• While greener than traditional cars, EVs are not yet truly sustainable.
  • More renewable energy on the grid will lower their environmental impact.
  • Governments must incentivize EV ownership until it becomes the norm.
  • We need to build a circular economy for EV batteries and components.

There is no doubt that it's sexy to drive an electric vehicle (EV). They’re fast, cleaner than petrol or diesel cars, and fun. That said, questions remain: Are EVs truly green? What about the ‘grey’ energy that powers them? And how can we reduce the enormous carbon footprint associated with building your new electric car? Here are the three actions we need to take now to prepare the automotive industry for the age of carbon neutrality.

1) Green the grid

A recent report by BloombergNEF found that CO2 emissions from battery-powered vehicles were about 40% lower than internal combustion engine (ICE) vehicles. Emissions were even lower in countries which have large renewable power production and storage capacity, such as the United Kingdom.

Unfortunately, not all countries have ‘green grids,’ which limits the full potential of the electric vehicle revolution to eliminate the 20% of global carbon emissions that come from road transportation. In this context, continued pressure must be placed not just on car manufacturers, but also on national governments and energy companies if we are to create a truly sustainable road transport system.

2) Incentivize EV driving

While an increasing number of drivers are choosing to switch to an EV, our research shows that the total cost of EV ownership continues to exceed that of owning an ICE-powered vehicle in many countries, largely due to differing approaches to green tax incentives.

Indeed, there is evidence that governments are pulling back from EV incentives in several countries, including the Netherlands, Belgium and the United Kingdom, well before EVs reach the all-important price-parity tipping point. This is a worrying trend. Meeting carbon-neutrality goals in the near future means taking policy action today, and this includes incentivizing EVs until they become the common sense choice for all drivers.

3) Design EVs for circularity

We need to design EVs – especially their batteries – with circular economy principles in mind. Some 11 million tons of spent lithium-ion batteries are forecast to be discarded by 2030. Unless we design these batteries for reuse and remanufacture, we will not have enough of the right materials to keep up with global EV demand. Furthermore, emissions from vehicle manufacture and repair have an enormous impact on an EV's overall (‘well-to-wheel’) carbon footprint, which could be significantly reduced if circular economy principles are adopted.

Incentivization could steepen this curve
Incentivization could steepen this curve
Image: BloombergNEF

Making the car a ‘circular’ product is within the realms of possibility. The drivetrain of an ICE vehicle typically contains around 2,000-plus moving parts, whereas an EV drivetrain contains around 20 – making them much easier to design for recycle and reuse. We know it can be done; Renault, for example, already operates a car production facility in France that runs on circular economy principles.

Unfortunately, however, such examples are few and far between – which is why the World Economic Forum, together with WBCSD, Climate-KIC, Systemic and LeasePlan are launching the Circular Cars Initiative at the 2020 Annual Meeting. The aim of the initiative is to bring together all the stakeholders involved in vehicle manufacture and maintenance to identify practical ways to eliminate all unnecessary emissions from road transportation.

Simply put, cutting the 20% of global CO2 emissions that come from road transport requires concrete action today. The three principles we set out here are achievable but significant steps, and will help reinvent the wheel for the age of carbon neutrality.