Tima Bansal has been researching and teaching business sustainability for 30 years as a professor at the Ivey Business School (Canada). Through my work at the Network for Business Sustainability and the Ivey Innovation Learning Lab, I offer insights into what it takes to lead tomorrow’s companies.
How Car Companies are Hiding the Environmental Costs of Electric Vehicles
If you think electric vehicles are “greener” than conventional ones, you’re in the majority. But there’s a hidden part to this story. Electric-car makers are holding onto the right to repair their vehicles. This creates hidden costs to the environment—and your wallet.
The electric car transition is here. Car company after car company is committing to selling electric vehicles. General Motors will go all-electric by 2035. Volkswagen has said it will increase its proportion of electric vehicles to 70% by 2030. Audi has stopped developing cars with combustion engines altogether.
Such bold moves are matched by government commitments. The EU will impose stricter emissions standards in 2025. The UK plans to end the sale of combustion-engine cars by 2030, France by 2040. And starting in 2035, California will ban the sale of gasoline-fueled trucks and cars.
This massive transition to electric vehicles made me wonder: What will happen to the millions of old internal combustion engine (ICE) vehicles? I’m envisioning these rusty shells of vehicles piling up in stockyards somewhere, while new vehicles are built and extracting new materials, reaping a heavy burden on the planet.
Car companies and owners could be creating a new environmental crisis by trying to avert another one.
It turns out I was right—but not for the reason I thought.
As I tried to figure out what happens to conventional cars at the end of their life, what I uncovered surprised me. The biggest threat to the environment from this shift to electric doesn’t come from huge piles of rusting conventional cars. It comes from a factor that few prospective owners of electric vehicles know about: electric-car companies retain the right to repair their vehicles.
Before I explain more about the right to repair, let me explain what happens to old cars.
Conventional vehicles are almost entirely recycled
I asked Steve Fletcher, managing director of the Automotive Recyclers of Canada, where old cars went to die. He said that about 83% of an ICE vehicle is reused or recycled. When a car is retired, recyclers remove the operating fluids (e.g., gasoline, oil, windshield-wiper fluid) for use or recycling elsewhere. They then strip the car of its parts for sale in an after-market. Once the car is stripped, it gets pressed and sold to companies that will shred and remove the metal for recycling. Only the plastics, textiles, and carpets go to landfill.
The vehicle-identification number (VIN) tells the history of the car’s parts, including the details of the original and replaced parts. Such information is gold for a recycler, as they know what they are buying at auction. It also builds an ecosystem of organizations, including repair shops, recycler, and after-sales shops, that ensure ICE vehicles enjoy a long life.
The issue isn’t end-of-life, the issue is the right to repair
Well, it seems that my image of the end-of-life of conventional vehicles isn’t what I expected. But, what I uncovered an issue I didn’t expect. Car manufacturers of conventional cars do not retain the exclusive right to repair, so an ecosystem of auto repair shops, aftersales markets, and recyclers has emerged. For electric cars, because of their complexity and reliance on software, the car manufacturers would have more control over the right to repair, which could considerably shorten the end-of-life of electric vehicles.
There are several mechanisms through which this works. First, electric vehicles are containers for electronic equipment, just like, say, Apple with its iPhone or Amazon with Alexa. These car companies are unwilling for to have others tampering with their equipment in part because fixing technology requires specialized skills, but also to protect intellectual property. So, car warranties require owners to take their products either to the manufacturer’s service department or to manufacturer-certified repair shops.
As well, these car manufacturers do not share their diagnostic equipment, in order to ensure that customers remain captive to manufacturers. In this way, car companies grab a greater share of the service market and keep their customers coming back to their shop. Manufacturers, then, seek to restrict the information they share with others, including what they put in the VIN. Repair shops and recyclers are less able to understand what’s under the hood or even fix it.
The end result: large repair bills, as car owners are held hostage to the car companies instead of being able to use their usual mechanics and tap into the after-market system of new and used parts. And what happens when you face a whopping bill for your car’s repair? Owners are more likely to just trade in the car for an upgrade. What’s more, they spend quite a lot of time sitting in a shop full of seductive new technology, giving you even more incentive to upgrade instead of repair.
Now, you might argue that electric vehicles have fewer parts than cars with internal combustion engines, so there is less stuff that can go wrong. This is only true to an extent. There are still plenty of things that electric-car owners may need fixed, say from an accident or a fault with the car’s electronics. With car companies keeping the right to repair, these sorts of things aren’t cheap or easy fix—especially when a small set of mechanics and other car-servicing people have a monopoly on doing the work.
Lower emissions—but also less recycling?
The right-to-repair convention for electric vehicles poses a threat to owners’ pocketbook. And, it also poses one to the environment. When people buy new cars instead of repairing their existing one, the system of repair shops, recyclers, after sales markets take a hit. And, as that support group diminishes in size and capability, it creates a feedback loop, so that car owners are even less likely to repair their car.
Fletcher told me that he saw an uncertain future for the recycling industry with the advent of electric vehicles and the move towards car companies retaining the right to repair. “Less recycling means a larger environmental footprint,” he said.
What car companies can do to ease the transition
The tide is turning inexorably towards electric vehicles. Ultimately, electric vehicles will be designed with the end of life in mind. But, until then, the environment could take a bit hit. Business leaders can ease that transition in a number of ways.
- Design their electric cars in such a way that they can be easily dissembled or reused, so that they can have multiple future lives.
- Relinquish the right to repair and give independent service providers the needed training and diagnostic tools. This will keep cars on the road longer.
- Participate in extended producer-responsibility or stewardship programs to prevent sending cars and batteries to landfills at the end of their life.
- Rebuild and reuse batteries, instead of simply recycling them. Offer the option of leasing batteries, to increase their reuse. Hyundai has signed a memorandum of understanding with the South Korean government in February to explore leasing batteries
If car manufacturers are indeed moving to electric vehicles in good-faith efforts to help save the planet, they need to think more holistically about the solutions. They need to encourage not just use, but also repair, recycling, and reuse. Otherwise, electric vehicles could end up adding to the problem instead of being part of the solution.
Originally published in Forbes Magazine, July 1, 2021