Podcast
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Transcript:
Frank Balas: Hello and welcome to Innovation Insights. I’m your host, Frank Balas from Emerald. And with me today is my guest, Dr. Levi Tillemann. Levi was a Special Advisor for Policy and International Affairs to the US Department of Energy. He’s currently a Senior Advisor to Valence Strategic, and he’s authored a book, “The Great Race,” published by Simon & Schuster. He’s a contributor to Wired Magazine and analyst for Fox Business on electric vehicles, and today we’re speaking to him as the lead of Circular Cars Initiative for the World Economic Forum. Levi, welcome to the show.
Levi Tillemann: Thanks for having me, Frank.
Frank: So just to frame the discussion, before we talk about the Circular Cars Initiative, one of the things we all talk about is the tail pipe emissions from vehicles, but what is less discussed is really the embedded energy and the embedded materials that go into vehicles. Could you tell us a little bit about how much of an issue is that really?
Levi: It’s a big part of the equation, so I think it’s right for us to focus on tail pipe emissions. Today that accounts for about 80% of life cycle emissions from a vehicle. That said, as we move towards electric vehicles, the proportion of emissions associated with manufacturer and materials is going to increase considerably. So, by 2040, we expect that more than 60% of the emissions of a vehicle are going to come from the materials and manufacture of that vehicle. That is why the Circular Cars Initiative is important. Without addressing those emissions, those manufacturing and materials emissions, we simply can’t reach a 1.5-degree climate scenario.
Frank: So, it sounds really interesting. It sounds like the World Economic Forum is trying to address that bit of the problem. Could you tell us a little bit about what the objectives are and how you hope to get there?
Levi: The Circular Cars Initiative is a collaboration between members of the auto mobility ecosystem, including industry, fleet managers and policy makers, among others. We have nine different automotive manufacturers, who are currently involved. We also have steel and aluminum companies. We have a variety of national research organizations, and we have fleet companies like SIXT and Macquarie and LeasePlan, who all realize that in the future, they’re going to be able to capture more value from their vehicles over the course of those vehicles’ life, if that material is recyclable, if there are different ways to re-manufacture different portions of that vehicle and to extend the life of the vehicle.
Frank: And so when we talk about… You mentioned that OEMs were part of the equation. Obviously, they are making the vehicle, so there’s a whole aspect of how you design a vehicle to be recyclable. And I guess they would maybe be the ones who take the vehicle back at the end. What kind of a role do you see for the OEMs, and are they active participants in this process?
Levi: The OEMs are really one of the very critical players here, so I would say that there are three sets of actors that kind of set things in motion with respect to the automotive supply chain. As you know, the automotive industry is absolutely massive, trillions and trillions of dollars of revenue every single year, and there are a few select actors who can set off a cascade through that supply chain. The first is the design teams, design and procurement teams at the automotive manufacturers. The second is regulators because just like the supply chain takes orders from the OEMs, the OEMs take orders from the regulators. Almost every single piece in that vehicle is regulated at the end of the day. And then a third actor that isn’t quite as influential, but will be increasingly influential going forward, is large fleets. And so that’s why we’re working with large fleets because they have some market power. If you look at a company like Enterprise, they purchase two million vehicles a year, which is roughly a third the size of the German automotive market. So, some of those fleet owners can have some pretty serious market power.
Frank: Okay, so the fleets are a key part of the puzzle, but I guess the other bit of the puzzle is electrification. I think you mentioned that at one point. Do you see there being special challenges with electrification and the whole circular economy for vehicles?
Levi: There are challenges, but they’re also a huge upsides. So, the first challenge is that as we transition from internal combustion engines to electric vehicles, the manufacturing emissions actually increase substantially, perhaps as much as 50%, sometimes even more. So, we did an interesting analysis of kind of a mock test of the Cyber Truck and we benchmarked it against a Ford F-150, and the manufacturing emissions are just dramatically higher for the Cyber Truck type vehicle, two or three times higher. But at the end of their life, if you run that Cyber Truck off of green energy, then the cumulative life cycle emissions are only about half of F-150. And if you manufacture and you design that Cyber Truck as a circular car, they’re about a quarter of the emissions of a Ford F-150. So, there are a lot of opportunities there.
Frank: So when we talk about transportation, we’ve talked about the automotive sector specifically, but do you think that the way that transportation is changing with sharing, with scooters, bikes and possibly even Hyperloop transportation, would that have an impact on how the circular car would actually function?
Levi: Absolutely, and when we think of a circular car, what we’re really thinking about is not an individual vehicle. We’re thinking about something that’s a little bit more conceptual, something that’s a little bit more theoretical. So, the ultimate circular car is not a vehicle that you manufacture with no emissions and then you can recycle. It’s a vehicle that is integrated into a zero emissions auto mobility ecosystem where we are utilizing lots of different resources as efficiently and as effectively as we can.
Frank: Okay. And so when we look at that entire loop and we look at all the technologies that have to be developed forward, of course, from Emerald’s perspective, looking at startups and venture, we try to figure out is there a space for startups in that entire loop?
Levi: The answer is yes. In fact, I would say the circular car is probably the biggest opportunity in auto mobility since the electric vehicle. The reason is that it’s almost inevitably part of our regulatory future. I think that’s one reason why we have so many OEMs who are so enthusiastically engaged with our initiative already. They realize that they are going to have to move towards circularity, and they want to get out in front of those trends. So, there are lots of opportunities for new business models for new kinds of materials, for new manufacturing and recycling techniques. If I were investing in the auto mobility ecosystem right now, looking down the road, thinking about where the big new industry were is going to be in seven or 10 years, I would invest in circularity.
Frank: Fantastic, Levi. It sounds like a really exciting project. Thank you very much for sharing your thoughts today and look forward to speaking again soon.
Levi: Thanks for having me.