5.1 Introduction

Central to the circular economy (CE) is the shift from a linear cradle-to-grave system following a “take-make-use-dispose” approach toward a cradle-to-cradle system following a lifecycle approach (Lieder & Rashid, 2016). This implies the consideration of a product’s entire life cycle along the value chain, including the extraction of raw materials, parts supply, manufacturing, distribution, and use, as well as end-of-life and waste management (Ellen MacArthur Foundation, 2013; Farooque et al., 2019). Thus, product design follows the principles of “design to redesign,” where technical parts circulate in a closed system, and to “design out waste, pollutants, and emissions,” where biological nutrients return to the biosphere (Murray et al., 2017). In the automotive industry, electric vehicles are discussed as a key technology for reducing greenhouse gas emissions (Li et al., 2019). In light of this transition from combustion vehicles toward the electrification of vehicles, the manufacturing phase and the downstream supply chain, rather than the use phase, are decisive for the carbon footprint, as the manufacturing process of batteries for electric vehicles is highly energy intensive (Morfeldt et al., 2021). Thus, a lifecycle perspective is highly important for the creation of sustainability impact (Ries et al., 2023). Products must support circular strategies, such as maintenance, reuse, remanufacturing, or recycling, by intention, thereby emphasizing the importance of the designer’s role (den Hollander et al., 2017).

On the Road to Net Zero outlined in this book, the actual implementation starts with product design once an integrated strategy and reporting scheme have been developed. Based on the principle of “what gets measured gets done” (see Chap. 1), the Future of Corporate Disclosure (see Chap. 4) enables companies to identify potential areas for improvement in their operations and products, including their sustainability performance. By integrating these insights into their product design processes, companies can create circular products that meet customer demands, corporate vision, and regulatory requirements.

The main objective of this chapter, Creating Sustainable Products, is to highlight the importance and implications of circular design on product and service development and to discuss the challenges faced by manufacturing companies in altering user behavior. The remainder of this chapter is organized into three sections. Section 5.2 starts with a short overview of the circularity concept. It then elaborates on three key implications of circularity for changing product design, service design, and user behavior. This is followed, in Sect. 5.3, by a conversation between Prof. Oliver Zipse, Chairman of the Board of Management of BMW AG, and Prof. Dr-Ing. Sandro Wartzack, Chair of Engineering Design at FAU Erlangen-Nürnberg. Both experts reflect on sustainable product appearance, globally varying customer expectations, and future advances in circular product design from a practitioner’s perspective. Section 5.4 then gives an outlook on the future challenges of circular design before Sect. 5.5 concludes with a transitional link to the following Chap. 6 on Transforming Value Chains for Sustainability.

5.2 Pathways Toward Circular Design

A linear economy causes many of our current environmental problems, including natural resource depletion, biodiversity loss, and global warming (Rockström et al., 2009). For example, the extraction and processing of raw materials are responsible for 90% of global biodiversity loss and 50% of greenhouse gas emissions (International Resource Panel, 2019, p. 8). These environmental problems have presented the managers of manufacturing companies with immense difficulties. Climate change and resource scarcity in particular are placing manufacturing companies under increasing pressure to cope with new environmental regulations, resource price volatility, and supply chain risks (Gebhardt et al., 2022; Lieder & Rashid, 2016). One regulation proposed by the European Commission in 2020 is the Circular Economy Action Plan, which targets product design, the value retention of products and materials, and waste prevention (European Commission, 2022a). As a result, manufacturing companies now need to reconsider their conventional take-make-waste approaches (Geissdoerfer et al., 2017).

Taking a closer look at the automotive industry, 14% of global greenhouse emissions are attributed to transportation, and they keep rising (PWC, 2007). This is the result of two issues. First, current estimates indicate that the world fleet of vehicles will triple by 2050 compared to the base year 2000. Second, this fleet is aging, especially in developing countries, and is therefore not complying with stricter emission regulations (Mamalis et al., 2013). To tackle the environmental impact of the industry, companies need to adhere to increasing environmental regulations. For example, the new EU Battery Regulation, which is expected to come into force in 2023 (see European Parliament, 2023), for the first time, will set out rules concerning the entire life cycle of a product in terms of “production, recycling and repurposing” (European Commission, 2022b). In terms of production, new traction batteries for electric vehicles will have to be labeled to disclose their carbon footprints. In addition, value chain actors (except SMEs) will have to disclose that raw materials are responsibly sourced from a social and environmental point of view as part of a due diligence policy. Finally, the new digital battery passport, as well as stricter collection and recycling quotas, will foster reuse and recycling efforts (European Parliament, 2023).

As another example, the EU Commission has recently revealed its plans to revise the end-of-life vehicle (ELV) directive, which was initially enacted in 2000 (European Commission, 2023). This announcement marks a significant shift in the regulations that have governed ELVs for over 20 years. The proposed revision aims to bring about substantial changes in the way ELVs are collected, treated, and recycled, with the ultimate goal of aligning with the objectives of the European Green Deal. By encouraging the automotive industry to embrace a sustainable approach to car design and production, this initiative seeks to ensure consistency with the broader environmental goals of the European Union.

5.2.1 The CE Approach Offers a Paradigm Shift

In this context, scholars, politicians, and practitioners are promoting CE as a new paradigm that offers great potential (Mhatre et al., 2021). It offers new business opportunities to create value and employment while reducing material costs and price volatility (Kalmykova et al., 2018). Moreover, circular strategies can foster resource security (Stahel, 2016) and cut global greenhouse gas emissions by 63% by 2050 (Circle Economy, 2019). While the concept of CE was introduced by Pearce and Turner (1990), they used it to describe the relationship between the economy and nature, where nature provides inputs for production and serves as a sink for waste outputs (Geissdoerfer et al., 2017). This contrasts with the modern understanding of extending the life of resources (Blomsma & Brennan, 2017). The most prominent definition of CE currently in use has been provided by the Ellen McArthur Foundation (Kirchherr et al., 2017), which describes CE as “an industrial system that is restorative or regenerative by intention and design […]. It replaces the ‘end-of-life’ concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse, and aims for the elimination of waste through the superior design of materials, products, systems, and, within this, business models” (Ellen MacArthur Foundation, 2013, p. 7). This definition highlights the importance of design to a CE in which the whole product life cycle, from design to end-of-life management, is considered (Farooque et al., 2019). Moreover, it shows how the understanding of CE is influenced by industrial ecology (Graedel & Allenby, 1995) and the cradle-to-cradle philosophy (McDonough & Braungart, 2003).

