Episode 20: BusinessShift – Closing the Loop with NIO by TÜV Rheinland

00:00:04: BusinessShift.

00:00:06: The podcast for decision

00:00:07: makers and executives who want to deal with the topic of sustainability

00:00:11: in a sustainable

00:00:12: way?

00:00:13: Welcome to BusinessShift, this Sustainability Podcast from TÜV Rheinland People & Business Assurance.

00:00:19: My name is Max Birkenmeier And I'm thrilled that you have decided to listen to us.

00:00:23: Imagine this a company manufactures a modern electric vehicle.

00:00:29: It needs lithium for battery, rare earth elements for its electric motor, cobalt, nickel and copper.

00:00:38: All materials that come from predominantly from a single region of the world... ...and whose export has been increasingly subject to government control since April 2025.

00:00:51: Today we are discussing an issue which is currently shaking the industry towards coal.

00:00:58: Who controls the materials

00:01:00: used to build the products of the future?

00:01:02: And how can companies regain genuine strategic control through circular economy practices and independent verification?

00:01:12: Joining me today are two experts who know this topic not just in theory, Dr.

00:01:19: Bahar Chat-Krause is Global Head of Sustainability at TÜV Rheinland People & Business Assurance.

00:01:27: Bahar!

00:01:28: Hi Max, nice

00:01:29: to see you.

00:01:29: And Penn Ding is sustainability manager at TÜV Rheinland Greater China and has directly supported and played a key role in developing the project with NIO – The Car-to-Car Loop.

00:01:43: Penn welcome it's great to have here today.

00:01:46: Hello Max, hello Dr.

00:01:48: Bahar.

00:01:49: So NIO is a Chinese electric vehicle manufacturer founded in 2014.

00:01:55: In Shanghai, the company is one of China's best known EV brands and has been listened to The New York Stock Exchange since

00:02:02: 2018 new is known for its battery as a service model.

00:02:07: so BA AS customers purchase the vehicle without a battery and swap detected batteries for once at automated swapping stations.

00:02:19: This structurally differentiates NIO from Tesla and other EV manufacturers.

00:02:26: In the context of BusinessShift, NIO is relevant as TÜV Rheinland's partner in the car-to-car loop.

00:02:33: So it was a first closed loop system for metal components in China's automotive industry to be verified according to ISO 14021.

00:02:45: But we will get later to that.

00:02:46: Bahar, let's dive directly in raw materials as a geographical hot topic.

00:02:53: That sounds dramatic is it?

00:02:55: Well yes I mean...to be honest It also not longer metaphor right?

00:03:00: We have to say that since April 2025 China has been actively controlling the export of seven heavy metal rare earth elements.

00:03:10: And beside that European prices for rare Earths have risen two six times.

00:03:20: When talking about companies from the automotive sector in the US and also in Europe, they have had to scale back production lines because of that.

00:03:29: Yeah?

00:03:29: Because of the high costs. And well we have to say over 90% of downstream value chain are all Chinese hands.

00:03:39: This is not an isolated event so it's a structural shift in power dynamics surrounding critical materials.

00:03:46: Penn you're China.

00:03:48: You see this up close.

00:03:49: How are companies in China perceiving this shift?

00:04:00: and carbon neutrality by twenty sixty.

00:04:21: So the Chinese dual-carbon targets have elevated the circular economy to a central pillar of an industrial strategy, And we are noted like especially in China that recent multi-ministry action plans explicitly encourage greater use of recycled materials, especially for the industrial automotive for the supply chain.

00:04:45: So, alongside the development of traceability standards and certification system.

00:04:52: Therefore we observe the rising demand for credible verification under transparency.

00:04:59: And today's topic about NIO and truth-highlander thesis is also a good one to reflect this policy direction.

00:05:06: and with international active study for lead companies they must operate effectively across two distant frameworks.

00:05:15: The first one is more about use regulatory.

00:05:18: And the second one, China's policy focus on resource efficiency.

00:05:22: So when we talk about raw materials which ones do you consider are most critical and why?

00:05:29: Okay so I'm in China.

00:05:31: The manufacturing industry is a strategic pillar in China.

00:05:36: so nearly all of the raw material involved in the manufacturing industry development such as diesel, cobalt, eco aluminum, and even iron are all crucial.

00:05:49: And particularly in China as we have the dual carbon charges.

