Driving decarbonisation in the supply chain.

It takes a 360-degree approach to drive decarbonisation effectively across a supply chain – as BMW Group is showing.

The BMW Group has a clear strategy for decarbonisation: by 2030, it wants to reduce CO₂ emissions by 40% per vehicle across the entire value chain compared to 2019.

With the ramp-up of electromobility at BMW Group, the focus of CO₂ emissions is shifting, more specifically, towards the supply chain. The company already offers 25 fully electric models across 12 model series. By 2030, one in two new cars made by BMW Group will have a fully electric drivetrain.

The production of high-voltage batteries that are used in these models is both resource-intensive and CO₂-intensive. Therefore, as Hendrik Lang, Senior Vice President Strategy, Digitalisation and Sustainability, at the Purchasing and Supplier Network, emphasises at London Climate Action Week 2024, the supply chain plays a crucial role in driving BMW Group’s decarbonisation strategy forward.

As the majority of raw materials for components from BMW Group vehicles come from external suppliers, the company is increasingly shifting its focus to decarbonising its entire supply chain.

“From EV batteries produced with electricity from 100% renewable sources to aluminium made with solar power, and CO₂-reduced steel, we are looking at how we can make the greatest reduction in emissions while ensuring our worldwide production sites are supplied with the 36 million parts they need every day. The right quantities have to be in the right place, at the right time – and of the best quality. It’s both a huge challenge, which we’re taking the necessary steps to overcome, and an opportunity to operate in a more energy and resource efficient way”, said Lang.

The majority of CO₂ emissions in BMW Group’s supplier network are generated deep in the supply chain, long before the components reach production plants.

Working closely with suppliers to build CO₂-reducing measures into contracts is one important way that BMW Group is driving and ensuring progress and accountability: in 2023, the number of contractual agreements with suppliers that included measures to reduce CO₂ climbed to 707, leading to a confirmed reduction of 1.7 million tons of CO₂.

The CO2-reducing measures include the use of recycled materials, optimising processes and using alternative CO₂-optimal materials. The use of green electricity is also key – around 50% of the CO₂ targets BMW Group has set for its supplier network can only be achieved with green electricity.

BMW Group is also taking a ‘local for local’ approach with its supplier and production network. This means working with regional suppliers to source materials close to BMW production sites. The shorter transportation routes reduce the carbon footprint of materials from the outset.

At a time of widespread supply chain instability, localisation also enables a high degree of flexibility and resilience in keeping production sites securely supplied. 

Making a high-voltage EV battery comes with higher resource and CO2 costs than making a traditional combustion engine. How can those costs to our planet and climate be brought down? BMW Group is answering this important question.

“Batteries for our Neue Klasse range, the new BMW model generation launching in 2025, will contain recycled cobalt, lithium and nickel. These ‘secondary materials’ are not newly mined, but already in the loop. Together with the commitment to use only green power in  producing battery cells, they’ll play a key role in enabling us to reduce the carbon footprint of our battery production.”, said Lang.

Producing the two most widely-used materials in the automotive industry – steel and aluminium – also produces high carbon emissions. That’s why BMW Group is working with its suppliers to drive down the carbon burden of these key materials.

In the USA, around half of BMW’s flat steel already comes from scrap-based and hence lower carbon routes. The green electricity used in our electric arc furnaces also cuts CO₂ emissions by around a half.

And by 2026, a third of all the steel BMW Group uses will be lower carbon – towards a goal of sourcing the majority of its flat steel from CO₂-reduced sources by 2030.

For aluminium, more than a third used at BMW Group’s light metal foundry in Landshut is made in Dubai using solar power. Starting in 2024, green electricity will also be helping to make the aluminium cast wheels of the BMW and MINI brands – saving over half the CO₂ emitted by the previous energy mix.

BMW Group also sees digitalisation and AI as crucial tools in meeting the decarbonisation challenge. Digital solutions that enable highly complex supply chain data to be tracked and shared are urgently needed to enable transparency and cohesion around CO₂ calculations for the entire automotive industry.

BMW Group is working to address this with Catena-X, a groundbreaking automotive industry initiative for digitalising the value chain between automotive manufacturers, suppliers, sub-suppliers, and in the future, recycling companies. The aim is to create a new data ecosystem that shares comprehensive information on CO₂ values and traceability of components and raw materials.

This work is well under way, as BMW Group is already working with partners, suppliers and Catena-X to model a complete data chain for the first time, to calculate the product carbon footprint (PCF) of the iconic kidney grille on the BMW iX.

Sustainability has long been a steadfast commitment of BMW Group. From being the first global car manufacturer to appoint its own environmental officer, to driving supply chain decarbonisation, BMW Group leads the industry in assuming responsibility throughout the vehicle lifecycle.

Follow the progress we’re making together with our suppliers and partners each year in our BMW Group Report.