The global Mercedes-Benz supply chain is becoming CO₂ neutral

December 07, 2020 - As part of the Ambition 2039, Mercedes-Benz is pushing ahead with the transformation to CO₂ neutrality with a package of measures along the entire value chain. The supplier network is a key element for achieving the climate goals of Mercedes-Benz due to the higher energy demand in the production of fully electric vehicles.

With Ambition 2039 Mercedes-Benz wants to offer a CO₂ neutral new car fleet in less than 20 years. The transformation to electric mobility in particular increases the energy demand in the supply chain. Compared to a conventional combustion engine, the production of an all-electric vehicle is twice as CO₂ intensive, mainly because of the lithium-ion batteries. Despite a higher energy demand in production, Mercedes-Benz plug-in hybrids and electric vehicles offer a clear advantage in terms of CO₂ emissions compared to conventional drives already today, since only when the entire life cycle of the vehicles is considered a realistic picture emerges: Electric vehicles can make up for a large part of the initially higher CO₂ emissions from the upstream value chain due to their emission-free driving. This is where Mercedes-Benz comes in and works with the global supplier network to reduce CO₂ emissions in the production phase.

Markus Schäfer, Member of the Board of Management of Daimler AG and Mercedes-Benz AG; responsible for Daimler Group Research and Mercedes-Benz Cars COO: "Electric mobility and sustainability go hand in hand for Mercedes-Benz. With the electric EQS luxury sedan, which is already in the starting blocks for next year, we have already achieved important milestones in close cooperation with our partners - for example by purchasing CO₂ neutrally produced battery cells. We are consequently pursuing this path: When awarding contracts for our subsequent electric vehicle platform - Mercedes-Benz Modular Architecture (MMA) for compact and medium-sized cars - we are already applying CO2₂ as a key criterion for the first time consistently."

Key criterion for supplier selection

"Together with our partners, we are implementing the Mercedes-Benz Ambition 2039. More than 75 percent of our approximately 2000 suppliers have signed an 'Ambition Letter of Intent' and are committed to supplying us with only CO₂ neutral parts in the future. These companies account for more than half of the annual purchasing volume of Mercedes-Benz AG. This is an important proof point on the way to achieving our climate goals: our supplier network has also recognised the signs of the times, and is following the transformation. We place an additional focus on particularly CO₂-intensive components and materials such as battery cells," says Gunnar Güthenke, Head of Procurement and Supplier Quality, Mercedes-Benz Cars. “We are also in the process of setting up a tracking system that will enable us to see how CO₂ emissions are reduced over time." The company is in close dialogue with all other suppliers to jointly develop strategies for CO₂ reduction.

Climate-neutrality is incorporated into contractual terms, and the Ambition Letter is a key criterion for awarding contracts. From 2039 at the latest, only production materials which are CO₂ neutral in all value creation stages will be allowed through the factory gates of Mercedes-Benz. A supplier declining to sign the Ambition letter will not be taken into account for new supply contracts.

Focus on CO₂-intensive components and materials

Mercedes-Benz will additionally focus on materials and components that are particularly CO₂ intensive in manufacturing and processing until 2039. Focus components include battery cells, steel, and aluminium. These components account for about 80 percent of the CO₂ emissions in the supply chain of a fully electric vehicle. Mercedes-Benz has already agreed on clear objectives with two strategic partners for battery cells: CATL (Contemporary Amperex Technology Co., Limited) and Farasis Energy have committed to supply battery cells that are produced using electricity from renewable sources such as hydropower, wind, and solar energy. This reduces the CO₂ footprint of an entire battery by more than 30 percent. The rest of the supply chain will be included as a next step.

A holistic approach to environmental impact also includes the sustainable use of resources. The company's goal is to consistently reduce the use of primary raw materials for electric drives by 2030 and gradually increase the share of secondary and renewable materials in vehicles. Mercedes-Benz is working with its partners to gradually increase the share of secondary material in the focus materials.

Mercedes-Benz plants as role model

Mercedes-Benz AG’s own plants, including the global battery production network, will produce on a CO₂ neutral basis worldwide already from 2022. This will make them role models for the supplier network. In line with the procedure in Mercedes-Benz’s own plants, suppliers are required to avoid and reduce emissions as a fundamental principle. Only then can compensation via high-value projects be considered. The areas of approach for climate-neutral production are diverse, and range from reducing consumption to purchasing energy from renewable energy sources.

Ambition 2039: Climate-neutrality along the entire value creation chain

With its new strategy, Mercedes-Benz has introduced its claim to produce the world's most desirable cars. Sustainability extends as a guiding principle across all strategic fields. The goal is a fully networked and completely CO₂ neutral vehicle fleet. Ambition 2039 gives the direction for this along the entire value creation. The company aims to have plug-in hybrids or all-electric vehicles to make up more than 50% of its car sales by 2030. Major milestones include CO₂ worldwide neutral production in all of Mercedes-Benz AG’s own plants from 2022, involvement in shaping the charging infrastructure and agreeing to specific CO₂ measures with suppliers.

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