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Industry Themes
Industry Themes
19 May 2025
For OEMs, engagement in closed-loop recycling and strategic partnerships with recyclers are essential to meet the targets of the End-of-Life Vehicles Directive.
As the automotive industry pivots toward a sustainable future, the End-of-Life Vehicles Directive (ELV) in the European Union sets forth crucial targets that manufacturers must meet by 2030. Specifically, the directive mandates that 25% of plastics in new vehicles come from recycled sources, with at least a quarter of that originating from closed-loop systems.
In a closed-loop system, plastics must be recycled back into automotive-grade applications rather than repurposed for other industries. For OEMs, proactive engagement in closed-loop recycling and strategic partnerships with recyclers are essential to meet these ambitious targets and secure a competitive edge in the market.
By addressing challenges such as material degradation, contamination, and the reliance on open-loop recycling practices now, OEMs can not only ensure compliance but also position themselves as leaders in automotive sustainability.
Every year, over six million vehicles reach the end of their life in the EU, yet many of these are underreported due to discrepancies in deregistration and grey-market activities.
S&P Global Mobility's recent forecast reveals that while the increasing plastic content in electric vehicles and sustainability targets will drive demand for closed-loop recycled plastics, anticipated supply shortfalls pose a significant challenge to the circular economy.
The European Parliament has acknowledged these challenges and has introduced adjustments to the ELV, indicating ongoing regulatory refinements as policymakers strive to balance ambition with feasibility.
Despite these efforts, improving ELV recycling remains a formidable task. While the final framework may evolve, the core challenge remains: the automotive sector must scale up solutions that enhance both the supply of ELV plastics and the efficiency of automotive-grade recycling.
Renault is leading the automotive industry's shift toward the circular economy through bold, strategic initiatives. The company has established a dedicated business unit to drive sustainability, backed by clear financial targets that align environmental goals with profitability. Its innovative Flins Refactory exemplifies circular economy integration, focusing on vehicle reuse, repair, and recycling.
Renault also promotes shared mobility to reduce environmental impact and engages with external stakeholders to attract investment and foster innovation. With plans to generate €1 billion in revenue from dedicated recycling factories by 2030, the company is positioning itself for long-term success. By proactively adapting to market trends, Renault sets a powerful benchmark for sustainability in the automotive sector.
As we look ahead, S&P Global Mobility has developed a robust methodology to forecast ELV volumes across key EU markets. This includes analyzing vehicles in operation by year of first registration, assessing used car export rates, and incorporating natural vehicle survival rates.
The findings reveal distinct national trends, highlighting the need for tailored strategies to address both ELV growth and deficits in various markets.
The End-of-Life Vehicles Directive also emphasizes the importance of closed-loop recycling. While the current focus is on plastics, future regulatory developments may extend similar requirements to materials like steel and aluminum. Still, the challenges of material degradation and contamination will remain significant barriers to effective recycling.
To navigate these complexities, collaboration with recyclers is essential. Partnerships, such as Volvo’s alliance with Stena Recycling, demonstrate how coordinated efforts can enhance the recovery and refinement of ELV materials, ultimately securing a more stable supply of compliant secondary materials. Additionally, integrating design-for-recycling standards during product development can significantly improve the recyclability of ELV components.
As sustainable automotive industry trends continue to evolve, proactive engagement in closed-loop recycling and cross-industry collaboration will be vital for securing regulatory compliance and long-term competitiveness. Companies that act now will not only ensure stable access to secondary materials but also reinforce their sustainability commitments.
While the transition to a circular economy poses challenges, it also presents significant opportunities for innovation and leadership in automotive sustainability. By embracing proactive strategies, such as forming strategic partnerships, investing in design-for-recycling, and committing to closed-loop recycling practices, automotive manufacturers can transform compliance into a competitive advantage.
S&P Global Mobility is dedicated to supporting industry leaders in navigating these changes with data-driven insights and strategic guidance. Those who seize this moment will not only lead in regulatory compliance but will also shape the future of sustainable automotive practices.
Learn more about how OEMs can navigate the End-of-Life Vehicles Directive by downloading our recent whitepaper, Securing recycled auto materials under the revised EU ELV Directive.
This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.