In recent decades, the automotive sector has grown in both size and variety. Today, travellers and cargo across the globe travel by road in a diverse range of cars, light-duty trucks and motorcycles, many of which are now powered by electricity with the advent of electric vehicles (EVs)37 and other alternative solutions. In 2023, the global automotive manufacturing market was worth over $2.6 trillion,38 and the sector contributes approximately 3% to global GDP output.39 In the same year, the number of vehicles produced was 94 million,40 with half of production concentrated in Asia (in particular, approximately 35% in China, and around 15% in Japan and South Korea), around 20% in the EU and around 15% in North America.41 Following recent supply chain disruptions caused by the COVID-19 pandemic, macro-economic and geopolitical uncertainty, and high commodity and energy prices,42,43 the automotive industry recovered and grew at a rate of 3% in 2023, in line with pre-2020 levels.44,45 The sector is projected to experience strong growth of 6-7% per year until 2030,46,47 driven by increasing demand for sustainable mobility options, a growing global middle class, expansion of emerging markets and shifting consumer preferences towards larger cars such as sport utility vehicles (SUVs). In particular, the shift towards sustainable mobility has transformed the market for automotive vehicles. EV sales grew from 1 million to 14 million per year between 2017 and 2023, and EVs accounted for 18% of total car sales in 2023.48 Of all the electric cars on the road today, over half are in China, and by 2023, the country had already exceeded its 2025 target for new EV sales. After China, the majority of other electric cars are in the EU (30%) and the US (12%). Sales of electric light commercial vehicles (LCVs) are also continuing to increase, nearly doubling in 2022 relative to 2021. At the global level, however, the LCV sales share still only represents 3.6% of sales.49 For the world to reach net zero by 2050 under the International Energy Agency’s (IEA) Net-Zero Emissions by 2050 Scenario, EVs will need to grow at an annual rate of 40%, reaching 380 million EVs on the road by 2030 and accounting for 60% of all vehicle sales. While the rise of EVs is critical to ensuring the success of the energy transition and combatting air pollution, it can still have unintended consequences, including its own inherent resource demands and upstream and downstream environmental impacts.50 Notably, this shift is driving rapidly increasing demand for critical minerals for batteries, with mineral requirements for clean energy technologies projected to increase by four to six times by 2040 and EVs and battery storage accounting for 25-45% of demand.51 Indeed, in 2022, about 60% of lithium, 30% of cobalt and 10% of nickel demand was for EV batteries. Lithium demand exceeded supply despite global production nearly doubling between 2017 and 2022.52 Supply security is an increasing concern. This has resulted in the Group of Seven (G7) countries adopting a Plan for Critical Minerals Security and pledging $13 billion in support in April 2023. The Group of Twenty (G20) additionally emphasized the need for diversified, sustainable and responsible supply chains for the energy transition.53 1.1 Sector overview For the world to reach net zero by 2050, electric vehicles are required to account for 60% of all vehicle sales by 2030. Nature Positive: Role of the Automotive Sector 14

Nature Positive Role of the Automotive Sector