The cradle-to-cradle philosophy distinguishes two separable cycles: a biological cycle and a technical cycle. In the biological cycle, biodegradable materials provide nutrients for nature after use. In the technical cycle, the products and materials circulate in closed-loop industrial systems through processes such as reuse, repair, remanufacturing, and recycling. Consequently, waste no longer exists. The Ellen MacArthur Foundation visualizes this approach in the so-called butterfly diagram (Ellen MacArthur Foundation, 2019). Thus, in a closed-loop system, healthy and renewable resources are complemented with technical processes to retain product and material value over time. Three main principles guide the life cycle thinking of a CE: the first is to preserve and enhance natural capital, the second is to optimize resource yields, and the third is to foster system effectiveness (Ellen MacArthur Foundation, 2015).

5.2.2 Different Frameworks for CE Operationalization: Slowing, Closing, Narrowing, and R-Strategies

Manufacturing companies are considered pivotal for implementing a CE based on their potential to decouple value creation from resource use (Blomsma et al., 2019). As such, they can improve product use, extend product lifetime, and close materials flows, among others, through different circular strategies (Bocken et al., 2016; Potting et al., 2017). A variety of frameworks exist to operationalize CE principles for manufacturing companies. Bocken et al. (2016) describe three product design strategies, namely slowing resource loops (product durability and life-extending services), closing resource loops (recycling), and narrowing resource flows (resource efficiency), to manage material and product flows over time. Geissdoerfer et al. (2018) extend these strategies with intensifying resource loops (increased product use), and dematerialization of resource loops (substitution of product utility by service and software solutions).

Another approach to operationalizing a CE is to use the so-called R-strategies. While some authors distinguish between the three R’s of reduce, reuse, and recycle (Ghisellini et al., 2016; Reike et al., 2018), others describe up to ten different R-strategies (Potting et al., 2017). While the former only addresses material flows, the latter includes a system perspective that addresses, for example, the rethinking of product use (Stumpf & Baumgartner, 2022). All varieties of the R-framework share a hierarchy that ranks the different R-strategies based on their value retention potential (Kirchherr et al., 2017; Reike et al., 2018). Strategies that aim at a useful application of materials are at the bottom of the hierarchy, while strategies that aim at extending product or component life are in the middle, and strategies that aim at intelligent production and use are at the top of the hierarchy (Stumpf & Baumgartner, 2022). An overview of the ten comprehensive R-strategies by Potting et al. (2017) is illustrated in Fig. 5.1, based on the visualization by Stumpf and Baumgartner (2022) and explained as follows: While recovering refers to energy, recycling describes the processing of materials to obtain the same or a lower quality of the material. Thus, these strategies address the material level and build the third cluster with the lowest priority for circularity. Strategies that extend product or component life comprise repurposing, which describes the use of products or components for a different function. Moreover, refurbishing (i.e., restoring and updating old products) and remanufacturing (i.e., using components of discarded products in a new product with the same function) are classified as life-extending strategies. Lastly, repairing defective products and reusing discarded products in good condition complement this cluster. The top cluster of smarter product use and manufacture comprises reducing, which implies an increase in efficiency in the manufacturing process or product use. Moreover, rethinking, which describes intensifying product use, and refusing, which implies making a product redundant by abandoning its function or by offering the same function with a radically different product, are based on business model innovation.

Fig. 5.1
A 3-layer pyramid diagram of 10 R-strategies progressing from linear to circular economies, with labels from bottom to top. Recycle and recover for useful applications. Reuse, repair, refurbish, remanufacture, and repurpose for an extended lifespan. Reuse, rethink, and reduce for smarter product use.

R-strategies increasing circularity (own illustration based on Potting et al. (2017, p. 5) and Stumpf and Baumgartner (2022, p. 6))

5.2.3 Three Implications for Design

Implementing the different R-strategies entails three implications for design: a change in product design, a change in service design, and a change in user behavior. Products need to be designed to embrace circular strategies (Bakker et al., 2014). However, circular products do not fulfill their potential if they end up in a drawer or landfill. That is why, in addition to changing the product design, manufacturers need to design new service offerings for reuse, repair, refurbishment, remanufacture, repurposing, and/or recycling (Revellio, 2022). These services must also be made attractive to the user if they are to actually be used (Amend et al., 2022), thereby emphasizing the role of the user and user behavior. Naturally, these three levels are interrelated, and trade-offs can occur among and within the three levels when aiming for circular design. First Implication: A Change in Product Design

The Inertia Principle guides circular design following the hierarchy of the R-strategies: “Do not repair what is not broken, do not remanufacture something that can be repaired, do not recycle a product that can be remanufactured. […] [R]eplace or treat only the smallest possible part in order to maintain the existing economic value of the technical system” (Stahel, 2010, p. 195). This implies a product design for recirculation, endurance, and efficiency (Boyer et al., 2021).

At the product level, two key elements are important for the design dimension of recirculation (Boyer et al., 2021). First, increasing the fraction of a product that comes from used products (i.e., the input of recycled materials) (Linder et al., 2017) is also described as a design to reduce the embodied impact during production (Tecchio et al., 2017). This refers to the recycling strategy of the third cluster. Second, the fraction of recirculated outputs is relevant (i.e., how much of the product ends up being recirculated at the end of its functional life) (Boyer et al., 2021). In this context, the design for a technological cycle, the design for a biological cycle, and the design for disassembly and reassembly are relevant (Bocken et al., 2016). Thus, beyond the recovering and recycling strategies, the strategies of refurbishing, remanufacturing, and repurposing are important for a recirculated output, as they ensure reduced residual waste at the end of the functional life (Tecchio et al., 2017). An example of circularity in product design is BMW’s “iVision Circular,” a vehicle that is made as much as possible from secondary materials and is 100% recyclable at the end of life (BMW Group, 2021). Moreover, connectors and screws, instead of welds, are used where materials meet to facilitate easy disassembly. The potential of recirculation regarding carbon savings is promising. In China, BMW’s joint venture works with local recycling companies to recover several materials, such as nickel, lithium, and cobalt, from spent high-voltage batteries and return them to the battery production cycle (BMW Group, 2022). According to BMW, this can save up to 70% of CO2-emissions compared to using newly procured raw materials.

