At the 2026 China Automotive Low-Carbon and Sustainable Development Forum hosted by Gasgoo, Jiang Jian, Vice President of Bosch China, stressed the urgency of low-carbon transformation for the sector: with Chinese automakers accelerating global expansion, decarbonization is no longer an optional initiative but an indispensable undertaking.
As the EU Carbon Border Adjustment Mechanism (CBAM) enters into force and the Battery Passport regulation is set to take effect, major global markets have raised stringent requirements on product carbon footprints. Low-carbon development has evolved from a choice into a compulsory assignment for China’s automotive industry. During the forum’s roundtable discussion, representatives from Geely Auto, XPEV, Bosch, Faurecia and Henkel shared insights from both vehicle manufacturers and supply chain players on the strategic priority of decarbonization, return on investment (ROI) and major challenges in implementation.
I. Strategic Priority: Low-Carbon Transformation Elevated to Core Corporate Strategy
Amid fierce competition in the domestic market, leading enterprises have embedded decarbonization into top-level corporate planning.
Yu Shaohua, ESG Management Director of Geely Auto Group, noted that decarbonization is a non-negotiable priority for Geely. The group has established a Sustainable Development Committee and a dedicated ESG Office under its Strategic Planning Center to quantify carbon reduction targets across R&D, procurement and manufacturing, with relevant indicators incorporated into business performance assessments.
Ma Jia, Chief Engineer of Interior & Cockpit at XPEV, echoed the industry-wide consensus on low-carbon development. XPEV attaches great strategic importance to the adoption of recycled materials, targeting an annual export volume of 1 million vehicles by 2030. In many overseas markets, carbon footprint and energy efficiency serve as key competitive edges.
Compared with OEMs, component suppliers face dual pressures from regulatory mandates and downstream client demands.
Bosch achieved Scope 1 and Scope 2 carbon neutrality across over 470 global locations back in 2020. Its current focus has shifted to Scope 3 emissions covering upstream suppliers, logistics and the full life-cycle carbon output of its products.
Jin Chao, CTO of Faurecia China, stated that carbon neutrality has long been a core corporate strategy for Faurecia. The company actively aligns with both European regulations and China’s national carbon peaking and carbon neutrality roadmaps. Carbon reduction goals are assigned as KPIs to all staff and embedded into the entire product development process.
Anna, President of Henkel Greater China, introduced that the 150-year-old family enterprise takes "for the generation to come" as a key strategic tenet. As a founding member of Catena-X, a European automotive industry alliance, Henkel aligns its products with the alliance’s standards to enable transparent carbon data visualization and promotes Catena-X’s localization in China. To date, 10 Henkel factories in China have run on 100% renewable electricity.
Across the industrial chain, decarbonization has become a market access threshold that determines future competitiveness, rather than an add-on corporate initiative.
II. Cost Accounting: Short-term Investment with Long-term Returns and Efficiency Gains
Practicing low-carbon transformation inevitably raises the question: is it purely capital-intensive spending or an efficiency-driven revolution?
Yu Shaohua acknowledged pervasive cost pressures across the value chain. On the product side, accelerated iteration of new energy vehicles pushes up R&D expenditure as automakers launch dozens of new models annually. On the supply side, suppliers incur extra costs from renewable power and green certificate purchases.
Geely prioritizes manufacturing-side optimization by installing photovoltaic power systems and deploying AI-powered energy management platforms to monitor power consumption of individual equipment. Savings from production are fed back to support collaborative cost reduction with suppliers. Geely has compiled training materials and set up empowerment teams to assist partner suppliers in decarbonization.
Ma Jia pointed out that over 70% of an NEV’s carbon emissions stem from upstream mineral and material extraction, calling for cross-industry collaboration. He highlighted a unique advantage of China’s industrial ecosystem: the cost of renewable power in China stands at only 40% to 50% of that in Europe. Widespread adoption of green electricity by material and component manufacturers can turn EU carbon compliance pressure into export competitiveness. While costs rise in the short run, decarbonization is an irreversible long-term trend.
Bosch adopts a three-pronged approach: regular energy-saving upgrades, on-site photovoltaic construction, and procurement of green electricity and carbon sinks. Since 2019, Bosch China has rolled out more than 1,200 energy conservation projects saving nearly 200 GWh of electricity, with its own PV facilities generating around 65 GWh of renewable power in 2025 alone. Most energy-saving projects recoup investment within one to two years and generate tangible economic benefits instead of becoming sunk costs.
