00:00:00: [MUSIC]
00:00:05: Hello and welcome to the IAA Mobility Visionary Club,
00:00:08: the format where we are connecting you with
00:00:10: the mobility pioneers who are shaping our future.
00:00:14: Our guest today is a circular economist.
00:00:17: We're about exactly what that is in just a second.
00:00:19: Today is Episode 9 and I'm very pleased to welcome Wojcak Wozsecki.
00:00:25: He's a circular economist. Wojcak, welcome.
00:00:27: It's great to have you today.
00:00:29: Tell us before we get started,
00:00:30: what exactly is a circular economist?
00:00:33: Hi, Sarah and thanks for having me.
00:00:36: It's great to be here.
00:00:38: It's a good question because it's like a new job,
00:00:41: but it's getting really trendy.
00:00:43: Circle economists doesn't have
00:00:45: a lot in common with traditional economists.
00:00:49: We don't study balance sheets or interest rates.
00:00:53: We look at material flows and resources and we
00:00:57: ask ourselves questions,
00:00:59: where did all the stuff come from?
00:01:01: When we surround ourselves with products like phones or cars,
00:01:05: does it have any recycled content in it or did it have to be
00:01:09: mined and extracted and processed or did
00:01:12: something have to be cut down in order to create something?
00:01:16: How long are we using these products?
00:01:18: Most importantly, what's going to happen
00:01:20: with everything afterward done with it?
00:01:23: With these questions in mind,
00:01:25: we try to of course optimize all these flows to
00:01:28: save resources and work with what we have a lot
00:01:32: better than we're doing it today.
00:01:34: Because Sarah, today our world is very linear.
00:01:38: That's how we call it in my branch.
00:01:40: Our world relies on mining and extraction and mobility sector
00:01:45: is very connected to that just like any other sector.
00:01:48: Almost everything around you,
00:01:50: like the clothes that you're wearing,
00:01:52: the screen you're looking at or even the cars for
00:01:55: driving or the bikes we have at home,
00:01:57: will become waste at the end of a day sooner or later.
00:02:01: At the same time,
00:02:02: often these resources are coming and they have to be
00:02:06: mined and extracted somewhere at the other side of the planet.
00:02:11: If that's not all,
00:02:13: we're not even that efficient at working with what we have.
00:02:16: An average car in Europe is part about
00:02:20: 92% of the time that we own it.
00:02:23: Well, I call that waste.
00:02:24: That's a lot of resources like steel,
00:02:26: aluminum, glass, plastics,
00:02:29: that's just sitting out there underutilized.
00:02:32: Globally, our economy is only 7% circular.
00:02:36: We expect about 100 billion tons of resources to power our needs.
00:02:42: Mobility is a huge part of that and there's a great need to go circular.
00:02:47: Because if we go circular,
00:02:50: we believe that that's the missing link to tackle climate change
00:02:54: while unlocking trillions of dollars in extra additional added value to our economy.
00:03:00: A lot of the greenhouse gas emissions are embedded in products and in the resources.
00:03:06: It's not only if this phone was made thanks to renewable energy.
00:03:11: That's very important.
00:03:12: But it's also about, does it have any recycled content in it?
00:03:16: Am I able to use it for one year or five years?
00:03:20: Can I fix it or will I just throw it away?
00:03:23: Can we make a new phone out of this again, and again, and again?
00:03:29: With these questions in mind,
00:03:31: we try to make our lives and our products and our industries more circular.
00:03:36: Now, when it comes to the mobility,
00:03:39: it's also a huge opportunity for Europe.
00:03:41: We looked at different data
00:03:44: and we did quite large assessments asking ourselves
00:03:48: how circular is really the European passenger car market.
00:03:53: And the answer would surprise a lot of folks.
00:03:55: We came to a number of 41%.
00:03:58: And it's not as high as you would think
00:04:00: because a lot of people think of while all the cars get recycled, right?
00:04:04: That has to be it. That's circular economy.
00:04:08: Recycling is just one out of many tools we need to unlock the circular economy.
00:04:13: But it's not everything.
00:04:15: Not everything is made to be recycled.
