With the phasing out of the internal combustion engine in Europe by 2035, car makers – including those building high speed supercars – are racing to go electric and integrate circular economy in their production and lifecycle processes. This will be complex. An analysis by Warwick Business School Alumna Veronica Volodina proposes a 5-step roadmap to make the journey to the transition that much smoother.

Speed Meets Circularity: How Can High-Performance Automakers Close the Loop? By Veronica Volodina. With kind acknowledgements to Prof. Frederik Dahlmann, Warwick Business School.

Think of your favourite supercar (if you have not chosen one yet, pick any)! What is the first thing that comes to mind? For most, it is probably a beautiful, extremely fast, and just slightly overpriced masterpiece. It is also highly likely that circularity, and sustainability in general, will not be at the top of your list.

However, this perception may change in the foreseeable future since the sales of cars with Internal Combustion Engines (ICEs) will be banned in Europe by 2035 (Deutsche Welle, 2023).

Why Does Circularity Matter in the Automotive Industry?

Statistics indicate that private cars and vans account for about half of global CO2 transport emissions (Statista, 2023). In response, the International Energy Agency (2023) highlights that rapid fleet electrification – switching from ICE vehicles to Battery Electric Vehicles (BEVs) – is key to reaching net-zero emissions. Consequently, managing batteries, especially their reuse and recycling, is crucial. Nowadays, lithium-ion batteries (LIBs) prevail in BEVs, but carmakers are investing in alternative technologies like sodium-ion and solid-state batteries, which could “… disrupt the market with improvements in cost, energy density, and safety” (IMD, 2024).

However, “unless we move away from the linear take-make-dispose kind of business model to that circular model of… reuse, use less, use longer, use again (Figure 1), we’re not going to get to net zero without that” (Shawley, Chorley, 2023). To provide further context, “CE tackles climate change and other global challenges, like … waste, and pollution, by decoupling economic activity from the consumption of finite resources” (Ellen MacArthur Foundation, n.d.). Besides its obvious ecological benefits, CE “ … holds the potential to improve profitability by 1.5 times along the value chain and tap revenues per vehicle 15–20 times its sales price” (WEF, Accenture, 2022).

Switching to the circular business model chain will allow to “…reduce carbon emissions by up to 75% and resource consumption by up to 80% per passenger kilometre by 2030” (WEF, Accenture, 2020). Several high-performance automakers have already started working in this direction by presenting their hybrid and/or fully electric vehicles. However, this is a much more complex process. launching a BEV is just the beginning; the real challenge lies in ensuring its efficient maintenance, with a strong focus on end-of-life vehicle (ELV) management. While high-performance premium cars are often seen as collectables, this perception may shift with the rise of BEVs, and some reasonable preemptive measures should be taken.

The broader research the author conducted included the analysis of over seventy different sources, including more than twenty legislative documents, which once again confirm the hypothesis of the necessity of climate-neutral CE while decoupling economic growth from resource overconsumption (European Commission, 2019).

While the concept of CE seems straightforward, formulating and implementing specific strategies can be complex. That is why the author decided to develop a five-step plan supported by the best practice examples for high-performance carmakers to consider while working on a strategy for a circular transition.

The “Ideal” Roadmap for Circular Supercars

The final roadmap consists of five steps. It merges the existing strategies broadly outlining how to achieve the Circular Economy Action Plan (CEAP) goals with the author’s findings based on broader research into one comprehensive guide. Below, you will find its visualisation (Figure 2), followed by a detailed description of each step.

Steps 1 & 2: Regulations & Strategising

It is essential to consider the existing CE regulations first. Once familiar with the regulatory landscape, setting clear and ambitious CE targets is crucial. Dahlmann, Branicki & Brammer (2019) state that rather ambitious and long-term targets, measured in absolutes lead to greater emission reductions. Blended with detailed KPIs, such targets will act as guiding principles for all the company’s employees.

Step 3: Pre-use Phase

Step three focuses on the pre-use phase. In other words, car manufacturers should start their circular journey early in the design stages. Yeabsley, Harkin, Ren (2023) emphasise the importance of carmakers being modular in design and cross-product parts standardisation (e.g. McLaren’s carbon fibre monocoque used for all its vehicles). Such measures aim to enhance circularity and lower production and maintenance costs.

Next, it is important to utilise sustainable, recycled, and/or bio-based materials. Apart from recycled carbon and aluminium, widely utilised for production in the researched companies (McLaren, Aston Martin, Ferrari), such renowned carmakers as BMW and Mercedes-Benz collaborate with a manufacturer of innovative cactus-based leather alternative Deserttex®. This renewable biomaterial requires low-impact raw materials and has a potential for biodegradability.