00:05:54: so the counterability stability and then even low performance of the low material is extremely important.

00:06:02: The EU is already responding with a critical raw materials act.

00:06:07: So do you think that's enough?

00:06:10: When talking about circular economy, I think so-called CRMA is a perfect and important first step because it has binding targets.

00:06:20: And this is what we need.

00:06:21: in the target are like 10% of domestic production for example but also 40% off domestic processing and 25% recycling by 2030.

00:06:36: possible, but these are really tough goals.

00:06:39: But to build up this processing capacity in Europe I think Only recycling is really a good method to get more recycled material, which is also needed.

00:06:57: The real problem I think that regulation creates the framework but industry has to act now.

00:07:05: Frameworks are only pushing or drivers for companies move forward in sustainability and circular economy transition.

00:07:18: the only strategy and I mean circular economy that really works in short term.

00:07:23: And super interesting question from my side, could you please explain us a car-to-car loop?

00:07:30: So what did you do with NIO and why is it so special?

00:07:34: The Car-to-Car Loop project established a verified closed material loop, so from the under life of new vehicles they are dismantled in the new manufacturer.

00:07:45: We studied mental components collected separately, melted, refined and recast into new NIO vehicles.

00:07:54: These specifically verify 20% recycled content in warehouse and aluminum housing over AC compressors.

00:08:02: So, actually it marks the first independent verified closed-loop systems focused on metal components in China's automotive industry which move beyond early efforts that sends a mailing on plastic.

00:08:17: So these days we make a breakthrough from plastic to metal and stand out feature is implementation of reliable tracking for every material flow from dismantling to recast ensuring a full train of costly visibility.

00:08:33: And for the Intel project, from planning to ISO certification was completed in 3 months.

00:08:42: so it proved like rapid practical security system are achievable when supported by clear methodology and good close function supply chain collaboration and experience within partners.

00:08:54: and lights-tooth highland

00:08:56: You outlined, Penn, what you have done in the project with NIO.

00:09:02: So which was most demanding process in this project and how did that differ from your expected at start?

00:09:11: I think it's about how to streamline information or material flow between all the supply chain companies because different companies they had different conditions.

00:09:23: their grade of maturity is different.

00:09:26: So we need to help them set up the traceability system.

00:09:31: Then they can do their traceability work and finally, you can do the verification work.

00:09:38: so I think that key points.

00:09:40: Coming back once again to the Car-to-Car loop.

00:09:43: Bahar, why does a system like this needs independent verification?

00:09:48: What are your thinking?

00:09:49: isn't enough for NIO to document it itself

00:09:53: I definitely know, because self-reporting and self assessment is not a verification.

00:09:59: So you have to keep in mind that lot of environmental claims nearly half or it in the EU where accelerate or falls and the pressure is really increasing because also in Europe we have regulation which wants to get rid of greenwashing.

00:10:19: And if you do self-assessment then you have a high risk. But if you are using a standard like the standards we have used in that project, then you have an independent testing.

00:10:30: You have someone who's auditing your onsite and can document also your supply chain documents.

00:10:36: so to summarize it with an external verification, you can really decrease or say legal risks but the risk for reputation when it comes to stakeholder communication that means investors mistrust for example but also reporting obligations you may have and also in the direction of your business partners.

00:10:59: So with a verification, you can do more credible communication for example... ...can be really more compliant with regulation wherever you are located….

00:11:11: …and have competitive advantage because people trust their claims and commitments that are externally verified or audited.

00:11:20: Penn is our expert!

00:11:22: What does the process

00:11:24: look like in practice.

00:11:25: What exactly does TÜV Rheinland verify?

00:11:28: Yes, for the verification process

00:11:30: all our work follows a four-step methodology.

00:11:34: so we worked with NIO's sustainability team and also the supply chain partners to make material flow.

00:11:41: mapping you know The mapping is about the detailed documentation of the intern supply chain from end-of-life vehicle dismantling to remelting and final reuse into the new NIO cars.

00:11:54: So that's first things, And second step we need do the off-site and on-site audits.

00:12:01: All supply chain partners are involved.

00:12:04: so tip hand.

00:12:04: We're going verify processes, documentations also quality controls.

00:12:11: For third one is about cross tracking of record. Actually NIO in order to, in terms of build a car-to-car loop.

