Auto industry will miss climate goals by a wide mark, study says

The automotive industry is likely to miss climate goals by 75%, according to a study backed by electric vehicle makers Polestar and Rivian that was released on Wednesday.

The study by global management consultants Kearney, called the Pathway report, said the industry would dramatically overshoot the Intergovernmental Panel on Climate Change’s target to try to limit the average global temperature increase to 1.5 Celsius by 2050 if automakers did not take action.

“Electrification alone is not the solution – even if every car sold in the world tomorrow would be electric, we’re still on track to overshoot,” Polestar and Rivian said, adding that they had invited the car makers to a roundtable and briefing discussion.

The report calls for urgent, collective action industrywide. “Car companies may be on different paths when it comes to brand, design, and business strategies, and some won’t even admit that the road to the future is electric. I believe it is, and that the climate crisis is a shared responsibility, and we must look beyond tailpipe emissions,” said Polestar head of sustainability Fredrika Klarén. “This report makes clear the importance of acting now and together. There’s a clear cost to inaction, but there’s also a financial opportunity for innovators who find new answers to the challenges we face.”

The report suggests three “levers” to have a chance at achieving the target by 2050:

Climate goals have been at the forefront of carmakers’ priority for the past decade as customers become increasingly sustainability-conscious, with the recent energy crisis and war in Ukraine underscoring the importance of accelerating the green shift.

Swedish automaker Volvo Cars is among those that have pledged ambitious goals, promising that by 2030 it will sell only electric cars. It also plans on reducing emissions across its entire value chain, aiming to become a climate-neutral company by 2040. Other carmakers have similar goals.

Despite the will of automakers to make the shift, geopolitical and macroeconomic conditions have continued to make life difficult for the industry, with higher costs, component shortages and supply chain issues continuing.

Rivian is one of the companies that has struggled with production ramp-up for its vehicles, and has been squeezed further as EV giant Tesla cut its prices. In early February, Rivian said it would lay off 6% of its workforce in an effort to cut cost.

Auto suppliers are also struggling with coping with the additional costs for making their components sustainable in order to meet carmakers’ sustainability goals.