Nature Positive Role of the Automotive Sector China Deep dive

Harness multiple approaches to reduce emissions from operations BOX 3 Li Auto implemented several initiatives to reduce GHG emissions in its operations, including: 1. Expanding the use of renewable energy and increasing the proportion of clean energy 2. Applying an intelligent energy management system to regulate and adjust the energy system 3. Optimizing manufacturing processes with mechanical connection technology and adopting self-piercing riveting and rotary swaging to reduce welding energy consumption 4. Harnessing heat regenerators to recover waste heat from air compressors and equipping boilers with additional condensing heat exchangers at flue gas outlets to absorb heat energy105 These activities contributed significantly to its ESG performance – in 2023, it achieved a Morgan Stanley Capital International (MSCI) rating of AAA.Focus on energy management to reduce GHG emissions from operations Compared to global automakers, the Chinese automotive sector is still catching up on operational decarbonization. To advance GHG emission reduction in manufacturing and operations, automakers should focus on adopting energy efficiency measures and low-carbon energy sources. By optimizing the use of electricity and adopting energy-efficient equipment and smart grid technologies, electricity consumption can be substantially reduced. Heat waste can also be reduced by waste heat recovery, heat pump technology and improved heat energy use efficiency. Other possible energy solutions include introducing and expanding alternative energy sources such as solar and wind, and optimizing production processes to both reduce unnecessary consumption of electrical and thermal energy and improve overall production efficiency. See section 3.1 of the global report for additional detail on decarbonization levers and global examples. A growing number of Chinese automakers have begun investing in the development and application of alternative energy sources. Additionally, they continue to focus on improving energy efficiency, for instance by introducing energy-efficient lighting and air conditioning equipment and optimizing manufacturing processes to reduce energy consumption. These initiatives not only facilitate the reduction of GHG emissions in manufacturing but also provide additional benefits in many instances, such as cost-saving advantages. Nature Positive: Role of the Automotive Sector – China Deep-dive 28