The Volkswagen ID. electric car goes into production at the end of 2019 © Volkswagen
The Volkswagen ID. electric car goes into production at the end of 2019 © Volkswagen

The procurement challenge behind VW's first CO2-neutral car

Volkswagen has introduced new sustainability criteria and transparency measures as part of efforts to produce what it claims will be the first CO2-neutral electric car.  

The new ID. will be manufactured in Zwickau, Germany, and it aims to be CO2 neutral throughout its lifecycle – including sourcing of raw materials, the manufacturing process, charging, use-phase, and recycling.

VW said potential barriers towards achieving the goal would be supply chain transparency and ethics around minerals in batteries.

Stefan Sommer, group board member for procurement, said: “Transparency in the supply chain – especially for graphite, cobalt, lithium, and nickel – is a prerequisite for the assessment of social and environmental standards.”

VW said the production of e-vehicles generates an average of 150% more CO2 than a combustion engines due to the “energy-intensive production of battery cells”. VW said its batteries would be made by Korean supplier LG Chem, which uses “green power”.

Transparency of raw material supply chains is a challenge because of 40,000 direct suppliers worldwide, and indirect suppliers, involved across the ID.'s production. However, VW has introduced pilot projects to tackle such issues, including “identifying the material origin of goods and initiating measures if risks are identified”.

VW has significantly tightened award criteria for suppliers through a new sustainability rating. “Compliance and sustainability performance will thus become a selection criterion as binding as price or quality,” said the company.

VW will work with other automotive manufacturers and in cross-sector initiatives such as the Global Battery Alliance and the Responsible Minerals Initiative (RMI).

Supply chain costs are estimated to reduce by one third by the end of 2019 through CO2 reductions, according to Volkswagen's report The mega potential of the supply chain.

The manufacturing phase will enable the ID.’s environmental impact to “improve by more than 1m tons of CO2 per year”, said VW, following the company's logic that “that electric cars are only as clean as the power that is used to produce and charge them”.

Thomas Ulbrich, the board member responsible for e-mobility at Volkswagen, said: “Climate change is the greatest challenge of our times. As the world’s largest car manufacturer, Volkswagen is assuming responsibility: The new ID. will be the group’s first climate-neutrally produced electric car. To ensure that it remains emission-free during its life cycle, we are working on many different ways to use green power. Truly sustainable mobility is feasible if we all want it and we all work on it.”

VW plans to invest about €9bn in e-mobility by 2023.

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