New cars from used parts? It is time for new automotive regulations

27.07.2023 automotive | environmental protection | project

Each year, nearly a million used vehicles are exported from Europe, often in very poor condition. They mainly end up in Africa, where they pollute the environment and pose a risk to humans. At the same time, around 3.5 million vehicles a year disappear without a trace from European roads, presumably ending up illegally exported and dismantled. But they could be a source of spare parts and critical raw materials in Europe.

Current status

The key pieces of EU legislation now governing the treatment of vehicles at the end of their useful life are:

The Polish parliament has implemented these directives in a number of different acts, including the Environmental Protection Law, the Waste Act, and the Act on Recycling of End-of-Life Vehicles.

Many years have passed since entry into force of the two directives, and some of their solutions have become obsolete. The European Commission has found that more than six million vehicles are taken out of service each year in the EU. Additionally, the automotive sector accounts for about 10% of plastic consumption (about six million tonnes per year). But there is no orderly system of regulations establishing an environmentally sound way of dealing with these vehicles.

Therefore, on 13 July 2023, the Commission presented a proposal to replace the two directives with the “Regulation on circularity requirements for vehicle design and on management of end-of-life vehicles.” The proposal is part of the European Union’s broader efforts under the European Green Deal, the action plan for a circular economy, and a number of other legislative initiatives, such as the Critical Raw Materials Regulation and the Waste Framework Directive.

Objectives of the proposed changes

The Commission presents extremely ambitious goals, which the regulation could achieve over the next twelve years.

CO₂ emissions are to be gradually reduced to less than 13 million tonnes annually in 2035. Nearly four million more end-of-life vehicles than before (including motorcycles, buses and trucks) are to remain within the EU, allowing them to be disposed of properly. They are also expected to be a source of many critical raw materials and other substances.

Nearly one million vehicles are exported from Europe each year. Unfortunately, these are often vehicles of very poor quality that would have to be taken out of service in the short term. These exports are mainly to African countries, where many of these vehicles pollute the environment and pose a threat to people’s lives, as most often these countries do not have adequate regulations for decommissioning and proper disposal of vehicles.

The Commission claims that the proposed provisions would generate a net income of about EUR 1.8 billion by 2035 and contribute to creation of 22,000 jobs across the EU. The prices of used car parts and components should also fall as a result.

New regulations, new obligations

The regulation is expected to introduce a series of requirements for design and production of vehicles enabling reuse of individual parts and recovery of materials used in the manufacturing process. To protect the environment, the proposal provides for extended producer responsibility, and the possibility of exporting used vehicles to third countries is restricted.

Which vehicles will be affected?

As a first step, the new rules would apply to vehicles and end-of-life vehicles in the M₁ and N₁ categories as set out in Art. 4(1)(a)(i) and 4(1)(b)(i) of Regulation (EU) 2018/858. This relates to motor vehicles:

Designed and constructed primarily for the carriage of passengers and their luggage, motor vehicles with not more than eight seating positions in addition to the driver’s seating and without space for standing passengers, regardless of whether the number of seating positions is restricted to the driver’s seating position
Designed and constructed primarily for the carriage of goods with a maximum weight not exceeding 3.5 tonnes.

Subsequently, within 60 months after entry into force of the regulation, the provisions will apply to vehicles and end-of-life vehicles from categories M₂, M₃, N₂, N₃(within the meaning of Regulation (EU) 2018/858) and L3e, L4e, L5e, L6e, L7e (within the meaning of Regulation (EU) 168/2013). This would expand the coverage of these standards to include vehicles such as trucks, buses and motorcycles.