Another important product design dimension is endurance, which describes a product’s ability to retain its value over time (Boyer et al., 2021). This requires, on the one hand, designing products for long life, including design for attachment and trust and design for reliability and durability. On the other hand, product design must ensure extended product use by including designs for maintenance and repair, designs for upgradability and adaptability, and designs for standardization and compatibility (Bocken et al., 2016; den Hollander et al. 2017). Design for modularity is also pivotal, as it allows the separation of modules of valuable parts that contain technology from those that do not (Krikke et al., 2004). Likewise, it facilitates the use of instruction manuals for self-repair (Amend et al., 2022). Thus, product endurance mainly relates to the circular strategies of repairing—designing for product life extension—and rethinking—designing for long-life products.

Designing for the efficiency of materials and resources during use stems from eco-design, and thus is not exclusive to the notion of CE (Tecchio et al., 2017). This type of design addresses the reduce strategy of the first cluster. An example of eco-efficient design in the automotive industry is lightweight design, which leads to a reduction in overall vehicle weight and increased fuel efficiency. The designers of BMW’s first battery electric vehicle, the i3, used a carbon fiber-reinforced plastic body, which reduced weight by 50% compared to the use of steel in conventional car bodies (W. Zhang & Xu, 2022). Note that while this material increases efficiency during the use phase of the car due to the reduced weight, it hinders recycling at the end of life because of the material mix of plastics and carbon fiber. Moreover, it shifts emissions to the energy-intensive production of carbon fibers unless the production processes are powered by renewable energy, as in the case of BMW. This is an example of a trade-off in circular design on the product level and between life cycle stages.

In practice, the Circular Design Guide, developed collaboratively by the Ellen MacArthur Foundation and IDEO (Global Design & Innovation Company), provides methods and tools to help designers apply design thinking and circular design (Ellen MacArthur Foundation, 2017). To quantify product circularity, Linder et al. (2017) critically reviewed different metrics, such as the Material Circularity Indicator (MCI) developed by the Ellen MacArthur Foundation, the Cradle-to-Cradle (C2C) certification framework developed by the Cradle-to-Cradle Products Innovation Institute, or a circularity metric for products based on life cycle assessment (Scheepens et al., 2016). However, acquiring the necessary data for impact assessment can be difficult, and research must take on the challenges of developing accessible, unbiased, and easy-to-use tools (Boyer et al., 2021). Second Implication: A Change in Service Design

Product-service systems (PSSs) are a type of business model that integrates tangible products and intangible services into a solution bundle to better satisfy customer needs (Mont, 2002). Based on their increasing servitization, PSSs are transitioning from a product focus toward providing services, product access, and performance (Tukker, 2004). Examples of this type of PSS are product-sharing systems, such as car sharing or appliance sharing (Bressanelli et al., 2018). This transition toward PSSs is relevant from an economic and environmental perspective (Tukker, 2015), as the design logic for PSS favors retaining product ownership to allow assessment of the total cost of ownership and designing for circularity (Tietze & Hansen, 2017). Therefore, PSSs are considered a means of dematerialization by paving the way for a more closed-loop, resource-efficient, and climate-friendly economy (Yang & Evans, 2019).

The use of PSSs has two implications for service design. First, the manufacturing companies need to design or form collaborations to offer additional services that can extend product lifetimes and close resource loops. These include services for maintenance, repair, upgrades, updates, take-back management, and waste handling processes (Lüdeke-Freund et al., 2019). These services need to be designed from a consumer-centric perspective, as discussed in the next section on user behavior. For example, circular services need to be included in a service contract (Amend et al., 2022), as users expect manufacturers to cover these costs (Mugge et al., 2005). Examples of these services in the automotive industry are the so-called re-factories of Renault in France and Spain, where used vehicles are refurbished, individual parts are remanufactured, traction batteries are repaired, and second-life applications are found for them (Groupe Renault, 2020).

The second requirement is that the manufacturing companies need to offer new PSS business models aimed at smarter product use (refusing and rethinking), such as product sharing (Bressanelli et al., 2018). In a sharing system, the service provider owns the product and therefore retains the responsibility for maintenance and repair, whereas different users can sequentially utilize the product and pay for this access (Tukker, 2004). These business models aim at intensified utilization, and respective metrics assess how often a product gets used (Boyer et al., 2021). However, their circularity impact depends on a change in user behavior (Tukker, 2015). For example, the potential of car-sharing business models to contribute to CO2-emission reductions depends on the number of privately owned vehicles that are substituted for the car-sharing business model (Harris et al., 2021). The authors revealed that this is hardly the case at the moment due to rebound effects. For example, BMW found that the extent of environmental benefits depended on how services like car sharing were integrated into urban mobility ecosystems. Thus, the beneficial effects of on-demand mobility were very city-specific and depended on innovative and holistic transportation planning. This is why currently substituting private combustion engine cars for electric cars is the most CO2-saving solution if the cars are charged with renewable energy. Changing user behavior is key to a positive circularity impact of service business models. A Third Implication: A Change in User Behavior

The consumer’s contribution to a CE has received little academic attention; however, as with products and services, user behavior must change from linear to circular (Selvefors et al., 2019). In a CE, the consumers have three roles (Shevchenko et al., 2023): First, they must select and buy a circular-oriented product or service rather than a conventional one. Second, they must not only use but also maintain and update the product. Lastly, they must discard the product through an appropriate channel for reuse, remanufacture, or recycling. Selvefors et al. (2019) describe these three phases from a user perspective, focusing on product exchange between users as obtaining the product (buying, trading, receiving products as gifts, leasing, subscribing, renting, borrowing, or co-using), using the product (utilizing, adjusting, repairing, repurposing, storing), and then resigning ownership of the product (gifting, trading, selling, returning a product to the provider, ending a lease or subscription contract, returning rented or borrowed products, or ending co-use). Based on this approach, the authors deduce user-centric design principles, including design for extended use, design for pre- and post-use, design for exchange, and design for multiple use cycles (Selvefors et al., 2019).

