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Your old car might be worth more for recycling than selling

BMW’s new digital twin software will monitor what your car’s components are worth as it looks to become more carbon neutral

It’s a fact that falls into the old Michael Caine category of ‘not a lot of people know that’ but BMW is currently celebrating 50 years of making cars in South Africa. The German giant first established a factory in Rosslyn, near Pretoria, in 1973. Initially it made cars just for the South African market (including a few tantalising SA-only models that are now coming to the attention of classic enthusiasts) and later made cars for export all over the world, including to Ireland.

It helps of course that South Africa is, like us, a right-hand drive market.

Marking 50 years of production – and in a factory which held out against the racial segregation of the outside world in South Africa – is a significant event. Possibly more significant is BMW’s more recent investment in a new facility in the country, one that is going to make it easier – and potentially profitable – to un-make cars.

In a glass and steel skyscraper on the outskirts of Pretoria, in an area that might look like Sandyford industrial estate if Sandyford ever got sunshine like this, stands BMW’s ZA Hub. It is like a little slice of Google, but with a Munich twist. Those who work here are called “hubsters”. There’s a rooftop presentation area laid out like a mini-amphitheatre with beanbags and cushions. The uniform includes dark blue Converse-lookalike sneakers. It’s all very Silicon Valley.

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BMW has three hubs like this. The other two are in Munich and Portugal and all three work to develop the software the company needs. If you’ve used a touchscreen in a BMW car recently, you’ve been using software developed in Portugal. The South Africa ZA Hub works on the software that BMW itself uses – software that runs its global network of factories; its communications between head office and dealerships; and its financial services software. All critical stuff, but not customer-facing.

However, the ZA Hub is currently working on software that could utterly change the nature of how you own, sell, dispose of and renew your car. BMW is embarking on a project to create a truly “circular” car. No, not a round 3 Series, but a car that’s fully recyclable and made entirely of recyclable materials from the steel and aluminium in its body to the upholstery of its seats, and the lithium and nickel in the battery.

A circular car does not need to have a fresh metal mind or cotton grown or plastics plasticated. It would be all but carbon-neutral.

To do that, though, you need lots of old cars coming back into the system so that their metals, their plastics and their upholstery can be scavenged and recycled. Too often at the moment that doesn’t happen and in part that’s because it can be difficult to know precisely what the value of a car can be once it’s stripped to bits.

ZA Hub’s new digital twin software can change all that. We are used to the concept of a digital twin in terms of production processes. Think of a factory, recreated in digital form. That digital version can run like clockwork time after time, always doing things perfectly. In doing so, and in comparing how the digital version works to the way the real, physical factory works, you can minutely work out what the pinch-points in your processes are, and fix them before they become a problem.

A car’s digital twin is a little different. Dujon Fredricks looks after vehicle-related data systems at the ZA Hub and said, “For every physical vehicle that we produce, there will eventually be a digital representation of that vehicle including all of the hardware, the software, and the individual features. It then follows the physical vehicle over its entire life, from cradle to grave so to speak.”

That’s what separates this from the usual documentation that accompanies and identifies a new car – the BMW digital twin can be kept constantly up to date, with data from servicing by using direct data links between the factory and the car itself including over-the-air software updates. It’s kind of like a digital Dorian Grey – there’s a version that shows the car as it was originally built and sold, and alongside a version that ages with the car, showing what broke, what was replaced, what was updated.

Part of this is down to meeting new regulations on vehicle data and identity, including the EU’s carbon dioxide monitoring systems, and China’s ultra-strict import and sales rules.

There’s another wrinkle, and it’s the most interesting one. “BMW’s CEO, Oliver Zipse, made a bold statement,” says Fredricks. “He said he wants BMW to be the most sustainable car maker in the world. But right now, only 30 per cent of the materials that we use in each vehicle are recycled.”

As car makers start to need more and more recycled and recyclable material to make their cars, so too the value of that material is going to go up. That is going to completely change how we trade in and eventually scrap our cars. BMW’s ZA Hub is looking at ways that the value of a car’s individual components and material can be monitored in real-time, using the digital twin.

“We think of the vehicles that are on the road as the raw materials of the future,” Theresho Mogowane, BMW’s senior software engineer for the digital twin project said. “For each of these vehicles, the digital twin allows us to go down to the component level, to each individual part.

“For each of the batteries in the car, for example, we not only know how many kilos of lithium are in each battery, we can also monitor the health of that battery in real-time. And if we know that, and the amount of each material that is in each car, then we can create a forecast of the monetary value of each component, and of the car as a whole.

“So you can look at the retail value of the vehicle itself, or compare that with the value of the components as secondary – recycled – materials.”

Mogowane punches some buttons on his iPad and up on the screen pops a proposal of a live trading screen, showing the value of each bit of an ageing car, based on the daily market values of each sliver of lithium, each kilo of aluminium. It means that, potentially, you could find out the point at which your car is genuinely more valuable as scrap than it is as a second-hand car.

The ZA Hub “hubsters” also predict a time when BMW – which will be monitoring such things all day long of course – will come looking for your car, and hundreds like it, to shore up its stocks of raw materials for making new ones.

There could even be a trade in automotive recycling futures, says Mogowane: “BMW specifically will be able to sell tokens based on the documented information about these materials, using the value forecast. Essentially, you’d be able to trade on the value of the material that’s still in use.”

The implications are massive. The values of second-hand cars could skyrocket if they become a significant source of new-car material. Equally, those increasing values would allow car makers to defray more of the final cost of buying one, making for much cheaper PCP finance packages. The predicted future value of not only the car as a second-hand vehicle but also the recycled value could become a big component of such finance deals.

Equally, there could be ructions in the insurance market, as insurers may become even more hair-triggers to write off a lightly-damaged car, keen to bank the raw materials locked inside. All of this is bathed in a soup of concerns about data security and privacy.

BMW South Africa was once most famous among car enthusiasts for building such rare machines as a 7 Series limo with the engine from the M1 supercar, and a right-hand drive, straight-six engined rival to Europe’s left-hand-drive-only M3. In the future, the South African base could become far more famous for entirely changing the car purchasing and ownership process.