Circular economy solutions are no longer optional – they are essential in a world of finite resources, writes Sophie Schmidtlin.
The circular economy is rapidly becoming a central strategic pillar of transformation for the automotive sector. This shift is driven by tighter regulatory requirements, increasing pressure on raw material supply, the transition to electromobility, and the industrialization of reuse, remanufacturing, and recycling value chains.
As Chair of the FISITA Circular Economy Expert Group and CTO of The Future is NEUTRAL, I see first-hand the depth and momentum of this transformation across the industry.
A closer look at the world of automotive circularity
Europe is currently the most advanced continent in automotive circular economy. Its leadership is rooted in a binding and systemic regulatory framework that now fully embraces a “circular by design” approach. This ambition is reinforced by a relatively mature industrial ecosystem, with several actors already operating at scale across reuse, remanufacturing, and closed-loop material recycling.
Asia-Pacific is following Europe’s lead through a different route: industrial power and speed of execution rather than regulation. China, Japan, India, and South Korea are accelerating circular initiatives at scale, driven by resource security, electrification, and strong capabilities in manufacturing, dismantling, and battery recovery.
Europe is currently the most advanced continent in automotive circular economy. Its leadership fully embraces a “circular by design” approach
By contrast, North America remains more limited from a regulatory perspective, although remanufacturing has long been deeply embedded in its automotive ecosystem. Circularity there progresses mainly through market forces, such as cost optimisation, supply chain resilience, and ESG commitments.
Other regions, including Latin America, Africa, and the Middle East, still play a marginal role in global automotive circularity. They are often positioned as second-life vehicle markets, informal dismantling territories, or low-value secondary material pools, rather than as fully integrated circular ecosystems.
From end-of-life vehicle handling to circular design
End-of-life vehicle (ELV) management represents the historical backbone of automotive circular economy. In France, approximately 1.2 million ELVs are processed every year by nearly 1,700 accredited treatment centres. Across Europe, around 11 million ELVs are generated annually, forming the primary resource base of automotive circularity.
Since 2015, European regulation has required that at least 85 percent of an ELV be reused or recycled, and 95 percent be reused, recycled, or recovered (including energy recovery). These targets measure the performance of the ELV treatment chain after dismantling, shredding, sorting, and material processing.
Circularity cannot succeed in isolation; cross-industry and cross-border collaboration is essential, and leadership increasingly means the ability to orchestrate ecosystems
Yet a structural paradox remains: despite high theoretical recyclability, new vehicles today still contain less than 30% recycled materials. Most of this comes from post-industrial metal scrap; only marginal shares come from post-consumer plastics, and very little from ELVs themselves. In short, cars are designed to be recyclable but are still largely produced from virgin materials.
Regulation as a strategic accelerator
France was a regulatory pioneer with the AGEC law (Anti-Waste Law for a Circular Economy) in 2020. It created an automotive Extended Producer Responsibility (EPR) scheme, effective since 2024, introducing free ELV take-back, stronger traceability, and reinforced action against so-called “missing vehicles.”
This approach is now scaling up through the forthcoming EU ELV Regulation, which is expected to enter into force by mid-2026. Directly applicable across all EU Member States, it will strengthen dismantlability and recyclability requirements, improve vehicle and parts traceability, and consolidate the economic role of reuse and remanufacturing. Its scope will also extend to new categories, including heavy-duty vehicles and two-wheelers.
End-of-life is thus becoming an upstream strategic lever, directly influencing vehicle design and engineering choices.
The Future is NEUTRAL: An operational circular model
The Future is NEUTRAL is a reference player in automotive circular economy and the only actor offering competitive solutions across the entire automotive ecosystem: manufacturers, suppliers, insurers, repairers, and private customers.
Its ambition is to act as a growth engine for the sector by delivering true “Car-to-Car” solutions. Its integrated circular value chain starts with ELV collection, depollution, and dismantling, followed by direct reuse or remanufacturing of high-value components. Non-reusable materials, such as metals, plastics, and batteries are recycled through dedicated industrial processes. Reconditioned parts and recycled materials are reinjected directly into vehicle production and aftersales, reducing costs, emissions, and dependency on virgin resources.
A structural paradox remains: despite high theoretical recyclability, new vehicles today still contain less than 30% recycled materials
This model demonstrates that circular economy can simultaneously enhance environmental performance, resource security, and economic resilience.
Engineers and collaboration at the core
One of the strongest messages emerging from this transition is the evolving role of automotive engineers. Performance and cost remain essential, but as standalone metrics they are no longer sufficient. Engineers are becoming architects of circular systems, integrating eco-design, modularity, repairability, and recyclability from the earliest stages.
This shift demands new skills, tools, and mindsets, balancing technical excellence with environmental and societal responsibility. Equally, circularity cannot succeed in isolation; cross-industry and cross-border collaboration is essential, and leadership increasingly means the ability to orchestrate ecosystems.
A shared vision: FISITA Circular Economy Expert Group white paper
The FISITA Circular Economy Expert Group’s white paper, “Driving Circularity: A new mindset to achieve sustainability” offers a shared international reference for engineers, manufacturers, suppliers, and policymakers. It provides frameworks and concrete examples to accelerate the transition from ambition to action.
The message is clear: circular economy solutions are no longer optional. They are essential in a world of finite resources.
The future of automotive engineering is being rewritten. Circularity is not its endpoint, but its foundation.
About the author
Sophie Schmidtlin is CTO at The Future is NEUTRAL