Therefore, research highlights the changing role of the consumer, who becomes a caretaker of the object in a CE (Rogers et al., 2021). This is similar to the notion of a pro-sumer (Kohtala, 2015) or pro-user (Stahel, 2019), who co-create products. In practice, however, evidence suggests that a tremendous gap exists between what people claim to do and how they actually behave. For example, 77% of European respondents said they undertake efforts to repair products, but 45% did not seek information on repairability (Parajuly et al., 2020). Therefore, designing for behavior change with the intent of influencing or promoting certain user behavior is pivotal for the implementation of a CE (Wastling et al., 2018). In this context, understanding the intrinsic (e.g., knowledge, motivation, habits, values) and extrinsic (e.g., norms, monetary incentives, infrastructural constraints) attributes that drive human behavior is important (Parajuly et al., 2020). By comparison, the car today is already one of the products that is kept alive for a long time by the established second-hand market, as well as by repairs.

To facilitate this behavioral change, two services are key. First, operational support is a service that supports the user in an efficient and durable product operation, such as training or performance monitoring (Kjaer et al., 2019). For example, well-designed repair manuals can help extend the product lifetime by aiding users in repairing rather than replacing a damaged product (Amend et al., 2022). Thus, operational support provides relevant knowledge and education on efficient product use. Second, behavioral support nudges users to act sustainably, thereby overcoming motivational challenges by setting and achieving goals (Ries et al., 2023). This can be achieved, for example, through positive feedback, gamification (e.g., repairability scores), monetary incentives, or a supporting community (Bovea et al., 2018; Valencia et al., 2015). Beyond fostering circular behavior, designing out adverse user behavior is equally important, as this can result in quicker wear and tear and decrease product longevity (Bressanelli et al., 2018). For example, in the case of a performance business model, customers might misuse products, thereby increasing maintenance costs, as these are covered by the provider (Reim et al., 2018). This link between pricing logic and user behavior emphasizes the need to understand how the pricing logic incentivizes certain behavior (Ries et al., 2023). For example, car-sharing pricing based on the minutes driven rather than on the distance driven is likely to incentivize fast, and therefore potentially unsafe, driving. Hence, the proper design of service contracts and pricing logic of service offers are pivotal for creating the desired circular behavior.

5.2.4 Implementation Challenges

For many companies, implementing circular strategies has not been easy (Lieder & Rashid, 2016), and this is especially the case with manufacturing companies (Lopes de Sousa Jabbour et al., 2018). In 2020, only 8.6% of the global economy was circularity oriented (Circle Economy, 2019, p. 8). One challenge is the required value network perspective, which requires enhancing relationships with supply chain actors, customers, and other service partners (Centobelli et al., 2020) to ensure the provision of additional services and PSS (Barreiro-Gen & Lozano, 2020). Compared to other industries, diverse services and PSSs are already associated with cars, from rental agencies and car repair workshops to used-car markets. Nevertheless, achieving full circularity requires additional collaboration. We will return to this idea in Sect. 5.3. Other barriers relate to governmental issues (e.g., the lack of standards), economic issues (e.g., the uncertainty regarding the profitability of circularity strategies), technological issues (e.g., design challenges in creating or maintaining durability), knowledge and skill issues (e.g., lack of skills), and management issues (e.g., lack of support from the top management) (Govindan & Hasanagic, 2018).

Currently, the focus of corporate efforts is centered on circular strategies involving reducing and recycling that combine environmental and economic benefits, particularly unilaterally, and it neglects the variety of circular strategies and an ecosystem approach (Barreiro-Gen & Lozano, 2020). For this reason, holistic implementation of circular strategies cannot be achieved solely through product design (Korhonen et al., 2018) and technological innovation (Suchek et al., 2021); it also requires stakeholder network (Evans et al., 2017) and learning (Bocken et al., 2018) perspectives. This also relates to the scope of the CE. While some perceive the CE as the operationalization for companies to implement sustainable development (Ghisellini et al., 2016; Murray et al., 2017), others perceive circularity as one archetype of sustainable business models (Allwood et al., 2012; Bocken et al., 2014). In a narrow sense, CE focuses on solutions that combine reduced environmental impact (resource efficiency and waste reduction) with increased economic value (customer value and growth). However, focusing only on these two dimensions—the ecology and the economy—fails to address all three dimensions of sustainability (Pieroni et al., 2019). Therefore, circular business models, being narrowly understood, might not always be sustainable. For CE to contribute to sustainable development, it must broaden its scope “from closed-loop recycling and short-term economic gains, towards a transformed economy that organises access to resources to maintain or enhance social well-being and environmental quality” (Velenturf & Purnell, 2021, p. 1453).

5.3 Expert Conversation on Sustainability in Product Development

Why Is It Important for BMW to Concentrate on Sustainability?

  • Zipse: Perhaps the most important ingredient in purchasing behavior is brand. We at BMW say that having a strong brand is very important—a brand with an innovative image, because the world very much links innovation with sustainability. We are convinced that most solutions for sustainable products come from innovation. Therefore, the impact of sustainability on brand image is the most important impact we have here.

  • Wartzack: What does this mean for product design?

  • Zipse: In addition to regulatory compliance, consumer behavior, and societal changes, it is about creating a brand image that remains attractive to current and future customers. We make sustainability one of the most important aspects of our product development because when it comes to products, you have to live up to what you say. You can talk a lot about what you want to achieve in the future or what your goals are. In product development, however, you have to put your words into action. People can experience your product, they can touch it, and of course they can drive it. People believe in your product strategy when they can see it.

What Is Your Customer Group?

  • Wartzack: In product development, we talk about Design for X, where X stands for recyclability, sustainability, use, transport, or production. Design for sustainability is very important, especially for the younger generation. We talk about Fridays for Future and CO2-neutral production. However, the younger generation is not the typical BMW customer. What is your view on that?

  • Zipse: We have customers of all ages. They start at 25—these are really our new car buyers—and the average age is somewhere around 50. Across all age groups, sustainability becomes one of the most important factors in purchasing behavior. In other words, if your brand is not perceived as sustainable—especially a premium brand like BMW—you are out of the game. You are simply no longer attractive in this market. Sustainability is at the center of political movements around the world, and all stakeholders are realizing that innovation and sustainability are key.

  • Wartzack: Yes, I absolutely agree. It is important to make cars for all ages. Another thing that is changing: When we were young, it was important to own a car and to be free. The younger generation considers having a car very important when you need it—a connected car that is environmentally friendly.

