"Carbon reduction is no longer an optional task, especially for China's automotive industry, where going global has become an irresistible trend. Carbon reduction is a mandatory subject we must engage in."
Recently, at the "2026 China Automotive Low-Carbon and Sustainable Development Forum" hosted by Gasgoo, Jiang Jian, Vice President of Bosch (Robert Bosch GmbH), highlighted the urgency of the low-carbon transition in the current automotive industry.
As the EU Carbon Border Adjustment Mechanism (CBAM) takes effect and the Battery Passport is about to be implemented, major global markets are simultaneously raising their requirements for product carbon footprints. For China's automotive industry, the low-carbon transition has shifted from an optional choice to a mandatory requirement.
So, from a practical perspective, where exactly does the low-carbon transition rank in corporate development? How long will it take to break even on this investment? And what is the biggest challenge in the implementation process? During the panel discussion at the forum, representatives from five companies—Geely Auto (Geely Automobile Holdings Limited), XPeng (XPeng Inc.), Bosch, FORVIA (FORVIA S.A.), and Henkel (Henkel AG & Co. KGaA)—provided their respective answers from the different perspectives of OEMs and the supply chain.
Low-Carbon Transition: How to Prioritize?
With the fierce competition in the domestic market unabated, where exactly does the low-carbon transition stand in the corporate strategic landscape?
"For Geely Auto, low-carbon development is definitely a mandatory question." According to Yu Shaohua, ESG (Environmental, Social, and Governance) Management Director of Geely Auto, the company has always attached great importance to the low-carbon transition. The group has established a Sustainable Development Committee and set up a dedicated ESG office in the Group Strategic Planning Center to coordinate and promote the initiative. Indicators in R&D, procurement, manufacturing, and other links have been quantified and incorporated into operational assessments.
Ma Jia, Chief Engineer of Interior Cockpit at XPeng, also stated that low-carbon development has become an industry consensus. XPeng attaches great importance to low-carbon strategies at the strategic level, including the application of recycled materials. "By 2030, XPeng's exports are expected to reach 1 million units. In many overseas markets, carbon footprint and the green and energy-saving performance of products are crucial competitive advantages."
Compared with OEMs, the sense of urgency among supply chain enterprises stems more from the dual pressures of regulatory and customer requirements.
Jiang Jian pointed out that since 2020, Bosch has achieved operational carbon neutrality (Scope 1 and 2) across its more than 470 business locations globally. Currently, Bosch's focus has shifted to Scope 3, which refers to carbon reduction in the upstream and downstream of the value chain. "From upstream suppliers and logistics to the carbon emissions of products throughout their entire life cycle, we must take all of them into account."
Jin Chao, CTO of FORVIA China, stated that carbon neutrality was established as one of FORVIA's core strategic directions very early on. In addition to meeting European policy and regulatory requirements, FORVIA in China has also actively responded to the government's carbon reduction strategies and timelines. Through continuous technological investment, it has the capability to meet the carbon reduction requirements of different countries and regions globally.
According to Jin Chao, carbon reduction is one of the KPIs for employees at all levels at FORVIA from top to bottom, with specific assessment items set in the year-end evaluation. In daily product development, carbon emissions are also a core indicator that runs through the entire process of product innovation and development.
Anna, President of Henkel Greater China, emphasized that Henkel is a family-owned company with a 150-year history, always taking "for generations to come" as an important indicator in the company's strategy.
The automotive sector is one of Henkel's important business segments. Anna mentioned that there is a European alliance in the automotive industry called Catena-X, of which Henkel is a founding member. Henkel aligns its products with the alliance's standards to ensure clear data visualization and actively participates in Catena-X's related work in China and various domestic industry associations. In addition, 10 of Henkel's factories in China have already achieved 100% green electricity operations.
Obviously, despite the different paths, low-carbon development is no longer an optional extra for all enterprises, but an entry ticket that determines future market access and the competitive landscape.
How Exactly Should This Cost Ledger Be Calculated?
As low-carbon development moves from concept to practice, the most realistic question arises: Is this just pouring money into it, or is it a revolution in efficiency? Where should the money be spent, and how long will it take to see a return?
Yu Shaohua frankly admitted that every link in the transition faces cost pressures. On the product side, the iteration speed of NEVs (New Energy Vehicles) is too fast. In the past, only a few models were launched every few months or even a year; now, more than a dozen or even more are launched in a year, inevitably increasing R&D costs. On the supply side, suppliers' costs have also increased due to the use of green electricity or the purchase of green certificates.
The manufacturing side also faces pressure, but Geely Auto chose to break through here. For example, it builds photovoltaic systems to reduce electricity costs and develops an energy management platform to refine data reading down to every piece of equipment, and then optimizes energy consumption through AI (Artificial Intelligence) analysis. The money saved on the manufacturing side is then fed back to the supply side.
