Indian auto industry emissions could reduce drastically

A new study released by India’s Council on Energy, Environment and Water (CEEW) has said that India’s automobile industry — the third-largest in the world — could cut its manufacturing emissions by as much as 87% by 2050 through a shift to green electricity and low-carbon steel. According to a CEEW press release, the study comes as several leading automakers — such as Mahindra & Mahindra, Tata Motors, TVS Motors, Ford, BMW, Mercedes-Benz, and Toyota — have, over the past two years, ramped up electric and hybrid vehicle production while simultaneously setting ambitious emission reduction targets.

These automakers have also committed to the Science-Based Targets initiative (SBTi), aligning with global definitions of net-zero (NZ) that require full value-chain decarbonization by 2050. For large Indian auto manufacturers, cleaning up supply chains will not just lower emissions; it will enhance long-term cost competitiveness and position them as preferred international suppliers.

The Executive Summary of the study says as the world moves towards NZ emissions, a transition is expected across all economic sectors. For the automobile sector, this would lead to a higher demand for low-carbon vehicles. Currently, about 65–80% of a vehicle’s emissions come from its use phase. Electrification is a major step toward reducing these emissions, while hybrid vehicles are also being explored as a bridge in the short to medium term. This, in turn, means that there will be major shift in the type of vehicles being manufactured.

The Indian automobile sector contributes around 7.1% to the gross domestic product, the Executive Summary points out, and employs over 19 million people. Indian original equipment manufacturers (OEMs) will need to ramp up low-carbon vehicle manufacturing to tap into the growing demand. For auto OEMs to be competitive, they will need to focus on decarbonizing their own manufacturing and upstream supply chains. It is, therefore, important to understand the future pattern of vehicle production, associated energy use and emissions, as well as the growth in demand for materials like steel or rubber used in vehicles. The OEMs must make informed decisions based on long-term assessments on the kind of materials and energy required for vehicle manufacturing.

Emissions intensity is declining — but not fast enough, the press release points out. The CEEW study uses a custom version of the Global Change Analysis Model to project emissions under various pathways. It finds that if current business-as-usual (BAU) trends continue, annual vehicle production could rise nearly fourfold — from 25 million units in 2020 to 96 million by 2050. Emissions, however, would only double, reaching 64 million tonnes of CO₂, suggesting a steady decline in emissions per vehicle. Still, the absolute rise in emissions underscores the need for accelerated action. Steel alone would remain the largest source of supply chain emissions, with suppliers expected to rely heavily on coal in this business-as-usual scenario. The study estimates that sourcing low-carbon steel could reduce emissions by nearly 38 million tonnes by 2050.

Green electricity and green steel are essential for deep decarbonization, according to the study. If both OEMs and their suppliers were to aim for NZ by 2050, annual emissions could fall from the projected 64 MtCO₂ (BAU) to just 9 MtCO₂ — an 87% reduction. This would require OEMs to shift to 100% green electricity — sourced through power purchase agreements, renewable energy certificates, or captive solar — and steel suppliers to use 56% hydrogen-based energy, reducing coal’s share to under 10%. In addition, increasing scrap-based steel production to 48% by 2050 would significantly reduce emissions and resource intensity. The CEEW study also highlights that rubber suppliers must transition to green electricity to clean up Scope 2 emissions.

The CEEW study also examines a high-hybrid scenario, where hybrids dominate in the near term before electric vehicles (EVs) take off. While this reduces energy demand among component suppliers by 7%, emissions remain slightly higher than in a BAU shift to EVs due to continued reliance on combustion engines. Ultimately, hybrid vehicles are at best a bridge and will need to be reduced to make way for zero-carbon vehicles. To align the automobile sector with a 2050 NZ pathway, the CEEW study recommends a two-pronged strategy: accelerate the transition to electric vehicles and decarbonize the full manufacturing value chain.