00:04:18: Not everything, even if it's made to be recycled, is sent for recycling.
00:04:23: Some of the stuff just gets lost, gets dumped, gets added to stock.
00:04:27: And even if our products like cars are made to be recycled
00:04:31: and are sent for recycling,
00:04:34: there are a lot of losses in the process itself,
00:04:38: on the energy, on the materials,
00:04:40: and it's quite labor heavy and expensive as well.
00:04:43: So we need to think bigger than recycling.
00:04:47: We need to think larger than that.
00:04:49: And we need to unlock more opportunities
00:04:52: that the circular economy mindset offers,
00:04:54: including for the mobility sector.
00:04:58: I've been in the field for about 10 years now, Sarah,
00:05:02: and everyone who's listening.
00:05:03: I've worked at the EU level and the circular economy directives.
00:05:07: I was an advisor to the mayor of Prague for four years,
00:05:11: making my hometown more circular.
00:05:13: I've worked with a really famous consultancy,
00:05:16: working with a lot of automotive brands
00:05:18: and many other companies across sectors.
00:05:21: And we boiled it down to about four powerful strategies
00:05:25: that are applicable to any sector, including the mobility,
00:05:29: where you can unlock these economic opportunities,
00:05:33: while also drastically reducing the carbon footprint
00:05:37: of the mobility industry.
00:05:39: And the funny thing is that they all start with a letter of R.
00:05:43: The first R, the most important R that we need to think of
00:05:47: before we do anything else, is to rethink.
00:05:50: We need to rethink how we build stuff.
00:05:52: We need to rethink how we sell cars.
00:05:55: We need to rethink how we consume,
00:05:57: because we're just getting too many people on this planet.
00:06:01: And right now, our current way of consumption
00:06:03: is not really sustainable.
00:06:06: One of the examples I really love is connected to micro-mobility.
00:06:11: You know, the demand for batteries in micro-mobility,
00:06:14: like e-bikes, e-scooters and so on, is booming.
00:06:18: We'll, I think, will increase by about 30% every year
00:06:22: for the next 10 years.
00:06:24: But there are a lot of bottlenecks connected to that as well.
00:06:27: You know, when you make batteries,
00:06:29: you rely on very precious and very rare minerals and metals,
00:06:34: like cobalt, lithium.
00:06:35: There are mine in plastic and sometimes even horrible conditions
00:06:39: at the other part of the world.
00:06:42: And the most annoying thing about batteries for micro-mobility
00:06:46: is that if one fuel cell breaks,
00:06:48: you can throw the whole thing away.
00:06:51: There's this company in France called Gouache,
00:06:54: which started looking at these batteries for micro-mobility
00:06:57: that went to waste.
00:06:59: They opened them up.
00:07:00: They fixed that one fuel cell out of 100.
00:07:03: Bring it back to life and resell it again on the market.
00:07:08: But that's not it.
00:07:09: They even rethink the way they sell those batteries.
00:07:13: They maintain the ownership.
00:07:15: It's them who own it and you only use it.
00:07:18: So they have the perfect motivation
00:07:20: to keep it in the use for as long as possible.
00:07:24: And they also have quite a good visibility on the life
00:07:27: and the health of the batteries so they can come in, fix it.
00:07:31: And if it cannot be done by maintenance,
00:07:33: they get it back and make sure it gets recycled.
00:07:36: The second R is reduce.
00:07:40: As I already said, we will be 10 billion people
00:07:43: on this planet by 2050.
00:07:45: But we only have one planet with limited amount of resources.
00:07:49: We need to reduce the amount of resources
00:07:53: to produce more products.
00:07:54: We need to do more with less.
00:07:57: And there are great examples across the industry
00:07:59: from what some brands are doing.
00:08:02: I like what BMW did with its latest announcement,
00:08:06: the Vision Cart, Neue Klasse X, where
00:08:09: they are reducing amount of components
00:08:12: that the car is using.
00:08:13: It's a bit more minimalistic design.
00:08:15: They're also making it lighter, requiring less resources
00:08:20: to actually create that car.