Yu Shaohua emphasized that this is not one-way price suppression, but collaborative cost reduction, gradually digesting cost pressures through efficiency improvements. Currently, Geely Auto has compiled its carbon reduction experience in manufacturing into special courseware and established an empowerment project team to visit suppliers. Several suppliers have explicitly expressed their willingness to jointly advance this initiative.
In Ma Jia's view, the initial costs of the low-carbon transition will inevitably increase. Over 70% of the energy consumption of NEVs comes from upstream mining and materials, so carbon reduction must rely on the coordinated promotion of the entire industry. However, he also pointed out an overlooked advantage of China—the cost of domestic green electricity is only about 40% to 50% of that in Europe. If component and mining enterprises can utilize green electricity on a large scale, exported models, when facing EU requirements for carbon footprints and carbon credits, can instead turn pressure into competitiveness. "In the short term, it is a matter of increased costs, but in the medium and long term, it is definitely a good thing. Low-carbon development is imperative."
Jiang Jian also believes that the low-carbon transition requires investment, but how much is invested depends crucially on how it is done, and the cost may not be as high as imagined.
Bosch's path is very clear: continuously promote energy conservation and emission reduction, which is a routine action taken every year; at the same time, actively deploy energy transition, including building photovoltaics in factories; and then coordinate with the purchase of green electricity and carbon sinks to continuously improve the quality of Bosch's carbon neutrality. Taking energy conservation and emission reduction as an example, although the projects require investment, Bosch tries its best to "let its returns quickly make up for the investment. These returns may come back within a year or two, because it is energy conservation and emission reduction, which will bring tangible financial benefits."
A set of data is enough to illustrate the point: since 2019, Bosch China has cumulatively implemented more than 1,200 energy conservation and emission reduction projects, saving nearly 200 gigawatt-hours of energy; in 2025 alone, Bosch China factories used about 65 gigawatt-hours of renewable energy electricity from their own photovoltaics. Jiang Jian's conclusion is that investment is not scary; it can be controlled with proper planning. Some investments themselves generate value, rather than being pure sunk costs.
As for the payback period of carbon reduction investments, Jin Chao stated that, according to experience, the payback period usually ranges from 3 to 5 years. Although the initial investment is large and it is difficult to see obvious returns in the short term, he emphasized, "Customers have already made it one of the necessary conditions for screening suppliers in the future," so FORVIA will continue to invest.
He revealed that, thanks to the advantages in carbon reduction technology, FORVIA has recently won several new nomination projects from Chinese local automakers. In his view, going global is the main driving force for Chinese automakers to promote the screening of carbon-reduced components. As domestic carbon reduction policies become increasingly clear, Jin Chao expects that the experience of going global will drive the domestic market to accelerate keeping pace with global changes and innovation.
Although Anna did not directly mention the payback period, she approached it from the perspective of process innovation, proposing to promote energy conservation and emission reduction in the entire industry through technological innovation. Taking metal surface pretreatment technology as an example, the most energy-consuming link in the automotive production process is the paint shop. Traditional processes require heating the bath liquid to over 60 degrees Celsius; walking into the paint shop during the dog days of summer is like entering a sauna. Through material innovation, Henkel has achieved room-temperature pretreatment, which not only achieves energy conservation and emission reduction but also significantly reduces the energy consumption of OEMs, saving costs.
In Anna's view, if carbon reduction technologies can achieve cost reduction and efficiency improvement through process innovation, this will be the development direction of the entire industry and what Henkel, as a supplier, is committed to doing.
Where Do the Biggest Challenges Come From?
On the path of low-carbon transition, challenges are far more complex than imagined. From policies to technologies and then to cognition, there are practical obstacles in every link.
Yu Shaohua pointed out, "One country, one policy. The different policies of each country determine our different directions. The challenge in this area is quite huge." Geopolitical factors further increase the complexity, and enterprises need to research and formulate differentiated response strategies for different countries and regions. From the dual-credit policy to the EU Carbon Border Adjustment Mechanism, and then to related regulations such as the Battery Passport, how to deeply understand and effectively respond to the policies of various countries is a major challenge currently faced by enterprises.
Ma Jia added that the EU is moving forward, but North America is different, with NEV preferential policies experiencing reversals. "Policy uncertainty is the biggest challenge for us enterprises."
Jiang Jian pointed out two practical difficulties at the operational level.
First, how to bring up the entire supply chain. After Bosch China achieved operational carbon neutrality in 2020, the current focus is on promoting suppliers to do it together. However, the automotive supply chain is extremely long, and upstream traceability can go very far, making coordination extremely difficult. To this end, Bosch globally, with the help of the CDP (Carbon Disclosure Project) carbon data disclosure platform, has currently promoted 4,500 suppliers to disclose carbon information on the platform, including over 720 Chinese suppliers. But the difficulty of this work remains very high. It is not easy for the entire supply chain to reach a common goal.