New definitions

The proposed regulation employs a whole spectrum of definitions, some new and some carried over from other legislation. The most important of these are:

End-of-life vehicle—a vehicle which constitutes waste as defined in Art. 3(1) of Directive 2008/98/EC, and vehicles that are not repairable according to criteria in Annex I, parts A(1)–(2), to the regulation
Supplier—a natural or legal person who supplies parts, components or materials to a manufacturer who uses them to manufacture vehicles
Placing on the market—the first delivery of a vehicle in the territory of the European Union
Manufacturer—a manufacturer, importer or distributor who, irrespective of the selling technique used (including by means of distance contracts), supplies a vehicle for distribution or use, within the territory of a member state, on a professional basis
Producer responsibility organisation—a legal entity that financially or financially and operationally organises the fulfilment of extended producer responsibility obligations on behalf of several producers
Used vehicle—a vehicle registered in a member state and not an end-of-life vehicle
Economic operators—producers, collectors, vehicle insurance companies, suppliers, waste management operators and any other operators involved in design of vehicles, trade in used vehicles, or management of end-of-life vehicles.

Key obligations

Sustainability requirements

Each vehicle approved under the requirements of Regulation (EU) 2018/858 must be constructed so that it is:

Reusable or recyclable to a minimum of 85% by mass
Reusable or recoverable to a minimum of 95% by mass.

This obligation will take effect 72 months after entry into force of the regulation. To achieve this goal, among other things, manufacturers should collect the necessary data through the full chain of supply (in particular the nature and mass of all materials used in construction of vehicles) and ensure the correctness and compliance of data obtained from suppliers.

Additionally, at least 25% of the plastics used in production of such vehicles will have to be recycled, and at least a fourth of that must come from end-of-life vehicles. This obligation will take effect 72 months after entry into force of the regulation.

No such vehicle shall be designed in such a way as to hinder the removal by authorised treatment facilities of the parts and components listed in Part C of Annex VII to the regulation when the vehicle is considered waste. This includes parts such as engines, transmissions, tires, wheels, etc.

Obligations of manufacturers

Auto manufacturers will have to demonstrate that new vehicles they have manufactured and placed on the market meet the foregoing criteria. For this purpose, among other things, they will have to provide the relevant documentation to the competent national authority, and before that, prepare a sustainable development strategy outlining what measures they will take to meet their obligations.

Importantly, manufacturers will be required to provide information free of charge to relevant waste management and vehicle repair and maintenance entities to enable the safe removal and replacement of individual parts and components. This obligation will take effect 36 months after entry into force of the regulation.

The regulation also establishes a circularity vehicle passport—a digital tool containing information on the safe removal and replacement of car parts and components. The manufacturer will be responsible for the accuracy and completeness of the information in the passport. The passport will cease to exist at least six months after issuance of a certificate of destruction of an end-of-life vehicle.

The part of the regulation addressing issues of extended producer responsibility is vital. These issues are contained in Section 2 of Chapter IV, Art. 16–22. The proposed solutions are designed to ensure that end-of-life vehicles are properly collected and processed. A register of manufacturers will be established to monitor manufacturers’ compliance with these requirements. Unregistered manufacturers will not be allowed to market vehicles in EU territory. Importantly, producers will be able to fulfil their extended responsibility obligations either individually or through a producer responsibility organisation. Primarily, this concerns the financial liability associated with collection and processing of the vehicles they have placed on the market. Among other things, manufacturers will also be responsible for conducting public education campaigns to raise awareness of end-of-life vehicle collection.

Obligations of owners

The regulation will also affect vehicle owners. The owner of an end-of-life vehicle will have to deliver it to an authorised treatment facility or collection point for end-of-life vehicles without undue delay. In principle, such delivery will not incur additional costs. Then the owner should obtain a certificate of destruction of the vehicle from the vehicle collector, which the owner will present to the registration authority.

Evaluation of the proposal

It is worth holding back with assessment of the proposed changes. The draft regulation is at the beginning of its legislative path, meaning quite a few provisions may be revised. For example, the amount of fees to be borne by vehicle manufacturers is unknown.

At this stage, it should be noted that the regulation covers the entire spectrum of automotive market participants and imposes many previously unknown obligations on them. Proper implementation of these obligations will take time and no doubt raise many questions. Hopefully, the proposed regulation will not threaten the solvency of obligated entities, and will actually raise the level of environmental protection.

Karol Maćkowiak, Environment practice, Wardyński & Partners