00:08:22: And they're reducing the amount of harmful substances
00:08:25: or non-renewable and non-recyclable components
00:08:29: in the car to make it overall a lot more sustainable
00:08:32: with a 55% of recycled input across the whole material
00:08:37: spectrum that the car is using.
00:08:39: Another R, which is also really important to use, is recover.
00:08:44: So if we cannot rethink it, if we're going to fix it,
00:08:47: if we're going to reduce the amount of resources,
00:08:49: or if we dump all that, at a certain stage,
00:08:53: products like cars or engines will
00:08:56: reach the end of their life.
00:08:58: But that doesn't mean we have to send them for recycling.
00:09:01: We can remanufacture them.
00:09:03: I live in Gothenburg.
00:09:05: That's in Sweden.
00:09:06: And it's home of actually two companies
00:09:08: that have the same name, Volvo Cars and Volvo Trucks.
00:09:12: They're not the same owner, by the way.
00:09:15: Now, Volvo Trucks makes trucks and buses.
00:09:19: The engines can live for about 1 million kilometers.
00:09:23: It's a very expensive component, very complex.
00:09:27: But what Volvo started doing is when that engine reaches
00:09:30: maybe 2/3 of its life and it breaks,
00:09:33: they don't just sell you a new one.
00:09:35: They try to remanufacture it.
00:09:37: They have six circular economy factories around the whole world.
00:09:42: And they're remanufacturing about 6,000 engines every year,
00:09:47: bringing them back to life, saving about 80% of energy,
00:09:51: water, and materials instead of creating a new one.
00:09:55: While guaranteeing the same quality
00:09:57: and giving you the same warranty as if you have bought a new one.
00:10:01: While also reducing about 40% of the costs
00:10:05: needed to purchase that particular engine.
00:10:08: So I could go on and on and on and on.
00:10:10: There's tons of examples like that.
00:10:12: And I'm sure we're going to talk about it even more in September
00:10:15: when we made in Munich.
00:10:17: But I hope this gives everyone listening
00:10:21: a little bit more of a perspective of, you know,
00:10:24: when we think of mobility, we need to go circular.
00:10:28: Everybody talks about electrification.
00:10:30: And of course, that's important.
00:10:33: We need to, you know, phase away the use of fossil fuels.
00:10:37: I'm 100% with everyone on that.
00:10:40: But it's just half of the journey of getting to net zero.
00:10:45: The other half is focusing on the materials,
00:10:49: using less, using for longer, you know,
00:10:53: keeping it in the loop again and again and again.
00:10:57: And if we nail those two challenges,
00:10:59: I believe that, you know, there's a very bright future waiting
00:11:03: for those who pioneer it forward.
00:11:05: And it's pretty much the only future as well
00:11:07: if we want to have a livable planet over here.
00:11:10: And that's maybe the thing I would love to leave
00:11:13: the attendees of this call with, you know.
00:11:17: Circle economy is the missing link to tackle climate change.
00:11:21: It's a trillion dollar opportunity,
00:11:22: including for the mobility sector.
00:11:25: But it's a lot more than recycling.
00:11:27: We need to think beyond that.
00:11:29: We need to keep resources flowing
00:11:32: before they reach the end of their life
00:11:34: and before they go to the bin.
00:11:37: Because then it gets a lot more expensive
00:11:39: and a lot more difficult to recover all the value
00:11:42: that we have carefully accumulated throughout.
00:11:45: I hope this is a good start of a conversation.
00:11:49: I'm super curious what you think, what others think.
00:11:52: And I would love to hand it over to you, Sarah.
00:11:54: If you have any questions, sorry,
00:11:56: if the audience has any questions,
00:11:58: I'm here for the next almost 20 minutes to chat.
00:12:00: So thank you for listening.
00:12:02: Well, thank you for laying that groundwork for us,
00:12:05: for our check.
00:12:06: It's really helpful to have this framework
00:12:08: to start our discussion.
00:12:10: I was listening to you describe Volvo's,
00:12:12: you know, reimagining of these engines and re...
00:12:16: Did you call it reconstructing or what was the word you use?
00:12:19: Re...