The next focus areas within step three are closed-loop supply chains, traceability, and digital continuity. Automakers should prioritise car longevity and ensure that they are at least partially reused and/or recycled over time (Tschödrich et al., 2023). These initiatives will bring companies closer to achieving CE goals and simultaneously decrease scope 3 emissions. One possible way to unleash this idea is a CE factory. For instance, Renault claims to be the first carmaker in Europe to launch a factory aiming to produce mobility solutions with a negative CO2 balance by 2030 (Ellen MacArthur Foundation, 2021). Factory’s four main activity areas are ‘Re-trofit’ (vehicle reconditioning), ‘Re-energy’ (optimising and repurposing batteries), ‘Re-cycle’ (dismantling of ELVs and their parts’ reuse and recycling), ‘Re-start’ (supporting research in the field of CE).

Step 4: Use Phase

Step four mainly focuses on vehicle servicing and sharing. While sharing models may be less appealing for high-end customers, the growing popularity of mobility-as-a-service (MaaS) suggests potential applications even within the premium automotive segment.

The most prominent MaaS options – leasing and subscription (e.g., Porsche Drive) – aim to benefit both parties economically while enhancing circularity. These models ensure timely servicing and vehicle returns for repurposing or recycling, and minimise the number of cars produced (reduce), and ensure the reuse of cars/components by the manufacturers (reuse, recycle), moving away from the linear business model.

Also, to extend vehicle life, car producers should incentivise longer use by offering favourable warranty, maintenance, and resale programmes (e.g., Ferrari’s Classiche certification, Aston Martin’s Timeless programme) to keep vehicles in optimal condition. They can also provide software or battery upgrades to keep cars up-to-date without full replacements. These practices support the “reduce” circularity pillar by increasing vehicle longevity. Premium car brands already position their vehicles as collectables and emphasise preserving their cars in prime condition for as long as possible.

Step 5: Post-use Phase

The fifth and most critical step is dedicated to the post-use phase, particularly efficient ELV management. The EU’s ELV Directive Proposal aims to enhance circularity and environmental performance of ELVs by increasing recycling targets, improving the recovery of critical raw materials, strengthening producer responsibility, and promoting second- and third-life applications for vehicle components, primarily through collaboration with recyclers to maximise material recovery.

Partnerships in this field include closed-loop battery repurposing, such as JLR’s collaboration with Wykes Engineering, which uses i-Pace Jaguar (BEV) batteries to create energy storage systems (ESSs) for solar and wind power (Shawley, Chorley, 2023). Previously, JLR also worked with Allye to repurpose PHEV batteries into energy blocks for zero-emissions charging during Range Rover Electric testing (Carrier, 2024; Carey, 2024) (Figure 3).

Chorley (2023) confirms that the automotive industry’s biggest shift will occur this decade with the transition from ICEs to BEVs, making collaboration, even with competitors, crucial for advancing technologies and materials, especially for effective ELV management. Notably, JLR plans to extend battery use even further by giving them a third life in smaller mobile solutions.

When battery packs can no longer be repurposed, recycling companies like Hydrovolt can recover valuable materials such as plastics, aluminium, nickel, lithium, and cobalt for their infinite reuse. This is especially useful since these materials are non-renewable and are constantly increasing in price (Stahel, 2012).

So, How Can High-Performance Automakers Close the Loop?

In this article, the author explored the urgent need for high-performance automakers to adopt CE principles, particularly as the shift from ICEs to BEVs accelerates. The proposed roadmap outlines a five-step strategy for supercar manufacturers to integrate CE throughout the vehicle lifecycle, with a special focus on the critical post-use phase, where effective ELV management becomes essential.

This roadmap, while comprehensive, leaves room for further research on areas such as control and reporting measures, sustainable taxation, and the broader application of circular practices within the high-performance automotive sector. Although implementing CE practices in niche supercar brands – characterised by high prices and low production volumes – may present unique challenges, these companies have the opportunity to lead the way in sustainability within the luxury segment.

Looking ahead, the road to circularity is complex but essential. Will high-performance automakers lead the charge toward sustainability – or risk lagging in the race for a circular future? As further research unfolds, this roadmap could evolve and expand to offer actionable strategies for other regions, helping to shape a global shift towards a more sustainable and circular automotive industry.

Useful links:

• Link up with Veronica Volodina on LinkedIn
• Read a related article: The Circular Economy: Its challenges and impact across frontiers
• Discover Warwick Business School, UK 
• Apply for the MSc Management at Warwick.

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