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Sobering Report Says Auto Industry Will Spend Remaining Carbon Budget Well Ahead of Schedule

Commissioned by EV makers Polestar and Rivian, the report details three levers that need to be pulled in unison and at full tilt for the industry to meet critical climate-action targets.

When a pathway report written by consultancy Kearney and co-commissioned by electric vehicle makers Polestar and Rivian was released earlier this month, it set off alarm bells about the magnitude of action required by the automotive industry to meet various climate targets.

What it did less of was provide direct avenues to those solutions — given the scale, scope and slow speed at which the industry tends to move.

“We wanted one set of data as an independent report — that element was important to both of us,” Rivian chief sustainability officer Anisa Kamadoli Costa told Sustainable Brands®. “From a technical standpoint, we wanted to assess where we are as an industry and determine what we needed to do to move forward, all with transparency at the core.”

The report asserts that even with a full-scale, accelerated adoption of battery electric vehicles (BEVs), the auto industry will still overshoot its emissions targets; unless it can holistically figure out a way to reduce scope 3 emissions across the board. The report projects that at the current trajectory, the industry will max out its carbon budget by 2035, which would equate to an overshoot of 75 percent in 2050, based on International Council on Clean Transportation projections as a baseline (or worse when considering other estimates). This also means overshooting the IPCC’s 1.5° pathway by at least 75 percent by 2050.

The report details three levers that would need to be pulled concurrently and at full speed in order for the industry to stay on track: a fast transition away from fossil-fuel-powered vehicles to full BEVs, increasing renewable energy integration in existing power grids, and reducing GHGs across the industry’s value chain.

It could be argued that both Polestar and Rivian are the closest out of many automakers in achieving at least a portion of the work this report says is required, as both are EV-only producers working towards progressive, highly transparent manufacturing practices. Most notably, Polestar is aiming to have a “climate-neutral” car on the road by 2030.

A curious starting point

In the grand scheme of the auto industry, Polestar and Rivian are quite small. The former delivered 51,500 cars last year, while Rivian sold just over half that. For two companies of this size to be sounding the alarming bells is a bit unfair given their size and scope; but the disconnect between the otherwise “progressive” work of these two brands compared to the rest of the industry is almost as alarming.

Various automakers have made commitments to carbon neutrality in certain markets, switching to renewable energy, improving the performance and lifecycle of EV batteries, cutting back on harmful manufacturing practices and, of course, wide-scale growth in developing EVs; but Polestar chief sustainability officer Fredrika Klarén says a larger issue is that automakers are putting resources towards refining traditional combustion engines, which doesn’t do enough to reduce carbon emissions.

“The industry is spending billions upholding legacy technology with a lot of money going into making it more efficient,” she says. “It’s astounding how much is being invested in this dying technology.”

Potential for collaboration

A key bit of information tucked into the report is that Polestar and Rivian held a joint roundtable at the end of January to discuss the report and the three levers with an unidentified number of other automakers in attendance (both brands declined to say who was in attendance, due to an NDA) — the idea being that collective conversations can lead to collective solutions; but the sloth-like pace and legacy thinking of the industry may prove to be too ingrained, at least for now. Sustainable Brands reached out to Ford, General Motors and EV upstart Lucid — but all declined to comment on the report, with only Lucid saying they were “aware of it.”

However various automakers felt about the report’s findings, the apparent lack of enthusiasm underscores the report’s claim that every year that the industry passes with minor action eats up approximately 7 percent of the GHG budget in the baseline trajectory, requiring even more work and urgency to play catch-up.

Interestingly, the report suggests that to stay on the needed 1.5° pathway for 2050, BEV sales must grow from 6 percent of the total car market to close to 100 percent by 2032 — a lofty ambition, to say the least; expectations put EV adoption much closer to 40-50 percent in the US market by 2030.

Even with the White House’s recent announcement of a major investment and expansion in a national charging network, adoption and use rates would land nowhere near what the report requires for the industry to meet its goals.

Supply chains remain a major hurdle

The report says that due to current technology and materials requirements, the emissions created from production of EV batteries are 35-50 percent higher than traditional combustion engines. The report estimates auto manufacturing and supply chains would need to reduce GHG emissions by 81 percent by 2032 meet the 1.5° pathway.

It goes without saying that this is a monumental, near-impossible effort; but it does highlight how much work remains to make EV adoption the more responsible choice for drivers. Beyond that initial statistic, the report says the production and manufacturing of the batteries themselves would need to become 100 percent electric — which right now, it largely isn’t; progress will depend on the speed of innovation of companies still reliant on fossil fuel technology.

“EV (adoption) is moving way too slow,” Klarén says. “It’s still a fringe part of the market. We are not all at where we need to be. EVs are only a climate solution if it can combat the climate crisis and get us below that 1.5° threshold.”

Rallying industry action

Klarén and Costa both note that other carmakers are interested in the type of data that this report produced, and that the first roundtable was a good step in creating awareness.

“This sort of report could have been super technical, and it would sit on shelves or within sustainability teams,” Costa says. “We can find more creative ways to work together. To me it’s all possible; but we just need the will of the industry.”

While the data is sound and the analysis is stark, it’s just hard to imagine the industry mobilizing fast enough to meet the necessary thresholds.

“What I know for sure is that for the sustainability teams who have seen this, it’s informing their strategies,” Klarén says. “We are anticipating that we are going to be the convener here, but that industries today are not wired to collaborate in this way to meet the climate crisis.”

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