What Are the Biggest Changes in Material Choice in Product Design, from a Conservative Focus on Cost and Functionality to a More Sustainability-Driven Approach?

  • Zipse: When we talk about product development, at the end of the day, it is about materials in the car. How do you see the use of materials in the car changing from, let’s say, the old world, where cost and functionality were at the heart of product development, to a more sustainable approach?

  • Wartzack: There are many new materials, even natural materials like hemp, sisal, or flax. However, many design challenges arise with these new types of materials. For example, the maximum tensile stress for glass fiber is about 1000 megapascals, whereas for hemp fiber, it is 250 megapascals. Material engineers and product designers have to take this into account and design in a different way.

  • Zipse: I can relate to that. I think our engineering, innovation, and design departments face similar challenges with new natural materials. So, the question is: How do you overcome the design challenges associated with using natural materials?

  • Wartzack: With natural materials, you need reliable data. Why don’t engineers like to design with wood, for example? Because it is very difficult to predict the behavior of wood, given its irregularities, such as knotholes. That is why design with natural materials is very difficult for the designer. But we have to differentiate. On the one hand, there are parts of the car in the main crash load path, where I would still use steel and aluminum, which are very recyclable. On the other hand, there are other parts, such as door systems or bulkheads, where biomaterials and biocomposites could be used. You can find concept cars in which the entire outer shell body is made of biocomposite materials. The key is to use the right material in the right place.

How Important Is Weight Reduction for Car Design?

  • Zipse: Weight has its ups and downs. When we were designing an electric car 10 years ago, we thought weight was the most important thing. Therefore, we used carbon fiber for the shell of the i3. We built the whole supply chain around carbon fiber, with a huge effort to make the car lighter. Making cars lighter is still a priority, but at the same time, other performance factors, such as aerodynamics, matter from a sustainability perspective. What is your view on weight reduction and lightweight materials?

  • Wartzack: Weight reduction through the use of high-quality lightweight materials is still an important factor, especially in the top-of-the-range segment, for reasons of driving dynamics. The BMW i3 impresses with its complete body made of carbon fiber-reinforced plastics, which was designed using very intensive dimensioning tools and computer-aided engineering tools. There is no doubt that designing with hybrid materials has huge advantages. However, their use requires new engineering skills and new recycling concepts. A car is a mixture of different materials, each put in the right place, depending on crash load paths and price.

How Can We Get More Natural Materials into Cars?

  • Wartzack: The interior of the i3 featured a lot of natural materials. This is very good for the user’s perception. When you touch the surface, it feels warm. Are natural materials an important part of your future generation of cars?

  • Zipse: Natural materials are important, but we are also researching and developing future natural materials, such as synthetic leather, with materials that can eventually substitute crude oil. And we want to substitute natural leather in the end. Weight plays a role, too. By reducing weight, the car consumes less energy over its life cycle. However, we are increasingly seeing a secondary effect: if the car is lighter, less material is needed for its manufacture. If you look at the world today, it is all about resource efficiency. Today, humanity extracts around 100 billion tons of raw materials from the planet each year.

  • Wartzack: That seems to be the inconvenient truth.

  • Zipse: You can argue whether this is too much. Perhaps it is. It has already had the effect of steadily increasing the cost of extracting natural resources from the earth. So, in addition to weight reduction, a secondary approach is to use as little material as possible because raw materials are becoming more and more expensive. Look at palladium or rhodium these days. Of course, the COVID-19 pandemic was also a reason for the increase in raw material prices. But you are at risk: If you use too much material, your base cost will increase.

  • Wartzack: So what would be the right strategy to balance cost and weight reduction?

  • Zipse: We are very committed to reducing material and the base cost at the same time. We have implemented several methods to reduce weight. For example, we use bionic design and additive manufacturing technologies to build parts. Every kilogram of weight reduction in the car has another secondary effect: If the car is lighter, you can use smaller brakes or smaller battery packs to cover the same distance. That is why, after improving the car’s aerodynamics, weight reduction is one of the most important areas of progress today. What do you think?

  • Wartzack: Yes, I absolutely agree. Sustainability means saving material and reducing weight. We can do a lot with the right dimensioning with the intensive use of dimensioning tools, for example. So, all in all, I think the product designers have to do their best to find a way to achieve these two goals.

What Would You Say Makes a Particular Material Sustainable?

  • Zipse: Do you think, when you choose materials, that a sustainable material choice has to look and feel sustainable? Is it a matter of haptics and quality? Is it enough that it is sustainably produced with a very small carbon footprint? Will customers pay extra money for sustainable features?

  • Wartzack: The appearance of a car is a very complex issue. On the one hand, the younger generations are striking on Fridays for Future, and society is demanding CO2-neutral production. The world is waking up. On the other hand, everyone wants to buy an iPhone. User perception and attractiveness are very important for Apple products. Even older people buy iPhones despite the availability of mobile phones designed specifically for that age group. It’s all about how much people love using your product. They like the design, the interaction, and the experience. Customers want to feel emotional about their products, and the integration of sustainable materials, the implementation of sustainable production, and sustainable supply chains are key arguments.

  • Zipse: You mentioned that the i3’s interior materials feel warm. About 10 years ago, the interior had to be as cold as possible. Lots of chrome, lots of brushed metal, and so on—it was all over the place—black panels everywhere. That is changing. If you look at the iX or the new i7, it is designed more like a private lounge. There are almost no cold materials in your home anymore. Black leather is used less, and chrome is used less. Instead, we see warm, earthy materials. This also carries over to the interior of the car. It has a lot to do with the choice of materials. Electric cars are perceived as a space where you can withdraw from the outside world—especially because of the silent driving characteristics. People want to feel more at home. This has a big influence on the materials we choose.

  • Wartzack: And what do you think—how eco-friendly could a BMW look in the future?

How Eco-Friendly Will a BMW Look in the Future?

  • Zipse: We don’t think it has to look like you are missing anything. It has to look like … You mentioned the iPhone. The iPhone is absolutely first class in terms of quality, and I think that will never go away. It is more the story you tell about how this product is made. It always has to look high quality. What you cannot do is neglect the quality of your product and claim it is sustainable. That will not work. There is no excuse for that. It is more a matter of what is perceived as aesthetically superior.