00:12:21: So develop digital platform.

00:12:24: so actually it will help you do the cross tracking against not just physical evidence and we can do physical evidences replication also check all evidence from the digital platform.

00:12:39: that's dual verification.

00:12:41: The last one is about certification.

00:12:44: So we do precisely the calculation about reserve content of components in accordance to ISO 14021 standard.

00:12:56: Let's hold a process and our team single list results not just result for one individual project but can be scaled efficiently into additional component even other materials and other supplies.

00:13:13: Well, to meet both Chinese industrial explorations and also maybe in the future

00:13:18: to meet European regulatory standards.

00:13:22: And you just mentioned that digital tracking was one of key elements right?

00:13:26: So this is really interesting.

00:13:28: So, did you use for the verification and audit on-site

00:13:33: The existing infrastructure or was it like something that you have built by your own system?

00:13:40: How did this work?

00:13:41: Yes actually these digital platforms were run by NIO.

00:13:45: The target of NIO is to integrate a system which can trace all the supply chain companies material flowing into NIO including a lot of information like the type, parameters and also quantity of low materials.

00:14:04: So actually we are not doing physical onsite web application. And in final phase will go to NIO's company.

00:14:12: We check all data indicated on NIO digital platform.

00:14:17: And you said that all data also from the suppliers are part of this system, right?

00:14:23: So are these real-data so primary data or are there more assumptions on general data that is used.

00:14:31: For NIO's digital platform I think both the primary data like some of the primary material datasheet which will be uploaded to the NIOs platform but also for some recycled content calculation, so there will be use of the calculation logistics to do this calculation.

00:14:54: So I think they are both and at its time as in it's a pilot version not all the supply chain comments are included... But i think maybe 10 or 20% supply chain companies include it right?

00:15:06: They are developing it.

00:15:08: yes is process, they are working on it.

00:15:11: Yeah, that really sounds like a big and challenging project.

00:15:14: What do you think was the biggest challenges in this project

00:15:18: you had to tackle with?

00:15:19: Oh I think as an issue before.

00:15:21: i think the key challenge is more about data traceability and transparency of the data between all those fraction companies because these are all different companies and the grade of maturity are all difference.

00:15:37: So how we can enable the transmitting and we can do verification is a big issue.

00:15:43: In the project, our team will do lot of work like standardize data templates we provide the datasheets for the supply coming store help to guide them how to fill all information that we needed.

00:15:58: And also we did on-site target training to build up the system.

00:16:04: And I think another important point is to shift the surprise view through this project.

00:16:10: Because this projects, we say that's our common career so let us work together!

00:16:16: So yeah...I think all the supply chain companies have overcome their difficulties and finally they got a pilot result.

00:16:24: I think it was great and i would like to highlight again because talking to your suppliers do some skill building, also such kind of barriers are so important.

00:16:38: And I really like what you say because this is key and will be a key element to become much better than today.

00:16:48: As mentioned it's a process but also learning curve that NIO and also their suppliers need to do together right?

00:16:57: Yeah that`s right Bahar.

00:16:59: I want to share more

00:17:02: like after certification results was released and we cooperated with NIO, and also the supply chain companies.

00:17:10: We developed a white paper which now serves as an implication guide to documenting all these licenses or all the insurance in this project for broader industrial adoption.

00:17:24: I think it's very informative

00:17:27: Definitely so.

00:17:27: when you mentioned the supplier there are still many companies in Europe say we don't really have that much influence over our supply chain.

00:17:36: What do you say to that?

00:17:38: I'd say, it's wrong because most of the risk is in the supply chain... ...because most raw materials and impacts are in the supply chain.

00:17:49: And this is not to bash them, I mean it's a reality.

00:17:53: of course if you're producing then you may have high risks and its scope

00:17:59: three that we always talking about really also your suppliers and production downstream as well upstream into how do say measurements to find the highest impact, so that you can develop measures and also talk to your suppliers.

00:18:20: And try to fix them in a joint approach.

00:18:24: I would say what is also important?

00:18:26: What do you said

00:18:27: Penn is it's also communication tool.

00:18:29: You mentioned The white paper, so others can learn also from learnings from NIO.

00:18:34: i think this Is really really important and I think the most important thing to say here is, move together with your suppliers.

00:18:44: Sometimes convince them to be part of this system which has more positive effects than negative and do their journey together until regulation is in force maybe too late.

