem that has net positive impacts (Level 5). The levels describe vehicles that are part of an increasingly circular automobility system. Each level can be determined based on characteristics of both the product and its use. Thus both the producer and the owner of the car are responsible for achieving circularity.

This framework is intended to serve as the basis for further discussion and refinement of ideas throughout the industry:

Model displaying the five levels of circularity from past to post-2035. Carbon and resource efficiency levels are also displayed.

Measures of circularity

To measure progress over the five levels of circularity, this study proposes carbon efficiency and resource efficiency as primary measures. Efficiency is increased by reducing carbon emissions and non-circular resource consumption, as well as by increasing the service delivered by a vehicle—mostly in the form of passenger kilometers.

Carbon efficiency (lifecycle Co2 emissions per passenger kilometer)

  • Carbon efficiency takes a holistic view of a vehicle’s carbon footprint—not merely exhaust emissions or carbon intensity of materials. This methodology accounts for both: a) total lifecycle emissions, including materials, production, use phase and end-of-life; and b) service delivered (as opposed to kilometers driven). The entire automotive fleet’s carbon efficiency should align with a 1.5°C climate scenario.

Resource efficiency (non-circular resource consumption per passenger kilometer)

  • Resource efficiency considers the amount of non-circular resources consumed to deliver one unit of service. It takes into account the inflow of resources into a car (recycled, bio-based and renewable materials would be considered circular, while virgin materials are non-circular), as well as the outflow of resources. Circularity can be increased through strategies including reuse, remanufacturing and high-quality recycling. Improving resource efficiency often has an indirect impact on carbon efficiency as well.

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