Your expert for questions
Dr. Sebastian Jursch
Director at PwC Strategy&
Tel.: +49 151 61554-648
Current trends such as zero emissions vehicles and carbon neutral manufacturing demonstrate the growing significance of sustainability in the automotive industry. These trends are not just driven by the introduction of stricter emissions regulations or even quotas, but also by increased awareness of environmental and sustainability issues within society and a growing interest among consumers in sustainable vehicles. Furthermore, cars have ceased to be a status symbol for many. Sharing instead of owning is a suitable option for many consumers, and not just for environmental reasons.
Car manufacturers and suppliers must therefore re-evaluate the sustainability of their products and value chains. Their greatest challenge here is to comply with legislative requirements while at the same time ensuring cost-effective manufacture and meeting the demands of consumers.
To achieve this balancing act, the industry will have to develop sustainable solutions which transform both the product and the value chain.
The automotive industry is experiencing radical upheaval. This transformation is being driven by four main trends: electromobility, shared mobility services, autonomous driving and connected vehicles. The growing demand for electric cars and innovative mobility solutions shows how important the issue of sustainability has now become. Meanwhile, investors and lenders are also paying more attention: They want to understand the climate risks faced by car manufacturers and suppliers and avoid damage to reputation as a result of associating with climate unfriendly organisations.
This trend is accelerated both by political policies and changing consumer preferences. Some manufacturers and suppliers have already responded to these trends, at least to a certain extent. For example, they are increasing the number of electric vehicles in their range and providing flexible mobility solutions. Yet the potential is far from exhausted. There is still a long way to go to transform the automotive industry into an industry that is actually sustainable.
There are three issues at the heart of this transformation:
1. Climate change and carbon emissions
Climate change and its impacts have been part of a broader societal debate for some time. As a result, lawmakers have made carbon emissions regulations considerably more onerous in recent years. Car manufacturers are required to reduce their carbon emissions both during vehicle manufacture and the emissions of the vehicles themselves. In this context, the use of alternative powertrains such as fuel cells play an important role.
2. Sustainability along the value chain
As natural resources become more and more scarce, sustainable value chains are becoming more and more important for the automotive industry. They are based on the principle of reusing and recycling resources. Creating transparency along the supply chain is critical. This is the only way to trace the origin of parts and ensure sustainability along the value chain. With this in mind, car manufacturers and suppliers are considering how to implement innovative solutions such as a circular economy, battery recycling, biodegradable components and sustainable processes in research, development and manufacture.
3. Digital responsibility
As self-driving and connected vehicles become more common, the focus will shift to issues such as unlocking digital value, data protection and data security. On the one hand, car manufacturers and suppliers have to define digital functionalities and technologies that are necessary in order to implement sustainable solutions. At the same time, however, strict guidelines are needed in order to prevent violations of data laws.
Car manufacturers and suppliers are looking for solutions that are feasible and cost-effective while also sustainable in order to integrate sustainability in their business models. To do this they have to consider issues such as the following:
Climate change and carbon emissions
Which powertrain solutions are best in terms of enabling my business to reduce carbon emissions – for example electric batteries or fuel cells?
What skills and expertise do we need to be able to implement these solutions?
How can we measure our carbon footprint and ensure that we comply with the legislative requirements?
Sustainability along the value chain
Which processes should we prioritise as we transform in the direction of sustainability?
How can we implement sustainable solutions such as a circular economy and battery recycling?
How can we create transparency along the supply chain?
Which digital functions and technologies are needed to support sustainable solutions in the automotive industry?
How do digital functions and technologies contribute to the sustainability targets of our business?
How can we guarantee data protection and data security?
Our team from PwC and Strategy& combines automotive industry experts with cross-industry experts in sustainability. We offer a varied range of sustainability-related services, from strategy formulation to implementation.
In the sustainability space, we have particular expertise in the following areas:
Sustainability strategy: defining a sustainability strategy and positioning your business in terms of sustainability.
Sustainable business model: integrating sustainability in organisational structure, processes, KPIs and incentive schemes.
Sustainable process transformation: transforming processes along the value chain to become more sustainable, for example sustainable research & development and manufacture.
E-mobility solutions: implementing e-mobility solutions ranging from strategy formulation and restructuring to research & development and manufacture through to marketing and sales.
Implementation of a circular economy: establishing circular economy solutions among car manufacturers and suppliers, with a focus on battery recycling
Impact measurement: creating transparency in relation to the environmental impacts of business activities along the entire automotive value chain
Sustainability reporting: providing assistance with non-financial reporting, for example developing non-financial KPIs for internal and external reporting.
Our experts from PwC and Strategy& will dedicate all of their expertise and know-how to helping car manufacturers transform into sustainable businesses.
As part of the global PwC network, we enjoy access to a large network of experts all over the world.
How do we realise "Sustainability Management" that simultaneously pursues economic profits and creates social value? To answer this question, this issue of Strategy& Foresight presents five reports on sustainability-related strategic issues and solutions, covering the themes of disclosure strategy, long-term strategy, short-term to medium-term strategy, governance design, and digital technology.
Our PwC and Strategy& experts adopt a pragmatic approach to help organisations develop low carbon and sustainable business initiatives that are profitable, practical and tangible. In over 200 sustainability projects in the last three years, we have helped our clients unlock value around the world while contributing to a better environment. Learn more about the solutions available to support you too.
Over the next 12 years, the automobile and truck industries will diversify their powertrains considerably. Plug-in hybrid electric vehicles (PHEVs), fully battery-powered electric vehicles (BEVs), and fuel cell electric vehicles (FCEVs) will become increasingly popular. Auto makers need to make strategic decisions today regarding their fuels and powertrains depending on issues such as the total cost of ownership (TCO). This report provides a detailed analysis that compares the total cost of ownership (TCO) for each type of fuel and powertrain – today and projected through 2030.
Dr. Sebastian Jursch
Director, PwC Strategy& (Germany) GmbH
Tel: +49 151 61554-648