European automotive suppliers are making their supply chains more sustainable, but they face the challenge of financing these efforts from existing operations and industry sentiment is not very optimistic.
Policymakers should take the necessary steps to provide support, but industry will also need to work harder to stay ahead.
CLEPA’s research on sustainability reports reveals that suppliers are adopting green and circular strategies throughout their value chains. While vehicle production has increased over the past two years, although still below pre-pandemic levels, notable improvements have been made in reducing CO2 emissions and enhancing recycling efforts.
In a sample of 27 companies, carbon emissions related to own operations decreased by 4.5% between 2021 and 2022, largely attributed to a significant increase in renewable energy usage, now reaching 41% of total energy consumption.
While waste generation increased by approximately 9% during this period, suppliers reported a slight rise in recycling and recovery of production waste, reaching 93% in 2022. Moreover, sustainability initiatives extend to remanufacturing of components and creating new components from recycled materials, bolstering industry sustainability.
These are encouraging findings, but this trend must be sustained and expanded with business revenue to achieve Green Deal objectives. However, in the latest insights from the CLEPA Pulse Check, a bi-annual survey conducted in partnership with McKinsey, it is concerning that more than half of suppliers (56%) report profitability below 5%, with 17% reporting losses.
Not less worrying is the fact that the EU is attracting relatively less foreign direct investment, which sharply contrasts with the US’s growth, especially in battery manufacturing, underlining CLEPA’s own research on sustainability reports reveals that suppliers are adopting green and circular strategies throughout their value chains.
While vehicle production has increased over the past two years, although still below pre-pandemic levels, notable improvements have been made in reducing CO2 emissions and enhancing recycling efforts.
In a sample of 27 companies, carbon emissions related to own operations decreased by 4.5% between 2021 and 2022, largely attributed to a significant increase in renewable energy usage, now reaching 41% of total energy consumption.
While waste generation increased by approximately 9% during this period, suppliers reported a slight rise in recycling and recovery of production waste, reaching 93% in 2022. Moreover, sustainability initiatives extend to remanufacturing of components and creating new components from recycled materials, bolstering industry sustainability.
These are encouraging findings, but this trend must be sustained and expanded with business revenue to achieve Green Deal objectives.
However, in the latest insights from the CLEPA Pulse Check, a bi-annual survey conducted in partnership with McKinsey, it is concerning that more than half of suppliers (56%) report profitability below 5%, with 17% reporting losses.
Not less worrying is the fact that the EU is attracting relatively less foreign direct investment, which sharply contrasts with the US’s growth, especially in battery manufacturing, underlining EU industrial policy challenges.
To enhance EU manufacturing competitiveness in e-mobility, policies must optimise raw material and battery supply chains, accelerate charging infrastructure deployment, reduce administrative burdens, and address skills and energy needs.