  • Wartzack: I absolutely agree with you about the quality aspect. But what is then perceived as superior by consumers today?

  • Zipse: Natural materials are perceived as aesthetic and progressive. You have to supply them at a very high level of quality. Then, the perception of quality comes naturally because the product is warm by its nature. But still, natural materials do not have to look natural. We are now on a level of interpretation that allows a lot more. You no longer see if it is based on natural or synthetic raw materials. It is all about design.

  • Wartzack: That is certainly the case with natural materials. They are sustainable and often recyclable or compostable, but what about synthetic materials? Especially in the interior design, components are made up of several layers, which limits their recyclability.

  • Zipse: Good point. Another important aspect is mono materials. My favorite example is a seat cover. It consists of a surface component, and material underneath, and the foam underneath is glued to another piece of foam. But they are two different materials. This makes them very difficult to recycle because they cannot be separated. What we are trying to do now with our next architecture is to use more mono materials. Mono materials are easy to recycle. These are things that we haven’t thought about to this extent before. But the transition is quite easy: You have to start thinking from the recycling process, not just from the product design process. In the end, you may even find that you will have a better cost base.

How Have Recycling Approaches Evolved Over the Past Decades?

  • Wartzack: I remember the hype about recycling in the 1990s. I visited a pilot recycling plant in Munich and found it very impressive. Before that, I remember that some parts in the BMW dashboard were made out of polypropylene foam, PVC, and metal parts—a complete mixture of materials. So, a lot of Design for Recycling approaches and tools were developed in the 90s. How established are these approaches that have been developed since the 1990s in the BMW production environment today?

  • Zipse: In our private lives, we all know what a green dot is (in German “Grüner Punkt”—a sign for waste collection and recycling systems). Everyone knows that. What kind of material goes into which channel is regulated. Paper goes in this channel, mixed materials go in this channel, glass goes in that channel. The car industry is very big, but it has a highly diverse global regulatory landscape for the recycling process—the afterlife of the car. We expect some new regulations soon in the EU, where the Battery Regulation puts into place new objectives (e.g., for the recycled content). You have to think 10 years ahead about what will happen to our cars if a new policy is based on the upcoming revision of the End-of-Life vehicle directive. What happens to the car after the use phase? You can already start thinking about how to design your car if suddenly a policy is in place that requires that you recycle the car and extract all the raw materials. This immediately leads to the use of secondary materials. However, the quality of secondary materials today is not sufficient.

  • Wartzack: Why is that?

  • Zipse: Because they cannot be completely separated in the recycling process. If you could separate them the way we do with household waste in our daily lives, it would not be a problem. The recycled product would be as good as the product in the first cycle. Separating materials would be easy if you built separation into your product development strategy from the start. To do it in retrospect is extremely difficult. How can we increase the amount of secondary materials? You know the term “cradle to grave,” but in the future, it should actually be “cradle to cradle.” The car goes through its life cycle. At the end of the day, it is dismantled and recycled, and it is again part of a new car. A “cradle to cradle” system is the actual target we are aiming for. As a product design researcher, what are your suggestions on how to approach design for circularity?

  • Wartzack: The designer has to design in such a way that the materials can be easily recycled—by implementing detachable joints, for example. Transparency of information is also key. You need to know what material composition is behind some plastic labels because that can also be very confusing if they are not labeled correctly. The OEM should be in charge of recycling because they know their car best and can plan recycling strategies at the concept stage. The manufacturer knows best which components can be given a second life. BMW is already doing it for battery packs at its Leipzig plant, where used battery modules are used as stationary energy storage.

  • Zipse: Yes, we started using spent battery packs as stationary energy storage in 2017. So far, we are satisfied with the results of this pioneering project.

  • Wartzack: That’s great to hear. A second life for cars is also a very sustainable approach and a good thing. If a car is used for 10–15 years in Germany today, it will then be used for another 10–20 years in Africa or elsewhere. This life cycle is quite common, as long as it is in line with existing recycling regulations. At first glance, this path does not necessarily seem to go against sustainability, but it does not bring secondary materials back into the cycle. I can imagine that ownership after the use phase is very difficult to control, and this also applies to effective recycling strategies when they are not mandated by legislation.

  • Zipse: I agree. Speaking of Africa and its resources, let us return to the use of natural materials. They have the best recycling properties, but at the same time, they are difficult to use because their properties are not so consistent. You mentioned the use of wood. What do you think about the product properties of natural materials and their recyclability?

How to Best Balance Between Natural Materials and Recyclability?

  • Wartzack: It is a big challenge. Using natural materials, such as natural fibers (e.g., hemp, flax, and sisal), wood, or leather, is a good thing, but it is challenging and makes life very complicated for the designer. That is clear. You need reliable data to make sound predictions about the mechanical properties of the materials. For example, performing your own tensile tests and simulations and conducting numerous cycles of validation, rather than blindly trusting the data sheets provided by the supplier, can be helpful. This is the basis for dimensioning products and even components. It is a lot of effort, but it pays off in the end. How do you deal with these challenges in BMW’s product design department?

  • Zipse: We still need to learn more about how to use natural materials. One field of research and development (R&D) that needs to grow is simulation methodology—how do I simulate natural materials? That should even be a new field of research. As you said, it is worth the effort. Clean natural materials can go back into the natural cycle, while all other materials must be recycled for reuse, which is a task in itself.

  • Wartzack: It is actually an emerging field of research. With 100 billion tons of new raw materials to be extracted, the use of natural materials will not be the only answer, as their application in car design is limited.

  • Zipse: Well, you are right. And there are many other issues to bear in mind, such as the loss of biodiversity due to the additional land use needed to grow these amounts of materials if we use our current technologies. I learned a lot when I read Bill Gates’s book because he put into perspective what we actually want to achieve by the year 2050. A lot of the technologies don’t exist today; therefore, we have to conduct a lot of research to find the right technologies. None of the technologies that exist today are capable of solving our climate problem. I found that quite evident. Similarly, many aspects of car design still need to be rethought and require new technological developments.

