Managing Structural Tensions in the Transition to the Circular Economy: the Case of Electric Vehicle Batteries

Abstract

The circular economy (CE) has recently gained attention as a key transformative strategy. However, as with previous transformation processes, the transition towards the CE is not a smooth process since there are underlying structural tensions in incumbent systems that need to be overcome. One industry that is currently undergoing transformative pressure is the automobile industry where the transition to electric vehicles that use lithium-ion batteries is creating structural tensions. In this paper, we adopt a multi-actor perspective and analyze the strategies that different actors pursue to manage the structural tensions that are induced by the transition towards lithium-ion batteries with the goal of creating and sustaining a closed-loop supply chain (CLSC) model. Through a case study of the key actors (mining firms, material manufacturers, vehicle manufacturers, and recyclers), we reveal the particularities of managing structural tensions which are influenced by temporal, spatial, and contextual factors. We demonstrate our claim by first expanding the application boundary of the concept of structural tensions to show the interconnection between strategic choices made by actors at operational and technological levels; and second, unfolding the dynamics of managing structural tensions in the CE transitions from a multi-actor perspective. The results of this study may support industrial actors to achieve a better understanding of the consequences of their short- and long-term CE transition strategies, and resolve conflicts in visions and priorities during the transition process.

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