00:19:01: I think it's a very good approach.

00:19:03: Penn, what do you think can companies outside of China learn from the NIO model?

00:19:09: Yes, I think that a model could be promoted because we think it is co-principles like material flow tracking and clear process accountability.

00:19:24: So there is no massive capital

00:19:25: investment was required.

00:19:27: As long as the supply chain come links, they are willing to join us and then we can build up a effective which is speed system so that I think the web application work will be done.

00:19:39: And i think this approach is particularly relevant for Europe.

00:19:43: you know there's some regulations like battery regulations where mandate detailed recycle content of the battery and information on Carbon Footprint and also the material origin data, I think this model can be duplicated to Europe.

00:19:59: And I think our team is willing to act at a bridge... ...to share good practice in China for you maybe to meet European regular standards in the future?

00:20:11: Maybe just summarize it a little bit.

00:20:13: so if you had to explain really to a European CFO tomorrow or today why circular economy and especially verified circular economy is an investment and not costs.

00:20:25: What would you say?

00:20:26: So I think Europe for this approach.

00:20:29: it's also particularly relevant to the V-notice that there are regulations some relevant regulation called like battery regulations.

00:20:37: It's where land data details a recycle counter of the battery and also information about material origin data.

00:20:47: But we notice that the maturity of a supply chain comes in Europe

00:20:52: compared to China, maybe for the companies in EU's supply chains they still need to develop and right now if there are some work that can be done in advance I think in future their costs will be regular standards.

00:21:08: So when you consider the round-term economic benefits.

00:21:13: So if we can start to work at early as possible and maybe some Chinese insurance can be applied earlier, the investment in data will decrease.

00:21:26: Also prevent themselves right?

00:21:28: To prevent them also prepare themselves.

00:21:31: Yes yes

00:21:33: I agree

00:21:34: Good point.

00:21:34: So what you see?

00:21:36: which industries beyond automotive sector should really act now?

00:21:41: So I think from a perspective in China, it's the battery industry and energy storage industry.

00:21:49: In China we have five-year plan.

00:21:52: And on the 2026 is the first year of China's fifteen years' five-Year Plan.

00:21:58: so in the Five Year Plan explicitly listed the batteries and energy storages industries as strategic industries in China.

00:22:08: We noticed that companies in these industries they all want to develop Oversea markets, especially Europe.

00:22:16: So if they want new regulations particularly those concerning recycle materials in the battery regulations these companies need immediately begin their work about recycled material.

00:22:31: Bahar question for you how do we think can prevent a circular economy from being a mere reporting exercise?

00:22:42: I think the most important thing is when it comes to circular economy, also internal structures.

00:22:50: To really operationalize and integrate circular economy topics into your strategy, into your processes into your operations too.

00:22:59: This includes also suppliers that we have talked about because you to business units like procurement, etc.

00:23:08: They need to know what kind of KPIs for example yeah?

00:23:13: What kind of partner purchasing contracts they need to implement, become more circular.

00:23:19: Also when it comes to recycling materials for example.

00:23:23: So its not only about reporting and I'm always saying that reporting is the last step in sustainability because the whole work before reporting because you need all KPIs all your measures somehow documented.

00:23:39: You need to have verification before you report and the workload is before reporting, so you cannot from my point of view currently, not report only and do nothing in the back.

00:23:56: I think that especially the NIO model shows when units like production or procurement and sustainability team is sitting together at one table, you're really able to drive the real change because otherwise

00:24:15: you are in your company or maybe a new silo and you can of course become better but not that good as it would be possible.

00:24:24: I definitely saw Penn.

00:24:25: How do we think?

00:24:26: How will the NIO and TÜV Rheinland project evolve?

00:24:30: What's coming next?

00:24:31: Well, from my perspective I think there are two directions.

00:24:36: The first direction is that we can spread it into battery recycling which technically more complex but also significant.

00:24:46: The current verification methodology is about physical processes while for the battery recycling this involves chemical reactions.

00:24:56: So it's more challenging, but right now we are working on it.

00:24:59: And the second direction is to scale the car-to-car loop from a successful pilot into a verified industry benchmark

00:25:08: so it involves spending as I said other components and more suppliers for the more materials.

00:25:17: In the long term we aim at positioning our model with practical tastes of automotive value chain. We're extending well beyond the China.