00:12:20: -Re-manufacturing. -Re-manufacturing.
00:12:22: Re-manufacturing.
00:12:23: And I'm wondering if you can walk us through a little bit.
00:12:25: The business case for circularity in automotive,
00:12:28: does it offer cost savings?
00:12:29: Is it revenue opportunities?
00:12:31: Is it both?
00:12:32: Because I could imagine that that would be costly.
00:12:35: Sometimes it's more expensive to fix something
00:12:37: than to just get a new one.
00:12:39: Yeah, that's a good point.
00:12:41: There are actually a lot of different value drivers
00:12:44: for mobility companies to go circular.
00:12:47: One, and the lowest hanging fruit is, of course,
00:12:51: eliminating waste, saving resources like water,
00:12:55: energy, et cetera, at the factory level.
00:12:58: -The company's... -Energies get more expensive now,
00:13:00: so that's important.
00:13:01: Yeah, exactly.
00:13:02: But so does steel, so does aluminium,
00:13:04: so does everything.
00:13:05: And also, you know, for every ton that you send to waste
00:13:09: to recycling, you pay.
00:13:10: So, you know, eliminating that,
00:13:13: is a huge cost saver and probably the lowest hanging fruit that I would say a lot of mobility players have already started exploring.
00:13:23: But it's it's one of them. The second is of course a new like a strategy growth driver. So, you know, acquiring new customers, reaching new markets, utilizing the underutilized.
00:13:38: We talked about it, right? 92% of the time that we own a car in Europe, you know, as a private owner, that car is just parked.
00:13:47: And right now, the way this is structured, like no one is making money on that. Everybody is kind of, you know, just the cities, the people.
00:13:55: It's not really a good business case for the society. But there are estimates that like reaping into, you know, leasing and providing mobility as a service is a huge opportunity.
00:14:08: And I know this is a bit far fetched. But look at what Uber is doing, right? They don't own their cars.
00:14:14: Yet they're a multi billion dollar company providing mobility as a service. But it doesn't have to start with Uber.
00:14:22: But then of course, there are other value drivers, you know, if you think outside of that, there's very large regulatory pushes.
00:14:31: So, you know, it's also about legitimacy and about avoiding fines and avoiding risks. And it's also about supply chain.
00:14:39: Maybe you remember what happened during covid. A lot of car manufacturers and their supply chains were totally disrupted.
00:14:48: Factories literally couldn't produce the cars because they were missing some key components.
00:14:53: That's because our global supply chains are very complex.
00:14:57: They rely on a lot of different players. A lot of the manufacturing is happening from a European perspective outside of Europe, outside of hands, outside of our control.
00:15:07: We don't even have access to these critical resources, like I mentioned, you know, lithium cobalt.
00:15:15: So if we close the loop in Europe internally on this, there's a lot of lithium, there's a lot of cobalt just, you know, being wasted or not utilized properly.
00:15:27: We can unlock that and the risk are supply chains.
00:15:32: It's a very complex thing to do. We're definitely not there yet. We're just getting started.
00:15:37: But from a longer term perspective, this is a safe bet for a not only a circular future, but also a pretty profitable future too.
00:15:45: Vartjik, I'm wondering how does the shift to a circular economy impact the competitive landscape in the automotive and mobility sector? How do you think about that?
00:15:56: Well, it's a big topic. I think that over-regulation is something nobody wants to see and Europe has had a lot of that.
00:16:08: But at the same time, I think, you know, Europe, I'm talking from a European perspective right now, right?
00:16:13: Because it's a totally different story in China or the US.
00:16:16: But as I said, you know, Europe is a continent where a lot of cars are made and we can think, you know, bigger than cars.
00:16:23: There's other things, you know, we need for mobility.
00:16:25: But, you know, we don't really own those supply chains. We don't really have these resources.
00:16:32: We import most of that. Going circular is also a geopolitical strategy, you know, making our economies more resilient towards climate change,
00:16:44: but also towards geopolitical issues that can happen.
00:16:48: So making sure we have control over the resources and we can manufacture from the ways that is generated in Europe,
00:16:57: creating new products again in Europe, can create a lot of jobs,
00:17:01: create a lot of value and de-risk our manufacturing future.
