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  6. Clean mobility starts with suppliers

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Volkswagen is doing everything in its power to make its contribution to achieving the Paris climate targets. CO₂-neutral components and raw materials from suppliers played an important role in this.

With its major electric offensive, Volkswagen wants to make a contribution to achieving the climate targets agreed in the Paris Agreement. But because the electric car is only as clean as the electricity with which it is produced and charged, the Wolfsburg-based company is now also taking a closer look at the so-called supply chain – e.g. the upstream production of materials and components through to the extraction of the raw materials required for this. The supply chain is also so important for sustainable electromobility because the production of high-performance battery cells is still very energy-intensive today. As a result, the production of an e-vehicle generates significantly more CO₂ than that of a combustion engine – around 150 percent on average. Compared to conventional drives, electric cars therefore have a disadvantage in the CO₂ balance right from the start. Consistent climate protection must therefore start early.  

The battery cells of the ID. are produced with green power.

That is not easy. If a car manufacturer wants to avoid and reduce CO₂ in the supply chain, it is facing special challenges. Partner companies must be convinced. The supply chains in the automotive industry are widely ramified. And there are no direct business relationships at all with many participants, such as raw material manufacturers. In many cases, the first step is to provide the required transparency. "Transparency in the supply chain – especially for cobalt, lithium, nickel and graphite – is a prerequisite for the assessment of social and environmental standards", says Dr. Stefan Sommer, Group Board Member for Procurement.

A lot of CO₂ can be saved in the extraction of raw materials and the upstream production of materials and components.

With the ID. Volkswagen shows that – despite all challenges – many advances are already possible. The compact electric car, which will go into production at the end of the year, will be the Group's first model to be produced in a balance sheet that is CO₂-neutral. This will be made possible, among other things, by the consistent avoidance and reduction of CO₂ emissions in the supply chain. A savings potential of roundabout one third was identified for the first step alone by the end of 2019. Currently unavoidable CO₂ emissions are offset by investments in certified climate protection projects elsewhere.

Battery production with green electricity

First of all, Volkswagen is achieving major CO₂ improvements in the production of battery cells, one of the hotspots in the supply chain. Their production has been very energy-intensive so far, due to various factors – among other things, a lot of electricity is consumed during the drying of the materials, which are applied in liquid form to a film. The so-called energetic backpack for battery production is a burden on the CO₂ balance, especially in countries that have a high proportion of fossil fuels in their electricity mix. Within the production cycle of the ID., it is therefore very important for Volkswagen that the battery cells are produced with green electricity. They are supplied by LG Chem, which is setting up a production facility in Poland for this purpose. A long time ago, Volkswagen fixed a firm agreement with LG Chem that only certified green electricity would be used to manufacture the battery cells for ID. By this, CO₂ emissions from this sector will be reduced to almost zero.

Further focal points for CO₂ reductions in the supply chain are steel production and electric motor production. In the case of steel, complex processes – including end-of-pipe technologies, which are only used at the end of the process – can lead to savings of up to 70 percent. In the electric motor, Volkswagen uses recycled aluminum for the housing. The savings potential of these and other measures is 50 percent.

Precise identification of components

The challenges grow as the supply chain moves down towards raw materials. One hundred percent transparency across all stages of the value chain is not yet possible. This is reinforced by a high degree of complexity – there are more than 40,000 direct suppliers worldwide, plus a multiple of indirect suppliers, some of whom are seven to eight intermediate stages away from the finished product.

At the moment, several pilot projects are underway at Volkswagen to precisely identify the material origin of goods and to initiate measures if risks are identified. In addition, Volkswagen has significantly tightened up the award criteria for suppliers by means of a new sustainability rating: compliance and sustainability performance will thus become a selection criterion as binding as price or quality. 

Apart from climate protection, compliance with social standards also plays a central role for Volkswagen when it comes to resource requirements - especially in the responsible mining of E raw materials such as lithium and cobalt. In future, Volkswagen will check on site whether subcontractors also meet the requirements. Further transparency measures include cooperation with other OEMs and participation in cross-sector initiatives such as the Global Battery Alliance and the Responsible Minerals Initiative (RMI). In the RMI, for example, Volkswagen is working on a certification system for cobalt melts in order to improve degradation conditions and make the origin of the material traceable. The Drive Sustainability working group is developing uniform monitoring instruments and sustainability training courses for suppliers. The targeted reduction of these raw materials within the battery cells is also important. Volkswagen's research and development department is currently working intensively on this as well. 

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