The looming climate crisis is one of the biggest challenges facing the world today, with everyone from international organisations and national governments to businesses and individuals having to take action to meet the oncoming threat. Population growth, increasing urbanisation, rising pressure on resources and a continuously growing global economy are all making this task both more difficult and more essential.
For its part, Microsoft has committed to the goal of becoming carbon negative by 2030. By 2050, the company aims to have removed all the carbon dioxide emissions that it has produced either directly or by energy consumption since the company was founded in 1975. As part of this commitment, it is investing over $1 billion in its Climate Innovation Fund over the next four years to help fund new technologies and sustainability solutions.
For automotive companies the challenge is a particularly pressing one. Around 4.6 metric tons of carbon dioxide are emitted annually from a standard internal combustion-engined (ICE) car, according to the United States Environmental Protection Agency, and the industry is perceived as being one of the major contributors to global emissions. However, this reputation is not always entirely fair, according to Sanjay Ravi, Microsoft’s worldwide head of automotive.
“In total, the automotive industry itself is actually less of a contributor than many think,” says Sanjay Ravi, worldwide head of automotive mobility and transportation at Microsoft. “Most of the emissions in automotive are produced in the value chain, with the vast majority of the lifetime impact of vehicles coming in their usage. One way to mitigate this is through electrification with green energy sourcing; Microsoft for example will electrify its entire global vehicle fleet by 2030, and intelligent fleet management will provide the data to allow us to optimise this.
Nonetheless, the industry faces considerable outside pressure. Consumer expectations are evolving to demand a more sustainable approach, while regulations and emission limits are coming into force in countries across the world. In response, car design has shifted rapidly towards electrification.
“The entire industry is working with electric platforms and are producing a range of products which range from plug-in hybrids to fully electric vehicles,” says Ravi. “For passenger cars, this transition will progress quite quickly, as it will for vans and light trucks. This may take longer for heavy trucks, but several companies are also working on both improved battery technology and hydrogen fuel-cell power to make this a reality.”
Electrification will allow vehicles to be as sustainable as the energy that powers them, making them no worse than any other consumer of electricity. The local pollution impact is removed, and the vehicle can become more immediately sustainable over its lifetime as availability of green power improves. As sustainable sources of electricity become more dominant, emissions related to the automotive industry will be significantly reduced.
Electric vehicles will also enable a shift in how vehicles can be maintained. Currently, replacing the power train or swapping the gearbox in a vehicle with a combustion engine is a complex and expensive task. With an electric vehicle, this task becomes a lot easier, potentially opening up the possibility of a much longer operating life with recycled parts.
“Manufacturers can start to design vehicles not to be scrapped after eight years or 10 years, but to last 20 or even 30 years,” says Ravi. “What we believe will happen is that people will shift away from seeing vehicles as a lifestyle choice towards a more utilitarian view geared to mobility, and that means that you can engineer longer lifespan products. If you’re not as concerned with selling vehicles to end consumers, then having some of the parts be recycled or refurbished isn’t a problem. It’s more economically efficient and sustainable. And data collected through the vehicle’s life can help identify parts with significant remaining service life, as opposed to others which might need to be recycled or remanufactured, helping to drive circular manufacturing. As part of this same trend, for example, Microsoft is moving to 90 per cent reuse/recycling of parts for servers in our data centres.
Shifting expectations for transportation as a whole can also influence the introduction of new, more sustainable mobility systems. Currently, private cars are a common method of transportation, with many vehicles operating below their maximum occupancy and remaining parked for the majority of the time. As a result, there are more vehicles on the road at any one time than necessary, creating additional emissions and congestion. And for individual vehicles, the impact in carbon emissions to build the vehicle is not necessarily amortised well from a point of view of utilisation (benefit received) or effective service life. The negative experiences that this creates has seen greater numbers of people shift towards different, shared modes of transport, especially in large cities and amongst younger generations.
The potential introduction of autonomous vehicles could also have a significant impact on the roll out of these systems. Without the need for a driver, fleets of multi-passenger vehicles which more closely match the required demand at any time of the day in terms of optimal size would become economically viable.
“The industry as a whole is beginning to adapt to these different modalities,” says Ravi. “That helps drive sustainability, because its not very sustainable to have cars that are only driven for an hour per day on average. All the energy and resource consumption that went into building that car is not easily justified if you don’t use it enough. Less cars on the road will also help to reduce the use of land for parked vehicles, freeing space up for more useful purposes.
This does not mean that cars will cease to exist. Instead, a smaller number of vehicles will have a much higher utilisation. And if people begin to share vehicles more, the net number of miles driven will reduce. This is the scenario that we’re thinking about as an industry and trying to understand how to respond to. We are using data to drive over 50 per cent of commuting to our Redmond headquarters to shared modes, as an example.”
Automotive companies are therefore looking to identify their role within a shifting landscape, as they pivot towards enabling these new modalities. Many are considering a shift towards providing the new mobility services that are envisioned in the future, while others may move away from interacting as directly as they currently do with consumers. In such a period of change, Microsoft is looking to support companies in adapting quickly.
“For any actor within the industry to survive these transitions and be successful, they have to be smart about what they do,” says Ravi. “They have to understand how things are shifting and change with it, using the nature of software and data to build in flexibility. Establishing digital feedback loops from all operational data allows you not only to deeply optimise your current business, but to make smart decisions on next steps based on simulation and modelling as you transform.”
For those who can adapt, the opportunities are significant. A total of 50 per cent of the industry’s $6.6 trillion revenues in 2030 will come from disruptive technology or business models, according to consultant firm McKinsey. Furthermore, according to one prediction by Data Bridge Market Research, the mobility-as-a-service market will see a compound annual growth rate of 33.1 per cent in the period of 2021 to 2028, reaching a total of $712 billion.
“We are very committed to helping people make these transitions, to become more sustainable and contribute to a shift towards net zero,” says Ravi. “We have a number of offerings and strategies which are geared around helping to connect vehicles, using their data, and improving manufacturing efficiency. Microsoft is also very invested in the work we’re doing with organisations like the World Business Council for Sustainable Development (WBCSD) to drive data sharing for sustainable mobility. In some sectors of transportation this is already happening – General Electric uses Azure to make aero engine performance data available to its customers and partners so they can optimise their operations and reduce emissions. Providing transportation that is more predictable, comfortable, safe and sustainable has to be our ultimate end goal, and helping to drive better ways of achieving that is absolutely critical.”
Partner perspective
We asked Microsoft partner ICONICS how it has been helping the automotive industry in its shift towards sustainability.
“ICONICS has over three decades of automotive industry experience, from the vehicle makers themselves to the Tier I and II suppliers, to original equipment manufacturers and machine builders across the supply chain,” said Melissa Topp, senior director of global marketing at ICONICS. “Initially, for automotive manufacturers and parts suppliers, ICONICS handled automation solutions that were mostly related to production processes.
“Today, ICONICS still provides exemplary production process automation, but also aims to become a more holistic solutions provider to the automotive industry, especially pertaining to sustainability initiatives. ICONICS has since developed complementary software and services to help companies in the auto industry make use of energy management and fault detection/diagnostics data, in addition to enhanced quality control and productivity data. By incorporating these newer tools, such as Energy AnalytiX and Facility AnalytiX, with trusted HMI/SCADA solutions such as GENESIS64, auto manufacturers and suppliers can benefit from a more comprehensive dashboard of not only their traditional manufacturing and production costs, but those related to energy use and facility maintenance, as well.”
This article was originally published in the Summer 2021 issue of The Record. To get future issues delivered directly to your inbox, sign up for a free subscription.