00:17:06: So if we look at the technological breakthroughs that are on the horizon, and I'm thinking here about AI,
00:17:11: but also blockchain, digital passports for materials,
00:17:15: which of these would significantly improve the circular economy in regards to mobility?
00:17:20: What are you most excited about?
00:17:22: I'm really excited about transparency.
00:17:25: So getting the data on, you know, where does everything come from? Where does it go?
00:17:30: Because right now it's a black hole. We have no clue.
00:17:33: You know, waste is not really tracked.
00:17:35: So having an overview, thanks to AI, thanks to digital passports,
00:17:41: thanks to blockchain about, you know, the resource flows globally could really help us to leverage
00:17:51: a lot of waste streams that are currently going under radar,
00:17:54: a lot of products that are currently locking in a lot of these value-critical resources we mentioned.
00:18:00: I really see a huge perspective in there.
00:18:02: And the other thing is, and we talked about as well a little bit, is the whole like the sharing economy, right?
00:18:08: From a consumer perspective, it hasn't really taken off in many industries and in others, it's booming.
00:18:15: A lot of it comes down to convenience, I believe.
00:18:18: You know, it's just, you know, it's a bit just that you have to set up your profile,
00:18:22: you have to connect with someone, you have to talk to someone, there's a lot of trust that's needed.
00:18:27: And I believe that, like, you know, with the help of AI, all these things will become extremely smooth.
00:18:34: And a lot of this untapped potential in underutilized products of daily use, it could be a drill,
00:18:42: it could be a car, it could be anything.
00:18:44: Suddenly, it will be a lot easier for you just to like with one click or even a thought,
00:18:49: just to tap into that without having to buy it and then never touching it again.
00:18:54: So I think that will be an interesting game changer.
00:18:58: And then, of course, we see a lot of AI in just, you know, improving the recycling processes to an unseen level.
00:19:06: But that's more just like efficiencies.
00:19:08: Those are not real game changers, but already that is saving a lot of money to a lot of people out there.
00:19:13: I'm curious, though, to hear what role you think we consumers need to play in driving circularity in the mobility industry.
00:19:21: And I'm thinking particularly of things like enhancing awareness and acceptance of vehicles that are made with recycled materials.
00:19:28: You know, sometimes you see like I've seen less in mobility, but like in shops,
00:19:32: oh, this is this garment is made with recycled polyester.
00:19:35: And I'll confess, I've stopped for a second and thought like, do I want recycled polyester?
00:19:40: Like, how do we get consumers on side, especially when we're thinking about like luxury vehicles?
00:19:47: That's a great question.
00:19:48: And you're not the only one to think that.
00:19:50: And it even goes as far as to cars and mobility.
00:19:54: I've heard it from folks in the industry that say, we don't really market all the green and recycled claims that we have in our cars,
00:20:07: because we see that we're our consumers don't want to hear that they want to feel like they're having the real deal, the premium,
00:20:15: you know, something had to be ripped off, mine cut down.
00:20:19: So it feels fresh and higher quality than if recycled.
00:20:23: I am the opposite, but I know I live in a very, very small bubble, right?
00:20:27: I've been in the climate for a long time.
00:20:29: You have a lot more knowledge than like the average person does about the impact.
00:20:34: Yeah, I feel guilty for not buying green.
00:20:39: But that's just because, you know, unfortunately, I know too much, right?
00:20:43: And then what I like to say about this all, Sarah, is that, you know, like as consumers, I don't think we can do a lot.
00:20:53: Honestly, we don't have too many options.
00:20:56: What I prefer to talk about is that we all can do a lot more than just focusing on our purchasing power.
00:21:04: We all, a lot of the folks listening here today, of course, you know, we all probably own a car, but we all had jobs.
00:21:11: We all do something pretty interesting, nine to five from Monday to Friday.
00:21:17: We all go to vote.
00:21:18: We all, you know, are members of communities.
00:21:22: Engaging in these activities can be a lot more meaningful and impactful than just buying or not buying green products.
