1© Capgemini 2020. All rights reserved |The Automotive Industry in the Era of Sustainability Key Insights | Capgemini Research Institute | March 2020Automotive Industry in the Era of SustainabilityMarch 2020Country deck China 2© Capgemini 2020. All rights reserved |The Automotive Industry in the Era of Sustainability Key Insights | Capgemini Research Institute | March 202001020405 Sustainability is now a strategic priority for the industryHowever, the implementation of sustainability initiatives is fragmented Realizing the true sustainability potential of electric vehicles and circular economy is criticalHow can automotive firms accelerate sustainability?03 An additional $50 billion investment is needed to meet sustainability commitmentsCountry deck China 3© Capgemini 2020. All rights reserved |The Automotive Industry in the Era of Sustainability Key Insights | Capgemini Research Institute | March 2020Research scope and methodology Automotive sector surveyWe surveyed 503 automotive executives along with 11 in-depth interviews of executives working on sustainabilityORGANIZATIONS BY COUNTRY OF RESPONDENT ORGANIZATIONS BY VALUE-CHAIN ORGANIZATIONS BY REVENUERESPONDENTS BY DESIGNATION5%5%5%6%8%10% 19%20%21%SpainSwedenIndiaUKItalyFranceGermanyUSChina 39% 27% 23% 13% 12% 4%Direct C-suit AVP / Head Progra CEO3%7%54%18%17% $100 million to $500 million$500 million to $1 billion$1 billion to $10 billion$10 billion to $25 billionGreater than $25 billionSource: Capgemini Research Institute, The Automotive Industry in the Era of Sustainability- Executive Survey, November-December 2019, N=503 executivesAutomotive OEM, 70%Automotive Supplier, 30%4© Capgemini 2020. All rights reserved |The Automotive Industry in the Era of Sustainability Key Insights | Capgemini Research Institute | March 2020Research scope and methodology Sustainability experts survey12%15%21%22%30%12%21%31%36%10%13%14%15% 48%Automotive regulator/agencyEnergy regulator or agencyAny other regulator focused on sustainabilityLabor or workplace regulator/agencyEnvironmental regulator/agencyAny other organization focused on sustainability not defined aboveFreelance consultant working on sustainabilityNon-governmental organizationConsultant working for private organizationCircular economyHuman and labor rightsIndustrial operations and production engineeringSupply chainEnvironment and sustainabilityRegulatorSustainability consultant AcademiaWe also surveyed 317 sustainability experts including NGOs, academia and regulators, along with 9 in-depth interviews COUNTRY OF RESPONDENT DOMIANS OF EXPERTS SURVEYED9%9%9%9% 12%12%12%12%13%UKItalySpainIndiaFranceGermanySwedenChinaUSSource: Capgemini Research Institute, The Automotive Industry in the Era of Sustainability- Expert Survey, November-December 2019, N=317 respondents33%33%34%5© Capgemini 2020. All rights reserved |The Automotive Industry in the Era of Sustainability Key Insights | Capgemini Research Institute | March 2020SUPPORTING AND PROMOTING A CIRCULAR ECONOMYFAIR LABOR POLICY FOR AUTOMOTIVE VALUE CHAINSUSTAINABILITY IN ITWhat do we mean by sustainability in the automotive industry?Sustainability in the automotive industry involves a comprehensive view of planet-and-human-friendly operations, processes, products, and services. We identified 14 elements spanning the automotive value chain that the industry is pursuing.R&D and Engineering Supply Chain Manufacturing & Operations Marketing & Sales Mobility services and vehicle usage§ Sustainable R&D and product development§ Product sustainability § Sustainable supply chain§ Environmentally responsible sourcing of metals, materials and products§ Due diligence of all material and product procurement § Sustainable manufacturing§ Recycling of waste and easy returns for end-of-life disposal § Sustainable power procurement § Sales, marketing, and after-sales sustainability § Mobility and digital services§ Emissions control and improved vehicle safetySource: Capgemini Research Institute analysis6© Capgemini 2020. All rights reserved |The Automotive Industry in the Era of Sustainability Key Insights | Capgemini Research Institute | March 2020Sustainability examples across the automotive value chain R&D and Engineering Supply Chain Manufacturing & Operations Marketing & Sales Mobility services and vehicle usageGroupe PSA consolidated its R&D to reduce CO2 emissions by reducing weight and improving aerodynamics of the vehicles.Volkswagen uses renewable raw materials such as natural fibers, wood, cellulose, and hemp to produce components. Scania co-founded a consortium to encourage the rollout of bio-gas (90% less polluting) fueled trucks. Yamaha Motors achieved zero waste to landfill by using thermal recycling processes and using post-combustion residue in making cement and roads.General Motors runs its SUV assembly plant in Texas, US, on 100% clean wind energy. Tata Motors took back an equivalent of 26,993 vehicles for refurbishing and reuse in the year 201718. Daimler-owned moovel Mobility-as-a-service platform can be used to purchase public transport tickets in German cities and it also offers users access to other mobility options such as carsharing, ridehailing, and bike rentals.Source: Company websites and media reports. Capgemini Research Institute analysis.7© Capgemini 2020. All rights reserved |The Automotive Industry in the Era of Sustainability Key Insights | Capgemini Research Institute | March 2020Sustainability is now a strategic priority for the industry8© Capgemini 2020. All rights reserved |The Automotive Industry in the Era of Sustainability Key Insights | Capgemini Research Institute | March 2020Sustainability is a strategic priority for the industrySource: Capgemini Research Institute analysisThe automotive industry is increasingly discussing sustainability with its key stakeholders142 173 184 261 3202015 2016 2017 2018 2019Number of investor events discussing sustainability*Investor events are public conferences, shareholder meetings, analyst roadshows, etc. discussing the companys strategy/earnings/valuation, etc. “We recently reaffirmed our focus on sustainability strategy at the corporate level into three key areas: climate action, circular economy, and ethical and responsible business. Its a long-term plan to go beyond ensuring sustainability in our operations and work with our supply chain network to make our entire value chain sustainable.” Head of sustainability at a large OEM9© Capgemini 2020. All rights reserved |The Automotive Industry in the Era of Sustainability Key Insights | Capgemini Research Institute | March 2020Experts believe that automotive organizations are broadly in line with or ahead of other industries, and regulations on sustainabilitySource: Capgemini Research Institute, The Automotive Industry in the Era of Sustainability - Expert Survey, November-December 2019, N=317 respondents with 41 from US38%37%25%GLOBAL GLOBALIn line with other industries Lagging other industriesAhead of other industries In line with regulations Lagging regulationsAhead of regulationsIN ENSURING GLOBAL SUSTAINABILITY, THE AUTOMOTIVE INDUSTRY IS. IN ENSURING GLOBAL SUSTAINABILITY, THE AUTOMOTIVE INDUSTRY IS.46%19%35% China 41%21%38% 28%46%26% China10© Capgemini 2020. All rights reserved |The Automotive Industry in the Era of Sustainability Key Insights | Capgemini Research Institute | March 2020The automotive industry aligns with experts on top sustainability priorities Source: Capgemini Research Institute, The Automotive Industry in the Era of Sustainability- Executive Survey, November-December 2019, N=503 executivesTop sustainability priorities among the experts and executives for the automotive industrySource: Capgemini Research Institute, The Automotive Industry in the Era of Sustainability- Expert Survey, November-December 2019, N=317 experts