As global consciousness continues to prioritize the effects of human actions on the environment, sustainability has become a critical concern for various industries. The automotive sector, in particular, has come under close examination for contributing to pollution, carbon emissions, and waste production. Despite this, industry leaders know that change is inevitable and have taken crucial steps toward a more sustainable future. Here at Kontrolka, we are committed to keeping up with this pace.
Driving forces behind the sustainability
We see three main drivers pushing the industry toward a sustainable future:
Firstly, governments are leading the way with directives such as The European Green Deal and other net-zero agreements. These initiatives urge automotive companies to seek more sustainable practices and solutions by setting strict carbon-neutral targets. For example, by 2030, all new vehicles must run on clean energy, and internal combustion engines should phase out from the entire population of motor vehicles by 2040.
Secondly, customers are playing an increasingly influential role. Younger generations, who are starting to dominate current markets, are becoming more environmentally and socially conscious. We believe cars should not merely meet the customers' needs but also align with their values and ethics. According to Accenture's report from 2021, "Not only 64% of the respondents are sustainability-minded drivers, but most prefer that their next vehicle be a new-energy vehicle". And the number is still growing. In fact, statistics from this year show that for American and European customers, the concern about climate change and sustainability is one of the top three most important aspects to consider when buying a new car.
"The aspect of affordability will soon play a significant role as well. I believe fully autonomous mobility will help to level the market again."
Lastly, several megatrends are driving change in the industry. These megatrends are tightly connected to the development of new technologies. The most evident is the shift towards new-energy vehicles (NEV), such as battery-electric or hybrid electric cars. OEMs are heavily investing in developing new lightweight and more efficient powertrains. Other significant trend includes the fast progression in the use of data, autonomous and connected vehicles. By 2025, all new cars are expected to be connected, leading to reduced traffic congestion, lower emissions, and more livable smart cities of the future.
Sources of data used in this article:
Deloitte US, Global Automotive Consumer Study, 2023
Accenture, Report “Busting automotive sustainability myths”, 2021
Hands-on research results
Kontrolka's research team conducted research focused on customer behaviors related to sustainability in the European market. The team carried out the research in two phases - analysis of current market reports and in-depth interviews with a focus on understanding the motivations of potential buyers and consideration of sustainability factors.
Some key findings included that concern about climate change and sustainability is one of the first three most important aspects to consider when buying a new car. However, customers still rely on a perception of product quality in the first place when making a purchase decision. Also, even though the majority of consumers are "sustainability-minded drivers," the shift to EVs is primarily based on a strong consumer perception that it will significantly reduce vehicle operating costs.
What does it mean for automotive OEMs?
Many are already taking steps toward a more sustainable future with efforts including the whole lifecycle of the car, from production to its last day. Starting with the manufacturing process, improving efficiency, reducing the amount of produced waste, and increasing the flexibility of production lines became essential. Manufacturers are also moving to recyclable materials, which can be repurposed multiple times without losing their qualities. Sustainability is also woven into the design philosophy of some cars. We see, for example, modular concepts with exchangeable parts as a compelling way of reducing waste and increasing the product life span.
However, for us, sustainability is not just about EV cars or materials. It starts with the design philosophy. Most importantly, sustainability is a mindset that can be practiced and perfected.
Small steps: Strategy
Transformation starts with a strategy. As mentioned at the beginning, nowadays, sustainability is already one of the core pillars of business strategy for many automotive companies. However, the strategy needs to be transformed into a more tangible roadmap that brings actionable steps with clear priorities toward your goals. From our experience, this can become the first road blocker. Still, to overcome it, you need people in the company that are on board and aligned.
Sustainability impacts organizations in many ways
The goal of achieving a sustainable future impacts the companies' organizational structures. Sustainability must be integrated into the decision-making processes and aligning sustainability goals with business objectives. Of course, it is a very complex challenge: Stakeholders inside and outside the company need to be sure why this is the right path. Creating a sustainability unit, or establishing new roles like sustainability officers in your business, can help to propagate the ideas faster as these people have nothing else in mind but to build and push for environmental mindfulness.
Company culture is vital
We know that setting up the right culture inside the company that supports the mindset is also crucial to success. It is vital to promote collaborations and communication to bounce ideas and insights and support a diversity of thought across all departments, from marketing to development. Going even further on the collaborations, McKenzie's report, The Race to Net-Zero, showed that 73% of business leaders are willing to collaborate with competitors on net-zero transition.
Engagement helps to move faster
A healthy feedback culture is also essential for employees to learn, develop and move forward faster. And most importantly, engage your stakeholders in sustainability initiatives. The research shows that education and support to raise awareness of sustainability issues help people relate to the objectives on a personal level. As a result, it strengthens their advocacy for the ideas. Read more about the power of engagement in our article link.