Vehicle electrification need closer partnership between metals suppliers and carmakers: Volvo CEO

Car manufacturers will have to work closer together with their suppliers to achieve net zero and governments need to make sure to pass legislation that benefits the supply chain of electric vehicle production, Jim Rowan, CEO of Swedish-headquartered car maker Volvo, said Jan. 18.

At a panel discussion on EV rollout at the World Economic Forum in Davos, Switzerland, Rowan said that 98% of the companies’ CO2 emissions come from scope 3, which is the materials supply side.

“We really need to make sure that we work with suppliers, bringing in legislation from government,” said Rowan. “We need green energy, we won’t get green steel, we won’t get green aluminum unless governments really step up in green infrastructure.”

Many companies in different industries across the value chain are reducing their Scope 1 and 2 emissions by implementing energy-efficient technologies, electrifying processes, and using zero-carbon alternatives, but in order to reduce their Scope 3 emissions, which are indirect emissions associated with their value chain, they need low-carbon raw materials.

Hilde Merete Aasheim, CEO of aluminium producer Norsk Hydro, said at the panel that the current dialogue of the electrification of cars takes place on CEO level and not procurement level. “CEOs set the tone,” she said.

Rowan added that discussing on CEO level would help establishing the long-term partnerships.

“We are not satisfied where we are today. We are chasing the CO2 emissions from bauxite to finished products,” Aasheim said, adding that Norsk Hydro’s current focus is to position itself more in producing aluminum via recycling.

The European market has seen several offtake agreements between car manufacturers and steel or aluminum producers of low carbon emission metals products. German OEM Kirchhoff Automotive secured a Eur130 million supply deal with Swedish steelmaker H2 Green Steel Jan. 17 starting in 2027.

Platts carbon-accounted steel premium for hot-rolled coil was assessed at Eur125/mt Jan. 18, up Eur25 on the week. The Platts low-carbon aluminum Good Western premium was assessed at $225/mt Jan. 18, up $30 on the week.

Author Laura