NIO pledges to join the Science Based Targets initiative

Abstract: NIO has committed to setting science-based carbon reduction targets and joining the Science Based Targets initiative (SBTi), in order to support China in achieving its dual-carbon goals.

On March 25th, at the main centre of WWF Earth Hour event, the forum of "Science Based Targets initiative Helps Climate Friendly Cities", NIO announced its partnership with the World Wide Fund for Nature (WWF) and its commitment to joining the Science Based Targets initiative (SBTi) , and planned to set SBTi within the next two years. This move is intended to assist China in steadily achieving its dual carbon targets and promoting sustainable development, in line with our guiding philosophy of "Blue Sky Coming."

Guests participating in the forum also included Zhou Wei, Secretary of the Kunshan Municipal Party Committee; Chen Liyan, Mayor of Kunshan City; Wang Tianqi, Director of Jiangsu Provincial Department of Ecological Environment; Liu Youbin, Director of the Publicity and Education Center of the Ministry of Ecology and Environment; and Chang Qide, Coordinator of the Office of the United Nations Coordinator in China. NIO, as a new force in vehicle manufacturing, will discuss with participants the opportunities and challenges of the transformation of the entire vehicle industry, the necessary measures to reduce carbon emissions, and how to achieve low-carbon emissions throughout the entire life cycle.

As more and more pioneering scientists, environmental activists, international environmental protection agencies, and governments continue to speak out. The impact of climate change is also increasingly known and recognized by the public. Many weather events such as droughts, wildfires, and floods caused by climate change continue to remind human beings to take immediate and resolute action. On the other hand, the energy crisis caused by climate change, social inequality, biodiversity, and irreversible and devastating damage to the ecosystems on which human beings depend all demonstrate that the climate crisis is closely related to everyone.

But with the development of global climate change science and the emergence of innovative solutions, we have more practical choices in the face of the climate crisis. In order to promote sustainable development worldwide, China pledged at the 75th United Nations General Assembly in September 2020 to strive to achieve carbon peak before 2030 and carbon neutrality before 2060. Against the backdrop of promoting dual carbon targets, NIO is also considering how to leverage its advantages, actively respond to climate change, protect the ecological environment, and form a systematic and long-term sustainable action. The plan to commit to joining the SBTi (Science Based Targets initiative) also emerged.

The Origin of SBTI

On December 12, 2015, the adoption of the Paris Agreement at the 21st United Nations Climate Change Conference was an important milestone in global climate governance and a unified arrangement for global actions to address climate change after 2020. The long-term goal of the Paris Agreement is to control the global temperature rise far below 2 ℃ compared to pre industrialization times and strive to control the temperature rise within 1.5 ℃.

Based on the Paris Agreement, greenhouse gas (GHG) emission reduction targets can be considered scientific if they are consistent with the measures to achieve the global temperature goals of the Paris Agreement according to the latest climate science theory.

The Science-Based Targets initiative is aimed at raising the ambitions of companies and promoting them to adopt more active emission reduction actions and solutions to jointly tackle global climate change. SBTi is an initiative jointly launched by Carbon Disclosure Project (CDP), United Nations Global Compact (UNGC), World Resources Institute (WRI), and World Wide Fund for Nature (WWF). The initiative defines scientific carbon goals, promotes best practices for setting scientific carbon goals, provides resources and guidance to reduce application barriers, and independently evaluates and reviews corporate goals.

We realized very early that new energy vehicles driven solely by electricity are no longer the only criterion for judging whether electric vehicles are green and sustainable. Even before committing to joining SBTi, NIO had been experimenting with energy-saving and carbon-reduction efforts, as well as sustainable production practices. From the exterior to the interior of our vehicles, and from factory production to service operations, we design and consider environmental and low-carbon factors throughout the entire automotive industry chain ecosystem.

In terms of the vehicles, we are designing for carbon reduction from the inside out. NIO's ES8 model became the first independently domestically-developed and mass-produced lightweight all-aluminum body platform. NIO plans to achieve 100% aluminum closed-loop recycling at its manufacturing base. In terms of material selection, we prioritize the use of recycled materials, bio-based materials and low-carbon materials, such as Clean+ polymer materials, which can reduce carbon footprint by more than 30% during production, ET5 bio-based supports and ES7 leather tanning as well as choosing the ultra-low global warming potential refrigerant HFO-1234yf for the car air conditioning system in the upcoming ET7 model. Through high-tech materials and technology, such as joint research and development of carbon fiber reinforced plastic battery casings, we aim to achieve weight reduction of about 40%. Lightweight products reduce carbon emissions during product use.

In terms of supply chain management, NIO has implemented a systematic carbon footprint management and empowered the supply chain to manage their carbon footprint. We work with our supply chain partners to develop decarbonization strategies. Starting from raw material acquisition, production, use, to product recycling, the carbon emissions throughout the entire lifecycle of the car are studied and calculated. They have gradually established standardized evaluation criteria for the carbon footprint of automotive lifecycle, and rely on an advanced carbon emission data management system for systematic accounting and evaluation. At the same time, NIO has developed an internal carbon price mechanism (ICP) based on complex domestic and foreign carbon policies, carbon trading, carbon taxes, and other related factors. It is also the first automotive company in China to develop an ICP mechanism. Enterprises can obtain carbon reduction decision-making direction through ICP. In 2022, NIO signed a framework cooperation agreement with Lu'an to jointly build a low-carbon recycling industrial park for intelligent electric vehicle components. It will introduce accessory enterprises such as refined vehicle disassembly, aluminum and other recycling materials, aluminum material smelting, aluminum die casting, and wheel hub manufacturing to create a low-carbon cycle full industrial chain for aluminum die casting. After the first phase is completed and put into production, the aluminum die casting products of NIO will reduce carbon emissions by about 50%.

In terms of factory production, NIO's second advanced manufacturing base has built a digital system for energy and carbon data and established distributed photovoltaic power stations to achieve self-use and surplus electricity grid connection. The photovoltaic project plans to reduce carbon dioxide emissions by about 50,000 tons per year.

In terms of service operation, we have the world's first fully automatic battery swapping technology. Each of our third-generation battery swapping stations can hold 21 batteries, allowing for optimal routing to reduce energy consumption. Since 2020, NIO has organized its battery swapping stations, supercharging stations, and home charging stations in the Beijing-Tianjin-Hebei region to participate in peak shaving and valley filling programs with Huabei Power Grid. From 2021 to 2022, more than 4,000 participating users consumed over 2.3 million kWh of clean energy, resulting in an equivalent carbon reduction of 1,179 tons. In the summer of 2022, a total of 108 battery swapping stations participated in peak shaving programs in their respective cities, helping to reduce the peak load on the power grid and leaving room for urban power supply.

Looking ahead, NIO will continue to explore and practice green development concepts in areas such as research and development, manufacturing, logistics, and recycling related to the full lifecycle of our products; the establishment of scientific carbon targets, the development of carbon reduction pathways, and the achievement of scientific carbon targets are all part of our commitment to fulfill the responsibility of green development and safeguard the clear sky.