00:25:27: So that's what should be about to do next.

00:25:31: Awesome, Super Bahar.

00:25:32: if look a few years ahead how will material control change business models?

00:25:39: It will change for sure because we have resource scarcity and it is not future problem, it`s a problem we are facing right now.

00:25:50: So, also when talking about energy and raw materials companies will really plan differently than they are doing today.

00:26:03: Also product design is going to change because. When we are talking about resilience, you need to be future proof.

00:26:11: And this means also that you have to redesign and maybe innovate your products so... This will bring a business shift with it.

00:26:21: So new business models who for example offer more verified or secondary raw materials will have structural cost advantage.

00:26:32: I think.

00:26:34: when it comes to financing, banks and also investors will factor raw material risks into due diligence.

00:26:43: And loan terms, those who really establish verified circular systems today.

00:26:49: we'll have a lead in 5 years and that would be nearly impossible to catch up if you don't start now?

00:26:55: If you're waiting coming back to your question.

00:26:58: Circle economy will control business models and it's crucial.

00:27:02: so for me It is not an option.

00:27:04: Yes

00:27:07: What is the one first step a company can take tomorrow

00:27:11: morning?

00:27:12: Take a real and hard look on your material consumption.

00:27:15: Be aware, manage and assess where you main impacts are... ...where risks are and also define responsibility.

00:27:23: There are structures within the company so that it's really clear if not in one person. It`s a joint approach internally, not only with suppliers but also the different business units in the company.

00:27:37: This would be very next step for tomorrow from my point of view.

00:27:40: Penn what's your opinion?

00:27:41: Well... From my point-of-view I think that the choice comes from practice.

00:27:45: so i think it is coming issue to take actions and start parallel work.

00:27:50: And look at NIO.

00:27:51: We see cars price of NIOs car are really good.

00:27:55: So all stuff behind good prices as they do a lot of work in advance.

00:28:02: I think for the coming, if there weren't really to do that just started right now?

00:28:07: Yeah and don't wait for perfection.

00:28:09: so start with what's possible today!

00:28:12: I think it is main message i would like to share.

00:28:15: Penn, Bahar thank you very much.

00:28:18: Today You've made tangible topic which sounds technical at first glance but its core highly political and highly strategic.

00:28:28: So who controls the materials from which the future is built?

00:28:32: Penn, I am particularly impressed that you've shown with NIO.

00:28:37: It's not just possible it's doable in three months with measurable results as a recognized industry model.

00:28:45: so there's no promise for the future.

00:28:47: That's the present!

00:28:48: What do i take away form this conversation?

00:28:52: First The raw material crisis is no longer a future issue.

00:28:57: It arrived in factory floors in April, 2025 with Chinese export controls and the form of production hordes skyrocketing prices

00:29:09: and strategic dependence

00:29:11: that suddenly proves to be a risk

00:29:14: anyone who still believes this is a problem for later

00:29:18: it's wrong.

00:29:19: Second recycling alone is not enough verification is needed.

00:29:24: The difference between a recycling claim and the verified recycling content according to ISO 14021 is the difference between marketing and strategy.

00:29:36: And this distinction has been demanded with increasing consistency through regulation investor pressure and lawsuits.

00:29:47: And third - this is most encouraging part those who act will win.

00:29:53: The new TÜV Rheinland model shows that genuine material control is possible through a circular economy and it doesn't take decades.

00:30:03: The companies who start today will have the lead in 5 years, which others would struggle to catch up with.

00:30:12: You dear listeners!

00:30:14: Thank You for listening.

00:30:16: If you want better understanding how to get strategic control over your material flows, and what that means for the company's future or viability.

00:30:26: Then subscribe to BusinessShift

00:30:29: We bring you the most important insights on sustainable business management innovation and transformation.

00:30:38: delivered resource efficiency straight to your ear. As always – You can find more information about todays episode in our show notes.

00:30:47: I'm Max Birkenmeier and i say the future won't wait.

00:30:53: So let's start actively shaping it until next time.

00:30:57: BusinessShift

00:30:58: BusinessShift

00:30:59: The podcast for decision

00:31:01: makers

00:31:01: and executives who want to deal with the topic of sustainability

00:31:04: in a sustainable

00:31:05: way.

00:31:08: stay curious

00:31:08: bye.