Based on an ITF Special Lecture by Christophe Périllat, Chief Executive Officer of Valeo

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At Valeo, we’re fully aware of the profound and necessary transformation that lies ahead. The automotive industry accounts for 18% of global CO2 emissions and if nothing changes, this figure will have increased by 60% between 2015 and 2050.

Individual mobility has a great future ahead. Solving the mobility problem is not just about reducing individual means of transport. To extend a 6 km long metro line with 4 stations, it costs EUR 1.5 billion . It will therefore not be possible to extend public transport further and further – and individual mobility will remain a fundamental need for the transport of goods and people. Over the next 15 years, we will see an even greater transformation of our industry than we have seen in the century since the invention of the Ford T in 1908.

Innovation for accessibility and availability

Sustainability is at the heart of our business. The automotive industry is transitioning to electrification and autonomy. We are working towards a world of electric cars where accidents and fatalities will be significantly reduced. We are not only working on automotive mobility, but more generally on “mobility on wheels”: this includes bicycles, motorbikes, scooters, very light urban cars, as well as autonomous buses and shuttles. 

We have also made important commitments to achieve carbon neutrality by 2050, and in the shorter term, more precise targets for 2030, as well as the 2035 deadline set by the Green Deal for Europe. Our aim is not only to decarbonise cars, but also our business, and more particularly our R&D centres. 

We devote 12% of our turnover to R&D, which is unusual for an industrial company. Investing in innovation obviously means seeking performance but also affordability. For the time being, an electric car costs more than a combustion engine car, by far. New solutions need to be found to make electric cars more affordable. Innovation is also a question of availability. For example, rare earth metals are an important component of the electric motor technology used by many manufacturers. We are developing a rare earth metals-free motor, as the supply of rare earth metals may become a problem in the future.

A complex transition: 5 major challenges

1. Joining forces for the mobility revolution

Coherent policies need to be put in place to create a stable framework, promote harmonious practices and ensure that actions converge towards a common trajectory. Rules will limit the amount of resources and capital expenditure needed for the transition, which is crucial to meet the affordability target.

2. Preparing the next generation of innovators

We need to strengthen technical and engineering education programmes. Innovation requires a huge amount of talent, and expertise in new fields: we need cybersecurity experts, software engineers and electronics specialists.

3. Commit to reducing CO2 emissions across the value chain

We need to know how much CO2 is emitted across the entire value chain. This requires transparency across the value chain, harmonisation of emissions accounting methods, and a legal framework for data ownership and exchange.

4. Ensuring resources are available in the event of a major crisis

Recent crises have put pressure on supply chains. Faced with increasing risks of climatic, health and political crises, the automotive supply chain needs to become more resilient and responsive. At the same time, it needs to adapt to growing demand: demand for cobalt is likely to increase 20-fold over the next few years, while demand for nickel and lithium is likely to increase 30-fold. It takes 10 to 15 years before a mine can produce its first kilogram: it is essential to anticipate.

Taking into account avoided CO2 emissions

Today, innovative efforts to reduce greenhouse gas emissions are not included in the reporting of the Science Based Targets initiative, which provides companies with best practices and targets for ambitious climate action. They should be included in corporate carbon accounting, as we need an effective way to incentivise every player in the sector to invest in the transition.

Effective co-operation

No one player can do it alone: we are all part of a much larger ecosystem, which goes far beyond the automotive industry. We are all in a race towards the 2035 deadline set by the Green Deal for Europe. In the race to that deadline, car manufacturers are in one lane, equipment manufacturers in another, utilities in another, and so on to highway operators, cities, chip makers and mining companies. The race is on, but will everyone reach the finish line in time?

Since co-operation between multi-stakeholder bodies is essential, Valeo affirms its commitment to the International Transport Forum. We must continue to work for the sustainable future of the automotive industry.

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This blog is based on a Special Lecture by Christophe Périllat at the International Transport Forum (ITF) 8 September 8 2022.

Valeo is a member of the ITF Corporate Partnership Board. For more information, click here