Based on Faurecia’s practical experience, the ROI cycle for decarbonization projects generally ranges from three to five years. Even with heavy upfront investment, carbon reduction capability has become a basic supplier screening criterion. Faurecia has secured multiple new project orders from domestic Chinese carmakers thanks to its low-carbon technologies, with outbound automotive exports driving stricter carbon requirements across the domestic supply chain.
Henkel delivers cost reduction through process innovation. Traditional pretreatment for automotive painting requires heating liquid baths above 60°C, which consumes massive energy. Henkel’s innovative room-temperature pretreatment material eliminates heating needs, cutting energy use and production costs for OEMs while lowering emissions.
III. Core Challenges Hindering Low-Carbon Transition
1. Fragmented and Unstable Global Policies
Each jurisdiction enacts independent carbon regulations, compounded by geopolitical complexities that force enterprises to tailor compliance strategies for different regions. While the EU tightens carbon policies steadily, North America frequently adjusts incentives for new energy vehicles, creating major uncertainty for automotive exporters.
2. Difficulties in Full Supply Chain Carbon Governance and Technological Route Selection
Bosch has encouraged 4,500 global suppliers including over 720 Chinese partners to disclose carbon data via the CDP platform, yet coordinating the extremely long automotive supply chain to align on unified decarbonization targets remains arduous. Meanwhile, multiple technical routes including BEV, EREV, diesel and hydrogen fuel cells coexist. Hydrogen energy is still in the early commercialization phase, posing great challenges to corporate long-term strategic planning.
3. Gaps in Public Awareness and Global-local Adaptation
Extreme high temperatures hitting parts of Europe have raised strong public awareness of carbon reduction, while Chinese consumers lack intuitive understanding of the impacts of excessive carbon emissions.
In Europe, flax fiber is widely applied to automotive interiors, whereas bamboo is far more abundant in China. European teams initially overlooked bamboo’s material value until a Japanese luxury car brand specified bamboo-based components, prompting Faurecia to develop localized bamboo fiber solutions for Asian clients.
4. Challenges of Overseas Localized Supply Chain Construction
Uneven distribution of chemical raw materials drives Henkel to promote two-way localization: exporting China-developed formulas to Europe. Chinese automakers will inevitably shift from pure vehicle export to overseas localized production to evade tariffs and regulatory barriers, requiring the establishment of complete low-carbon supporting supply chains in target markets.
IV. Breakthrough Directions for the Next Five Years
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Develop Zero-Carbon Industrial Parks for Cluster Decarbonization
Around 60% to 70% of auto parts are supplied locally near vehicle assembly plants. Leveraging national policies for zero-carbon park development, OEMs and surrounding component manufacturers can jointly upgrade energy systems to slash collective carbon footprints efficiently.
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Align Domestic Regulations with International Standards
XPEV proposes bringing China’s domestic carbon rules in line with EU frameworks, so low-carbon performance becomes a core differentiated competitive factor in the home market rather than merely a compliance measure for exports.
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Unify Renewable Power Policies and Carbon Accounting Standards
Bosch calls for national-level policies to streamline green electricity procurement nationwide and establish unified carbon emission accounting and data mutual recognition mechanisms to lower cross-enterprise and cross-border collaboration costs.
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Launch a China-led International Organization for Carbon Reduction Technology Promotion
Faurecia suggests setting up a multinational initiative led by China to showcase the country’s advanced low-carbon automotive technologies, dismantle the stereotype of Chinese products being merely low-priced, and deliver cost-effective decarbonization solutions to the global market.
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Build Official Certification and Incentive Mechanisms for Decarbonization
Additional costs from recycled materials and green power purchases are mostly borne by enterprises alone. Henkel recommends introducing official certification bodies to convert corporate decarbonization efforts into recognized credit and market access privileges, forming a systematic compensation mechanism to share transformation costs.
Conclusion
Low-carbon capability has evolved from a value-added branding tactic into a hard threshold determining enterprises’ survival in the global automotive industry. Though OEMs and suppliers adopt diverse investment modes and implementation paths, the industry has no option to backtrack on decarbonization.
To secure a solid position on the global stage, China’s automotive sector needs to go beyond product competitiveness and speed of iteration. It must participate in setting industrial standards and amplify its voice in global low-carbon governance. The low-carbon transformation of China’s auto industry has officially entered an in-depth phase across the entire industrial chain.
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