Not just electric: Auto sector needs cleaner steel & power to really put the brakes on emissions, says study

India’s automobile sector—the third-largest in the world—could slash its manufacturing-related emissions by a staggering 87% by 2050, not just by building more electric vehicles (EVs), but by cleaning up how all vehicles—ICEs, hybrids, and EVs—are made.

That’s the central finding of a new report released Wednesday by the Council on Energy, Environment and Water (CEEW), which stresses that green electricity, low-carbon steel, and cleaner supply chains—not just EVs—are essential to decarbonising the industry.

In recent years, top automakers such as Tata Motors, Mahindra & Mahindra, TVS Motors, Ford, BMW, Mercedes-Benz, and Toyota have set ambitious emission reduction targets and joined the Science-Based Targets initiative (SBTi). Many have expanded electric and hybrid offerings—but the study urges the sector to go further by addressing Scope 1, 2, and 3 emissions, including those from suppliers.

“To lead in a low-carbon global economy, we must decarbonise not just the vehicles we drive, but the industrial processes that build them,” said Dr Arunabha Ghosh, CEO of CEEW. “Automakers must clean up what powers their factories and how suppliers produce critical materials like steel and rubber.”

The Delhi-based think tank’s study shows that while production could quadruple to 96 million vehicles by 2050, emissions from manufacturing can be capped—or even dramatically cut—if the sector shifts to 100% green electricity, adopts hydrogen-based and scrap-intensive steelmaking, and makes low-carbon procurement the norm.

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Today, Scope 3 emissions—mostly from materials like coal-heavy steel and rubber—account for 83% of the industry’s carbon footprint in India. Simply electrifying vehicles without addressing these upstream emissions will leave most of the climate problem intact.

Hybrids are a temporary bridge

CEEW also modelled a “high-hybrid” scenario, where hybrids dominate before EVs become widespread. While this reduces some energy demand, emissions remain higher than a direct EV transition due to continued combustion engine use.“Hybrid vehicles may offer short-term efficiency gains, but they’re not a substitute for a zero-carbon mobility future,” the report notes.

Green manufacturing: Real game changer

The report urges OEMs to treat green manufacturing as a strategic lever—not just for climate goals, but for long-term competitiveness. With global supply chains tightening sustainability standards, Indian manufacturers who decarbonise early will have a distinct edge.

“Indian automakers must secure green steel, power factories with renewables, and demand cleaner inputs from suppliers,” said Dr Vaibhav Chaturvedi, Senior Fellow at CEEW. “Without this, EVs alone won’t be enough to meet net-zero goals.”

The study calls for a two-pronged strategy: accelerate EV adoption and decarbonise the manufacturing value chain. If done right, it says, the Indian auto sector could become a “force multiplier” in the country’s broader transition to net-zero.

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