Circular Economy

Luxury Carmakers Expand Circular Solutions for Auto Industry

JLR, Mercedes-Benz and Volvo are the latest companies embracing circularity to boost resilience and stability of their operations and supply chains.

Published 4 months ago | About a 7 minute read

Image: Quang Nguyen Vinh

Automakers including BMW, Ford, Renault and Volkswagen are among those already seizing economic and operational benefits by expanding circular manufacturing processes and supply chain partnerships. Now, in a time of ever-growing economic and geopolitical instability, three of their peers are increasing operational resilience by driving the movement forward.

Volvo cutting CO₂ emissions with recycled steel partnership

SSAB Zero
steel Image credit: Volvo Cars

Volvo Cars has signed a new agreement with Swedish steel firm SSAB for the supply of high-quality, recycled and near zero-emissions steel starting from 2025. Volvo is the first car maker to partner with SSAB for recycled, near-zero-emission steel for serial production deliveries.

One of our most used materials, the steel industry produces over 1.8 billion metric tons annually. Sadly, it is also a massive polluter: Traditional steelmaking processes rely heavily on carbon-intensive equipment such as blast furnaces, emitting around 1.8 tons of CO2 for every ton of steel produced — roughly 11 percent of the world's total greenhouse gas output.

“One of the biggest sources of CO₂ emissions in our production process is the steel we use to build our cars, averaging 25 percent of all material-related emissions for a new Volvo car,” says Chief Supply Chain and Manufacturing Officer Francesca Gamboni. “We work towards achieving net-zero greenhouse gas emissions by 2040, and cutting steel-related emissions really has the potential to move the needle.”

The recycled steel — which meets the same safety-related requirements as primary steel in terms of strength and durability — will be used in components of Volvo’s forthcoming, fully electric EX60 SUV, as well as other cars based on its next-generation SPA3 car architecture.

SSAB’s closed-loop system recycles scrap steel, significantly reducing CO₂ emissions and keeping materials and natural resources in use for longer. Compared with traditionally produced steel in Europe, SSAB’s recycled steel generates almost 100 percent less CO₂ emissions in own operations and is made with a recycled content of almost 100 percent.

In addition to buying recycled and near-zero-emission steel, Volvo Cars will also sell its scrap steel to SSAB to be recycled at the company’s mill in Oxelösund into decarbonized steel. The agreement is an extension of a long-term collaboration between the two companies, with the goal of leading an industrywide transition to decarbonized steel.

“This agreement marks a significant milestone on our journey toward steelmaking with virtually no fossil CO₂ emissions,” says Asma Manesh, Commodity Manager Scrap at SSAB. “The conversion of our Oxelösund site will not only enhance our production competitiveness but also enable us to cut emissions equivalent to 3 percent of Sweden’s total CO₂ output — and high-quality steel scrap is an important factor in this equation.”

Volvo Cars is committed to achieving net-zero emissions by 2040. By 2030, the aim is to have reduced CO₂ emissions per car by 65-75 percent compared to a 2018 baseline. The SSAB partnership supports this, as well as Volvo Cars’ circularity ambitions — which include achieving an average of 30 percent recycled content across the fleet by 2030, and for new car models released from 2030 to contain at least 35 percent recycled or bio-based content.

Mercedes, Modern Meadow partner to scale bio-based, circular leather alternative

Mercedes Modern Meadow
Innovera Image credit: Mercedes-Benz

Meanwhile, Mercedes-Benz has teamed up with materials-science company Modern Meadow to develop a bio-based leather alternative for its Concept AMG GT XX technology program. The aim of the development partnership is to further develop Modern Meadow's INNOVERA™ (fka Bio-VERA™) — a high-performance, upcycled alternative to traditional leather — for series production and set new standards in vehicle interiors.