00:21:33: Now, when it comes to getting consumers on board, we have work to do.
00:21:38: I don't think it comes down to regulation.
00:21:41: I don't know if we can force people in just to buy in green.
00:21:45: But of course, a lot of it comes down to price as well.
00:21:48: Right now, the unsustainable products are often cheaper just because of the fact that we don't regulate enough pollution.
00:22:00: Right? Polluting, it's still way too cheap.
00:22:03: And once we make it more competitive from a sustainability perspective, you will see sustainability becoming also just like the better option from an economical perspective for day to day users.
00:22:17: And that's where I see the role of regulation.
00:22:19: And I don't know, maybe one day everybody will feel like, you know, we want the recycled stuff.
00:22:26: It feels better.
00:22:26: It feels more green.
00:22:28: And but it also has to be safe.
00:22:31: Right?
00:22:31: So we need to make sure that if we use, if we work with recycled components, there are no risks to human health and the quality is exactly the same, if not better.
00:22:41: Yeah.
00:22:42: That's a good point.
00:22:43: What do you think are the biggest barriers preventing OEMs and other mobility providers from adopting circular economy principles at scale?
00:22:53: Is it a cost issue?
00:22:54: Is it just a reluctance to change the way we've always done things?
00:22:57: What's going on?
00:22:58: I think there's just like so many factors at play.
00:23:03: A lot of it comes down to just change management organizationally.
00:23:08: You know, we've been, circular economy is just starting and organizations, big corporates are getting up to speed.
00:23:13: If you don't have a vision, if you don't have goals, if you don't have KPIs, nothing's going to ever happen again.
00:23:19: So that's one thing that needs to happen, you know.
00:23:22: But I see it happening and everybody is just doing their homework.
00:23:26: The other thing is, of course, as we talked about it, regulation.
00:23:31: Right now, you know, virgin materials, virgin steel is again, you know, cheaper than probably the fossil free steel.
00:23:41: Some companies make here in Europe.
00:23:43: So just like making sure we are ramping up our production and infrastructure to supply these sustainable alternatives.
00:23:51: So that sustainability and circular economy is not a cost and an extra thing on top of how companies do that.
00:23:59: But lastly, and the most importantly, I think comes down to just rethinking the business models.
00:24:05: Right.
00:24:05: If we just believe we can keep selling the last quantities day after day, year after year to folks who don't even maybe need it anymore.
00:24:15: We're not headed the right way.
00:24:17: I think we need to just rethink how do we keep providing great value without maybe people having to own stuff.
00:24:25: I really believe that access over ownership.
00:24:30: And I think that's an opportunity of our lifetimes.
00:24:35: And I think I hope more and more companies will start experimenting with that than they're today.
00:24:43: It's an exciting idea.
00:24:45: I'm conscious that we're coming to the end of our time.
00:24:47: We need to let you get back to the work of circular economizing.
00:24:51: Before we let you go over our check, tell us, what do you think the next steps are for automakers to accelerate circularity in vehicle production and supply chains?
00:24:59: And it can be a relatively short answer, but what needs to happen?
00:25:03: I would say, focus on just using more recycled and biobased resources.
00:25:10: Stop digging for more.
00:25:12: Second, try to keep the vehicles on the road for longer, extend the lifetime, repair, remanufacture.
00:25:22: Those things can make a great business sense.
00:25:25: And then make sure you start designing your services and products so that they can make it back into the loop again and again and again.
00:25:36: Don't rely on some other part of the world to just maybe recycle what you're doing.
00:25:43: Try to figure it on your own.
00:25:45: And I think if we nail these tricky principles, then we'll see circular economy flourishing.
00:25:52: All right, I am looking forward to continuing this conversation at the IAA Mobility in Munich in September.
00:25:59: Until then, Vojcek, it has been a huge pleasure.
00:26:01: Thank you for sharing your insights about the circular economy with us in the mobility context.
00:26:06: It was a pleasure having you with us and it was a pleasure having you as our guest here today on the IAA Mobility Visionary Club.
00:26:12: I hope you will join us again next month for episode 10.
00:26:16: See you then.
00:26:17: [Music]