  • Wartzack: To address these global challenges, we need more comprehensive approaches, such as Life Cycle Assessment (LCA). A lot can be done, but you need very accurate data throughout the entire value chain. Building up a sustainable process chain is quite tedious: you have to know where and how materials are extracted, how they are transported to the plant, and so on. Let me take the simple example of wine. What kind of wine would you prefer? For sustainability reasons, a wine from Australia or a wine from Italy? Most people would say, a wine from Italy, obviously. But imagine that the wine from Australia comes in large batches by ship. It could be that, at the end of the day, the wine has a better carbon footprint than the wine from Italy, which comes in small batches. Accuracy of data is key, so a lot of data analysis needs to be conducted to precisely measure and compare life cycles. The peak of recyclability and LCA approaches was in the 1990s, but today, we have completely new possibilities with AI. This is an emerging area of research.

  • Zipse: Wine is a very good example. Normally, one would assume that the Italian wine—or even better, a German wine—would have the best LCA because of the short transport distance. But this evidence is too simple. You learn from your mistakes: Ten years ago, we would have assumed that ride hailing was clearly good for the climate in cities.

  • Wartzack: And it is not?

  • Zipse: It actually turned out not to be the case, because first of all, with ride hailing, a lot of people switched from public transport to private transport, and consequently the number of kilometers driven increased. Traffic jams—our best example is San Francisco—have actually increased because of ride hailing. The assumption that this had only a positive environmental impact was incorrect. This is where we really have to understand and think all these things through to the end, to understand the whole life cycle effect. The life cycle effect will become a relevant decision factor in the future. Anything you do has a life cycle effect. Only by regulation will you see that life cycle effects become transparent and will be decisive.

  • Wartzack: There needs to be a regulatory effort to make lifecycle costs transparent. This becomes evident in the case of natural materials, which are sometimes more expensive than conventional materials because not all life cycle costs are captured.

Is It Worth Paying More for Natural Materials?

  • Zipse: We would if the entire life cycle effect was taken into account. At the end of the day, our cost base has to be in line with customer behavior. Customers today are extremely cost sensitive, even in the premium segment. This is not a one-size-fits-all answer, but if the market and consumers recognized a full life cycle effect, we would consider spending more money on it. We did this with carbon fiber, which was mainly produced using renewable energy sources in the i3. Of course, the carbon fiber structure was much more expensive than a normal steel structure. But we are open to making these bets for the future if we see evidence that it will have an overall life cycle effect that is acknowledged.

Is the Strategy Applied to the i3 Involving a Whole Structure Made from Carbon Fiber a Role Model for the Future?

  • Zipse: I think we have learned a lot about the use of carbon fiber. It is not necessarily scalable to very high volumes. Electromobility is now going to be a mass market segment, so an entire structure made of carbon fiber does not seem appropriate. However, you can see in the iX that the side frame is made from carbon fiber. We use it in certain structures where it makes sense, but there will not be another full carbon-fiber car body in the next few years. Product development is really one of our core competencies, and there are many exciting technological developments in the pipeline for the future.

5.4 The Future of Sustainable Product Development

As discussed in the Expert Discussion (Sect. 5.3), design for circularity is increasingly becoming the lynchpin of product development. While this paradigm shift offers many new opportunities for life cycle optimization, customer satisfaction, new business opportunities and recycling, it also presents challenges that need to be addressed. This section highlights two key aspects of the future of product development in the light of design for circularity.

5.4.1 Digital Technologies as Enablers of CE

Digital technologies, such as the Internet of Things (IoT), Big Data, Artificial Intelligence (AI), and Blockchain, can enable manufacturing companies to transition toward a CE (Chauhan et al., 2022). The support of digital technologies allows the collection of product lifetime information and the prediction of product condition and health status. This fosters the optimization and automation of business processes, thereby enabling different circular strategies (Alcayaga et al., 2019). Research suggests that the joint adoption of circular strategies and digital technologies increases firm performance (Lopes de Sousa Jabbour et al., 2022). For example, the digital product passport offers the possibility of storing static product information, such as material composition, disassembly instructions, and end-of-life handling, on a chip or sensor (Lopes de Sousa Jabbour et al., 2018). In addition, the passport can collect dynamic data, such as the product’s history and alterations, during the product’s life cycle (Hansen et al., 2020). Thus, a digital product passport enables the sharing of relevant data to facilitate different circular strategies, such as recycling.

In addition, regarding the second cluster of Fig. 5.1 (see Sect. 5.2), addressing lifetime extension, digital technologies can help to relocate used products and offer possibilities for the establishment of marketplaces in which former owners and second-hand buyers can trade products to enable the reuse strategy (Liu et al., 2022). Similarly, tracking and tracing product location and quality facilitates the harvesting of functioning modules or parts (Hansen et al., 2020). Regarding the repair strategy, the IoT and AI enable condition-based maintenance, which assesses the physical condition of a machine or product and deduces maintenance actions to prevent failure based on the derived insights (Ingemarsdotter et al., 2021). This has the potential to increase product performance, uptime, and lifespan (Alcayaga et al., 2019). Furthermore, algorithms and robotics can support efficient disassembly, depending on the quality of the product and its parts, for refurbishing or remanufacturing (Hansen et al., 2020; Kerin & Pham, 2020). Lastly, just as in the case of the reuse strategy, marketplaces based on platform technologies can enable repurposing by transforming wastes or byproducts created in one industry into production inputs for other industries (Liu et al., 2022).

Additionally, to reduce the environmental impact of products at the product development stage, designers can use simulation methods. Similarly, modeling tools can help to better understand the sustainability impacts of decisions made in product design (e.g., the choice of the material composition for the product) by testing multiple interactions between the environmental, social, and economic dimensions (Jaghbeer et al., 2017). In addition, other technologies, such as the digital twin, offer the opportunity to predict and control carbon emissions by optimizing the manufacturing process (C. Zhang & Ji, 2019). Regarding rethinking and refusing strategies, offering new services and altering user behavior is key. Digital technologies can help to change user behavior, such as supporting an efficient and sustainable use to foster longevity, by monitoring and incentivizing user behavior (Bressanelli et al., 2018) and enabling operational and behavioral support (Ries et al., 2023).

5.4.2 Better Together: The Need for Broadening Perspectives

As mentioned earlier, extending the implementation of circular strategies cannot rely only on product design (Korhonen et al., 2018) and technological innovation (Suchek et al., 2021). Instead, a shift is needed in doing business to expand impact assessment and address the whole product life cycle, including end-of-life and social aspects (Farooque et al., 2019). The organizational boundaries also need expansion to embrace stakeholder collaboration along the value chain (Evans et al., 2017).

