The BMW Group methodically pursues its climate goals for the supplier network and significantly lessens its steel sourcing’s carbon footprint. The BMW Group has concluded further agreements for the supply of CO2-reduced steel in China and the US, following initial contracts with European suppliers, as per the press release by the company.
“Steel is one of the main sources of CO2 emissions in our supply chain. That is why we are comprehensively reorganizing our steel portfolio – so we can supply our global production network with over one-third of CO2-reduced steel from 2026.” said a member of the Board of Management of BMW AG responsible for Purchasing and Supplier Network, Joachim Post.
“This will reduce the carbon footprint of our supply chain by 900,000 tonnes per year, while at the same time driving the transformation of the steel industry,”
The German manufacturer will increase CO2 savings in the medium term through agreements with additional steel suppliers. Hence, consistently driving forward its supplier network’s decarbonization.
Around 20% of supply chain CO2 emissions for a mid-sized all-electric vehicle are accreditable to steel, coming in third, after battery cells and aluminum.
With its versatile properties, steel is one of the critical materials for automotive manufacturing and not a less important future vehicle concepts and generations.
Focus on renewable energies in Mexico and the US
For the American region, agreements have been achieved with domestic steel producers Steel Dynamics (SDI) and Big River Steel, a US Steel facility, to use renewable energy sources in their local steel production.
About half of the automaker’s flat steel requirements in Mexico and the US are supplied by the electric arc furnace (EAF) steelmaking process, relying on electrical energy to melt down iron and steel scrap. This manufacturing process has a potential for CO2 savings in comparison to coal-based steel production in a blast furnace.
Then, the CO2-reduced steel is used at the company Plants Spartanburg and San Luis Potosí to build car bodies for BMW vehicles. Due to its material properties, steel from EAF is appropriate for structural components like the underbody.
Use of innovative technologies in China
In China, the automaker signed an agreement in August with steel manufacturer HBIS Group to supply the BMW Group plants in Shenyang with CO2-reduced steel from next year.
The HBIS Group is slowly transitioning to a hydrogen-based method in combination with EAF steelmaking to enable more CO2 savings from 2026.
Notably, BMW will be the first automotive manufacturer in China to use CO2-reduced steel from the HBIS Group in series production.
CO2-reduced steel in Europe
Furthermore, the company signed an agreement with Salzgitter AG to deliver lower-CO2 steel. The plan is to employ the steel in the series production of cars at the BMW Group’s European plants from 2026.
The automaker signed an agreement with Swedish startup H2 Green Steel in October 2021. H2 Green Steel will provide BMW’s European plants with steel produced exclusively using electricity and hydrogen from renewable energies.
Closed loops save resources
Moreover, the German automaker established closed-loop material cycles for sheet steel waste with some steel suppliers.
When they deliver steel coils to the plants, the manufacturers take steel remains, like those made at press plants when doors are punched out, away with them and use this material to make new steel. Then, this steel is sent back to BMW plants.
In that way, raw materials can be used several times in a circular economy, thus conserving natural resources.
Investment in startups boosts the development of new technologies
In addition to sourcing CO2-reduced steel, the carmaker invested in an innovative method for CO2-free steel production produced by American startup Boston Metal through BMW i Ventures, its venture capital fund.
Boston Metal employs electricity for its new technology utilizing an electrolysis cell, producing molten iron that is then processed into steel.
If electricity from renewable energies is utilized for this process, then steel production is nearly CO2-free. Over the upcoming years, Boston Metal plans to expand the new method for steel production on an industrial scale.