INNOVERA is made from a combination of plant-based proteins, biopolymers and post-consumer waste to replicate the look and feel of conventional, bovine leather. For the Mercedes-Benz partnership, the post-consumer waste component will come from chemically recycled tires from Mercedes' AMG GT3 race cars.

"At Modern Meadow, we are redefining automotive interior possibilities with INNOVERA — our next-generation transformative material that brings beauty, performance and sustainability into perfect balance," said CEO David Williamson, PhD. "In our development partnership with Mercedes-Benz, we have used INNOVERA to create a new luxury leather alternative without sacrificing aesthetics, versatility and texture. It looks and feels as good as it performs."

Modern Meadow's INNOVERA achieves more than 80 percent renewable carbon content and is completely animal-free. INNOVERA requires no special preservation or storage conditions, which reduces complexity and costs, and is adaptable to any standard manufacturing process.

In the Concept AMG GT XX, one scrap tire provides the basis for approximately four square meters of the custom INNOVERA material — which will be used as covering for the black seat pads of the car’s bucket seats. Modern Meadow says its bio-based nature makes it breathable, waterproof and lighter than traditional materials; and its maximum tensile strength is twice as high as that of traditional materials.

JLR driving over £100m in value from industrial reuse initiatives

JLR EPMC
reuse Image credit: JLR

And Jaguar Land Rover recently revealed how it is reducing waste across its industrial operations in the UK and Europe through a £100m reuse, refurbishment, repurposing and recycling drive.

As its electrification transformation continues with the upcoming launch of Range Rover Electric, JLR’s industrial operations are readying themselves for the next generation of electric vehicles and undergoing a revamp across all facilities.

As a result, tens of thousands of pieces of equipment and tools — spanning from entire production lines to screwdrivers — have been put back in circulation, when possible, after considering factors such as standard compliance, availability of spare parts, cost of refurbishment and servicing, potential scrap as well as sale revenues.

Instead of buying new, JLR has reused over 50,000 square meters of equipment — from its facilities in Castle Bromwich, which ceased production last year, and Graz, Austria; and its Electric Propulsion Manufacturing Centre (EPMC) in Wolverhampton — and redeployed it across JLR sites in the UK and Nitra, Slovakia. Meanwhile, hundreds of secondlife robots are now installed at Solihull, Halewood and the Wolverhampton EPMC to produce JLR’s next-generation electric vehicles and battery packs.

In addition, 18,600 tonnes of scrapped metal from Castle Bromwich and Graz have been sent to a supplier for recycling — helping to enable the reduction of CO2e emissions by 1,258kg per tonne of new steel generated from scrapped metal.1

“As we are entering a critical phase in our electrification journey, JLR aims to act as a responsible user of resources by enhancing product utility and longevity, and maximizing recycling and repurposing,” says Chief Sustainability Officer Andrea Debbane. “It’s not only the right thing to do, but it also improves profitability and increases supply chain resilience. Through these initiatives, JLR advocates that sustainable choices are not always more expensive — they can help reduce costs and even become opportunities for the growth and development of our colleagues.”

JLR’s circularity drive has been led by a broad, crossfunctional group with members from Industrial Operations through to Vehicle Programs working across sites and technologies to identify asset reuse opportunities.

A new digital management system has also been developed inhouse, aiming to manage the life of every vehicle program asset from acquisition through to sale, scrapping and reuse. The solution will include an internal marketplace where a catalogue of assets will be available for purchase, streamlining and scaling up future projects. Across facilities, the teams have also built new technical, maintenance and safety skills — bringing refurbishment and recalibration of tools to production standards on site.

Circularity plays a major role in JLR’s transformation in becoming a more sustainable, modern luxury business. Other circularity efforts include a partnership with energy giant Pramac to develop a portable, zero-emission energy storage unit powered by second-life batteries from the all-electric Jaguar I-PACE.

1Supplier data: 442kg CO2e per tonne of new steel created from scrapped metal vs 1,700kg CO2e per tonne of new steel created from scratch (as of 29th April 2025).