Evaluation of the sustainability impact of circular business models requires analysis of a variety of effects and trade-offs between and within lifecycle stages early on. First, rebound effects can cause detrimental sustainability effects (Kjaer et al., 2019). For example, circular strategies can lead to lower prices, less time consumption, or more accessible services that, in turn, increase demand, ultimately leading to an increase in resource consumption, waste, and emissions (Castro et al., 2022). Negative consumption-based shifts between life cycle stages (Kjaer et al., 2016) or trade-offs within one or between different design elements (Ries et al., 2023) can also occur. For example, energy consumption might increase as maintenance processes are optimized based on digital technologies (Halstenberg et al., 2019). Lastly, rebalancing effects might arise. These describe, for example, the activity of relocating bicycles with the help of vehicles and staff to compensate for asymmetric use patterns in product sharing (Bonilla-Alicea et al., 2020). Thus, a thorough understanding of the life cycle is necessary, complemented with an understanding of underlying assumptions regarding behavior, for any analysis of the sustainability effects produced by circular business models (Niero et al., 2021).

This understanding must consider both the environmental impact and the social impact, thereby extending the scope of CE to embrace all sustainability dimensions. While sufficient indicators are available for social life cycle analysis, most studies have focused on indicators related to health and safety at the workplace of focal companies while neglecting value chain actors and consumers (Kühnen & Hahn, 2017). Digital technologies can help to consider the social dimension of sustainability in these assessments. For example, a combination of digital technologies can help to analyze product stewardship (i.e., health and safety effects on the user) (Ries et al., 2023). Examples are injury prevention (Moreno et al., 2017), breakdown avoidance (Lim et al., 2018), safe driving (Haftor & Climent, 2021), and healthy living (Valencia et al., 2015). Blockchain technology can further increase the willingness of value chain actors to share confidential social data needed for these assessments (Rusch et al., 2022).

This aspect relates to the expansion of boundaries embracing collaboration. While the integration of stakeholders and coordination among partners in the business ecosystem become a crucial skill in the transition toward a CE (Santa-Maria et al., 2022), the development of ecosystems and value co-creation within them, based on connectivity and interactivity, poses a challenge for many companies (A. Q. Li et al., 2020). A business ecosystem for circularity comprises a set of actors that include producers, suppliers, service providers, end users, collectors, disassemblers, recyclers, policymakers, and members of civil society organizations who contribute to a collective outcome (Konietzko et al., 2020). Building this ecosystem requires that manufacturers engage with regulatory bodies to develop better circular strategies (Awan et al., 2021), but they must also interact with collectors, dismantlers, and recyclers to increase efficiency and reduce recycling costs (Parida et al., 2019).

Product collectors, dismantling companies, and recyclers are crucial actors in a circular supply chain (Lüdeke-Freund et al., 2019). Feedback and circular involvement from the end-of-life phase to the product design phase of the OEM are important for comprehensive leveraging of circular potentials (Hansen & Revellio, 2020); however, the information flow usually ends with the user (Blömeke et al., 2020). Manufacturers, users, reverse logistic providers, dismantling companies, and recyclers can overcome these deficits by forming connections through smart devices and digital platforms, thereby increasing collection, dismantling, and recycling efficiency (Liu et al., 2022). By facilitating collaboration and automation, digital technologies can improve product disassembly and recycling and contribute to economic feasibility (Blömeke et al., 2020). One example of this type of a new data ecosystem in the automotive industry is Catena-X, where different value chain actors are currently building a platform to enable the crucial information exchange on product history and the state of health of the vehicle and its components (Mügge et al., 2023). Implementing new technology advancements for an optimized data exchange might have the potential to support the formation and expansion of circular business ecosystems.

Establishing and tightening relationships can create a common understanding among different stakeholders and foster circular strategy implementation (Schöggl et al., 2020).

5.5 Conclusion

The CE addresses current challenges of resource scarcity, global warming, and economic volatility. To operationalize this abstract concept, the ten R-strategies of refusing, rethinking, reducing (smarter product use and manufacture), reusing, repairing, refurbishing, remanufacturing, repurposing (extend the lifespan of products and their parts), recycling, and recovering (useful application of materials) are widely recognized. Their implementation has implications for design.

How does one approach design for circularity? We want to highlight five takeaways from this chapter that invite further discussion:

  1. 1.

    Circular design requires a change in product design. To fulfill circularity principles, innovators need to incorporate recycled materials and consider the future circulation of the product, its parts, and its materials. The use of recycled materials requires that the quality of the recyclate matches the given requirements of the product and that the material be available in sufficient quantity. Designing for endurance and efficiency further complements the aspect of recirculation. Thus, recirculation, endurance, and efficiency serve as guides for product design.

  2. 2.

    Circular design requires a change in service design. Additional services, such as take-back, enable circularity. Alternatively, a shift in ownership from the producer to the provider and toward access and performance business models can implement circular strategies. Thus, product design must go hand-in-hand with service design.

  3. 3.

    Circular design requires a change in user behavior. The CE emphasizes the role of the consumer as a crucial actor who takes care of the product and returns it at a given time in the life cycle. User behavior is a key determinant in assessing any sustainable impact. Thus, circular design needs to be especially user-centric.

  4. 4.

    Circular design requires a social dimension. So far, industry and research have focused on the environmental–economic nexus within the CE concept. However, extending the scope to embrace the social dimension is the key to sustainable development.

  5. 5.

    Circular design requires collaboration along the value chain. To implement circular strategies, manufacturing companies need to extend organizational boundaries and establish business ecosystems that include, for example, suppliers, service providers, logistic providers, customers, dismantlers, and end-of-life vehicle recyclers. A new mindset is necessary that fosters openness to collaboration and lifecycle thinking.

Circular design, such as the use of recyclable or renewable materials and the development of new services to close resource loops, starts with product and service innovation, but it needs to embrace many different functions within a company and a variety of actors across organizational boundaries spanning an automotive ecosystem. This results from the need to shift organizational thinking from a product to a PSS, from a production to a lifecycle, and from an individual to a collaborative approach. The next stage (Chap. 6) on the Road to Net Zero focuses on Transforming Value Chains for Sustainability.