Together with its steel suppliers, the company is retooling its supply chain to focus on the prevention and reduction of CO2 emissions. This partnership with H2GS is another step towards Mercedes’ goal of a fully connected and CO2 neutral vehicle fleet by 2039 — 11 years earlier than the European Union’s legislation requires.
“With an equity stake in H2 Green Steel, Mercedes-Benz is sending an important signal to accelerate change in the steel industry and increase the availability of carbon-free steel. As a first step, we are investing a single-digit million amount. As a preferred partner of the start-up, we will be launching green steel in various vehicle models as early as 2025,” said Markus Schafer, member of the board of management of Daimler AG and Mercedes-Benz AG and responsible for Daimler Group Research and Mercedes-Benz Cars COO.
Currently, a Mercedes-Benz sedan is made from approximately 50% steel, which accounts for about 30% of CO2 emissions in production. By innovating the manufacturing process of the steel at the supplier level, the steel could become CO2 free. This new innovative process will use hydrogen and electricity from 100% renewable energy sources instead of coking coal in the steel production. The hydrogen serves as a reduction gas, which releases and binds the oxygen from the iron ore. Unlike the use of coking steel, this does not produce CO2, but water. The supplier also uses electricity from 100% renewable sources for the energy requirements generated in the manufacturing process.
In May 2019, Mercedes-Benz Cars announced its Ambition 2039 plan, which includes up to 50% of its car sales in 2030 to be either plug-in hybrids or all-electric vehicles and to produce a carbon-neutral passenger car fleet.
The plan’s goal relies on innovation across its multiple suppliers. Mercedes is working with organizations to assess the environmental impact of its supply chain, with the goal of helping its suppliers reduce their CO2 emissions. To that end, Mercedes will establish CO2 targets as a key criterion in making supplier decisions across all major commodities.
While Mercedes is working with suppliers on cutting their emissions, the company is also looking inward to its own production plants with the aim of using more renewable energy. To that end, it created its Factory 56, which is completely run on renewable energy — a blueprint that all of its European plants will follow by 2022.
While Mercedes-Benz has plants in multiple countries, it has only a few U.S. manufacturing facilities. Mercedes-Benz U.S. International, in Tuscaloosa, Alabama, produces several of the company’s SUVs models. It has embarked on expanding its production to include electric vehicles, both the EQS and EQE SUV models, starting in 2022. To facilitate that move, the company is building a battery plant in nearby Bibb County.
Mercedes-Benz also assembles its Sprinter vans at its Ladson, South Carolina, plant. In March, Mercedes announced that it would be upgrading the South Carolina facility to accommodate its assembly of the eSprinter — one of three Mercedes plants worldwide to produce the electric version of the Sprinter van beginning in 2023.
Both the battery facility in Bibb County, Alabama, and the upgrades to the South Carolina plant are part of the company’s goal to cut emissions as part of its Ambition 2039 plan.