Second, the diversification of carbon reduction in the full life cycle of products. Range extenders, pure electric, diesel, and hydrogen energy each have their own space for existence. Bosch continues to deploy in the hydrogen energy field, but the industry as a whole is still in the stage of commercial exploration. "Which technology exactly, and how to proceed, is very challenging for enterprises."
Jin Chao, on the other hand, broadened the perspective.
First, the difference in consumer cognition. He mentioned that some parts of Europe experienced high temperatures of 44 degrees Celsius this year, and personal experience has made consumers deeply aware of the necessity of carbon reduction. However, Chinese consumers currently do not feel this strongly and lack intuitive cognition of "what will be affected if carbon reduction is not done."
Second, the difficulty of adapting global solutions to localization. FORVIA uses hemp fiber for interiors in Europe, which works very well, but China has limited hemp resources and is very rich in bamboo. European colleagues do not understand bamboo; they have only seen it in parks and lack cognition of its material properties and application value. It was not until a Japanese luxury automaker explicitly proposed bamboo requirements in a price inquiry that the European team gradually understood and recognized the feasibility of bamboo as an Asian version of flax. Since then, FORVIA has started to develop applications based on bamboo fiber to meet the needs of Asian OEM customers.
Jin Chao believes that while global solutions are important, they must be adapted to local resources. At the same time, China's technological accumulation in the field of carbon reduction is equally worthy of being included in the global vision.
Starting from the characteristics of the chemical industry, Anna pointed out another challenge. Chemical raw materials are unevenly distributed, and Henkel has been continuously promoting localization work many years ago. Today, as Chinese automakers accelerate their global expansion, Henkel has begun to try to promote localization in reverse, exporting formulas developed in China to the European market. In Anna's view, Chinese enterprises going global usually start with exports, but affected by tariffs and local regulations, they will inevitably move towards localized production in the end. Whether they can build a supporting supply chain system locally will become a new topic faced by enterprises.
Where Are the Breakthroughs in the Next Five Years?
Looking towards the next five years, how to deepen and solidify the path of carbon reduction, how to coordinate policies, how to mutually recognize standards, and how to share costs are topics that the industrial chain must face directly.
Taking zero-carbon parks as an example, Yu Shaohua proposed a specific starting point. A large number of component factories are clustered around OEMs, with 60% to 70% of components supplied locally. "The country has already provided a very good platform—zero-carbon parks, and the speed will definitely be faster in the next five years." OEMs and component factories should collaborate to promote each park well, which will be of great help to energy conservation and carbon reduction in the entire supply chain.
Ma Jia brought the topic back to the domestic market. In his view, exports are indeed forcing carbon reduction, but "the main battlefield is still China." He suggested that domestic regulations should refer to European standards and lean towards low-carbon and green development at the policy and regulatory levels, "so that the competitive dimensions of OEMs will not just be price and cost." The implication is that carbon reduction should become a differentiated competitive threshold in the domestic market, rather than just staying at the level of export compliance.
Jiang Jian put forward two very specific policy recommendations. First, regarding green electricity procurement, resources are uneven across regions. He hopes for clearer promotion policies at the national level to make green electricity better used by enterprises. Second, the lack of unified carbon emission accounting standards and data mutual recognition mechanisms increases the difficulty of cross-enterprise and cross-border collaboration.
Jin Chao proposed a bolder vision: to establish a transnational carbon reduction technology promotion organization led by China. There are two purposes: first, "to prove to the world that China is not without investment in this area, nor is it without advanced technologies"; second, to enable the global market to "spend less money and get better cost-effectiveness" when promoting carbon reduction.
In his view, Chinese automakers have made a lot of green innovations, but they suffer from not knowing how to express them, and overseas markets still use the "low price" label to define Chinese products. "Asking others to help tell our story" is one thing, but Chinese enterprises themselves must also learn how to tell it.
Anna brought the topic back to costs. She pointed out that recycled materials are more expensive than virgin materials, and green electricity requires the purchase of green certificates; these are all hidden costs borne by enterprises. She suggested that China establish an official certification body to recognize enterprises' carbon reduction investments, "transforming this cost into a kind of credit or an entry threshold, so that compliant enterprises can get good compensation." This is actually calling for the establishment of an institutionalized value feedback mechanism, so that carbon reduction investments are no longer just borne by the enterprises themselves.
The position of low-carbon development in the industry has changed. It is no longer a matter of icing on the cake, but a hard indicator that determines whether an enterprise can stay at the table. As for how to do it, how much to spend, and who to do it with, different enterprises have different paths and accounting methods. But there is only one direction, and there is no turning back. For Chinese automakers to truly stand on the global stage, in addition to speed and products, they must also learn to set rules and tell stories. This transition has just entered the deep-water zone.