This document discusses how circular economy principles can help improve urban mobility and meet stakeholder expectations. It provides examples of companies adopting circular business models in mobility, such as Michelin's tire retreading program and BMW's car sharing service DriveNow. The circular economy aims to keep products and materials at their highest value through closed-loop systems, decoupling economic activity from finite resource use. Transitioning to circular models requires analyzing product life cycles and partnerships to establish new recovery systems that optimize value for customers and businesses over ownership-based models.

1. URBAN MOBILITY IN THE
ADVENT OF CIRCULAR
ECONOMY

2. +
HOW COULD CIRCULAR ECONOMY HELP
IMPROVE URBAN MOBILITY AND RESPOND
TO VARIOUS STAKEHOLDER’S
EXPECTATIONS?

3. Circular and Functional Economy
Tim C. McAloone
Professor, Technical University of Denmark (DTU)

4. The current economic paradigm
• Linear economy: Take – Make – Use – Dispose
4
Structural waste
in mobility
[Ellen MacArthur Foundation]

5. What is the Circular Economy?
• Closed-loop systems
• Value creation decoupled
from resource consumption
• New business opportunities
estimated at €1.8 trillion /
year
5

6. What is the Circular Economy?
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“A Circular Economy is
restorative and regenerative by design,
and aims to keep products, components and
materials at their highest utility and value
at all times.”
[Ellen MacArthur Foundation]

7. Example: MICHELIN 4R Strategy
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• Reducing CO2 emissions with
lighter MICHELIN tires, which last
longer and save fuel.
• Reusing by repairing, regrooving
and retreading tires to make them
last longer.
• Recycling and recovering used
tires.
• Renewing by using renewable
raw materials such as natural
rubber, biosourced isoprene and
butadiene, and natural oils and
resins, etc.

8. Drivers and motivation for a
circular economy
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Material costs
Value recovery
Supply security
Legislation
Waste management costs
Customer demand for
complementary services
Performance-based contracts
Image
Better customer relations
Strategic vision
Redefining value proposition
New business idea
Introduction of a new technology
Repositioning in the supply chain
Circular
Economy

9. Example: BASF Automotive
Refinish
• From can-kickers to paint-shop business consultants
• Complete change in customer platform
• Selling know-how instead of just paint
• Selling value
• Working together
• Plan – Do – Review
• Customer Attractiveness evaluation
• Customer Stability evaluation
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10. Circular Economy
Business Models
10[wbcsd, 2017]

11. Functional Economy
• ”Product as a Service”
• An economy where products are produced and sold based on their
use (functionality) – not based on the transfer of ownership.
• Value is based on the performance of the product, customer
satisfaction or the end-result.
• The functional economy offers solutions that are combinations of
products and services that fulfil customer needs.
• Other related terms:
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• Functional Sales
• Functional (Total
Care) Products
• Integrated Solutions
• Product/Service-
Systems (PSS)
• Service Engineering
• Servitization
• Performance Based
Logistics
• Dematerialisation

12. Functional Economy
• Drivers
• Commoditisation of products –
leading to fierce price competition
and diminishing profit margins
• Saturation of markets and a high
installed based, which limits the
amount of new product sales
• Greater responsibility of products
during use and end-of-life due to
legislation and customer demand
• Reduced funds to finance new
purchases
• Decreasing interest in owning
products
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• Potential benefits
• Optimised use of products
• Higher profit margins
• Possibility to differentiate products with
services
• Increased value of services and / or
realisation of product quality and
functionality
• Reduction of downtime and failure of
equipment
• Customer can focus on core activities
• Long-term customer relationships
• Stable source of revenue
• Reduction of material and energy
consumption

13. Example: MICHELIN Fleet
Solutions
• Sells the use of truck tyres per kilometre
instead of just selling tyres.
• Offers customers better cost control, fewer
breakdowns and less administration.
• Helps reduce and control fuel consumption
for fleets.
• Contractual commitment to reduce fuel consumption
• Training in eco-driving and real time monitoring of
driver behaviour
• Tire management, low rolling resistance tires, cloud
based tread/pressure monitoring
• Telematics integration and deep analytics
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• Allows Michelin and its customers
to extract the optimum value from
their products
• Allows the customer to focus on
key aspects and the core
competencies of their business
• Facilitates value demonstration of
Michelin’s market leading product
portfolio
• Creates a direct and stronger
relationship with customers

14. Example: DriveNow
• A car-sharing service from the automotive manufacturer
BMW and the car rental company Sixt.
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• Customers only pay for the
time they use the car, then
park it free of charge in almost
any public parking spot within
the business area when they’re
done.
• Includes the cost of fuel,
repairs, pay and display
tickets, car taxes and
insurance.

15. Example: Vélib’ in Paris
• Self-service bicycle sharing scheme
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• Provides the city with a simple and affordable
bicycle sharing system
• Subscription and pay for any time over 30
minutes of use
• Vélib’ stations all over the city
• Financed by bill-board advertising
• A subsidiary of JCDecaux, Cyclocity,
designs the self-service bicycles and
is in charge of the installation,
operation, upkeep, maintenance and
regulation of the service

16. How to make the transition?
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Identify opportunities based on an analysis of the product’s life
cycle, supply chain and customer activities1
Optimise and / or redesign the product, process and / or (reverse)
supply chain to minimise waste and recover products / materials2
Develop new business models that align incentives, build the
business case and formulate a clear strategy3
Establish partnerships / agreements with customers, supply chain
actors and other business partners to set up material recovery
systems
4
Test, measure, monitor, adjust and improve before scaling up
5

17. Summary
• Circular Economy and Functional Economy are well-fitting steps on the
road to business advantage and sustainability leadership
• They represent business opportunities with potential for decoupling
economic growth from resource consumption
• Allows companies to enhance their competitiveness
• Increases value and utility for customers (provides what customer actually want
to pay for)
• Reduces costs through reduced natural resource consumption and waste
generation
• Requires system thinking and re-design
• An opportunity to re-think how to provide mobility.
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18. THANK YOU!