Volkswagen Group and LG Chem are taking a closer look at one of the less visible parts of the automotive transition: the materials that make up the vehicle itself. The companies have signed a memorandum of understanding aimed at developing next-generation plastics and composite materials that could lower vehicle weight, improve performance and increase the use of recycled content.
The partnership brings Volkswagen’s automotive scale together with LG Chem’s expertise in ABS, engineering plastics and post-consumer recycled materials. It arrives as automakers face pressure to make vehicles more efficient while also preparing for stricter circular-economy requirements in Europe. The agreement is still at the development stage, but it shows how plastics, recyclability and material engineering are becoming increasingly important parts of automotive strategy.
A Materials Pact With a Broad Automotive Mandate
LG Chem announced the agreement with Volkswagen Group on September 28, 2026, saying the memorandum of understanding was recently signed at LG Twin Towers in Yeouido, Seoul. Executives from both companies attended, including Volkswagen Group exterior-materials procurement executive Stefan Gramse and LG Chem petrochemicals executive Kim Sangmin. The stated goal is to develop and expand the application of next-generation, environmentally focused mobility materials rather than concentrate on a single component or vehicle.
The scope is deliberately broad. Volkswagen and LG Chem plan to work on plastics and composite materials that could reduce vehicle weight and improve performance, while also studying greater use of post-consumer recycled, or PCR, materials. LG Chem specifically mentioned interior and exterior components across Volkswagen Group’s major automotive brands. Cost is part of the discussion as well, with the companies looking at material solutions designed to improve sustainability without ignoring the commercial pressures involved in mass-producing vehicles.
Why Every Kilogram Still Matters
Automakers have been trying to remove unnecessary weight for decades, but electrification has made the issue particularly important. Batteries and electric-drive hardware can add considerable mass, meaning engineers are looking beyond traditional steel structures when searching for savings. Plastics and composite materials can help replace heavier components in appropriate applications while still satisfying requirements involving durability, stiffness, appearance, heat resistance and crash performance.
The potential efficiency benefits are significant. The U.S. Department of Energy says reducing a vehicle’s weight by 10% can improve fuel economy by roughly 6% to 8%, although the actual result depends on vehicle design and use. The agency also notes that lightweight materials are particularly useful in hybrid, plug-in hybrid and battery-electric vehicles because they can help offset the mass of batteries and electric motors. In some cases, weight reduction can contribute to greater electric range; in others, engineers may be able to achieve a target range with a smaller battery. Volkswagen and LG Chem are therefore working on a problem that affects both conventional and electrified vehicles.
ABS and Engineering Plastics Take Centre Stage
LG Chem identified ABS and engineering plastics as important parts of the cooperation. ABS, short for acrylonitrile butadiene styrene, is valued because it combines impact resistance, heat resistance and relatively easy processing. It can also be produced in different finishes and colours, making it useful in visible vehicle components where appearance matters almost as much as mechanical performance. LG Chem already lists automotive interior and exterior components among the major applications for its ABS products.
Scale gives the partnership another dimension. LG Chem says it has approximately 2.35 million metric tons of annual ABS production capacity across its operations. Its portfolio includes high-gloss, heat-resistant and paintless grades, with automotive applications such as side mirrors and radiator grilles specifically identified by the company. A material that eliminates or reduces secondary finishing operations can potentially influence manufacturing complexity as well as weight and cost. That helps explain why the agreement is not simply about substituting one plastic for another; the companies are examining how material properties can change the way a component is designed and produced.
Recycled Plastics Are Moving Deeper Into Vehicle Strategy
Recycled material is already present in modern Volkswagen vehicles, so the LG Chem agreement is better viewed as an expansion of an existing direction rather than the beginning of one. Volkswagen Group says its environmental standards call for recyclates, or materials containing recyclate, to be used preferentially when technically possible. Within the Volkswagen ID. family, recycled materials are already found in components such as headliners, fabrics, carpets, seats, door trim panels and decorative inlays.
Some seat textiles in certain Volkswagen equipment lines contain up to 100% recycled PET, much of it derived from former PET bottles. The new cooperation could extend that thinking into additional plastic components and applications using LG Chem’s PCR portfolio. That distinction matters because recycled plastic must do more than satisfy an environmental target. Automotive parts may spend years exposed to heat, cold, sunlight, cleaning products, vibration and physical wear. Expanding recycled content therefore depends on proving that materials can deliver repeatable properties at automotive-production scale without creating unacceptable quality, manufacturing or cost problems.
Europe’s New Rules Raise the Stakes
The timing is important because Europe has just strengthened the regulatory framework surrounding vehicle circularity. The European Union’s new regulation on vehicle design and end-of-life management entered into force on August 13, 2026. Most of the new framework begins applying from September 1, 2028, replacing older rules as the EU pushes manufacturers to consider recyclability, material recovery and recycled content earlier in vehicle development.
The recycled-plastic requirements become particularly relevant during the next decade. The European Commission says new vehicles will be required to contain at least 15% recycled plastic from 2032, with the requirement increasing to 25% from 2036. The Council of the European Union also states that at least 20% of the required recycled plastic must originate from end-of-life vehicles. Those targets turn recycled material from a largely voluntary sustainability initiative into a design and sourcing requirement. Partnerships that qualify automotive-grade recycled polymers years before the deadlines could therefore become strategically useful as Volkswagen prepares future product programs.
Volkswagen Already Has a Bigger Circularity Target
The agreement also fits within Volkswagen Group’s longer-term materials strategy. In its 2025 sustainability reporting, the automaker set an ambition to use 40% circular materials in passenger cars and light commercial vehicles for projects whose production begins from 2040 onward, excluding China. Importantly, Volkswagen’s definition extends beyond recycled plastic. It includes renewable, recycled and remanufactured materials, meaning the target covers a broader transformation of the company’s material supply chain.
That makes the LG Chem relationship one potential piece of a much larger puzzle. Volkswagen cannot reach a group-wide circular-material objective simply by changing seat fabrics or adding a few recycled trim pieces. High-volume vehicle programs require materials that can be purchased consistently, processed through existing or modified production systems and certified for specific applications. Plastics suppliers will consequently play a larger role in determining what is technically possible. The new partnership gives Volkswagen access to additional material-development expertise while giving LG Chem an opportunity to tailor formulations around the requirements of one of the world’s largest automotive groups.
LG Chem Is Building a Larger Recycled-Materials Portfolio
LG Chem has been increasing its work on recycled polymers well before the Volkswagen agreement. The company says it became the first in the industry to successfully produce white-coloured PCR ABS in 2020, overcoming one of the appearance challenges associated with plastic recovered from consumer waste. Its LETZero materials portfolio now includes PCR versions of ABS, polycarbonate, PC/ABS, polypropylene, polyethylene and other polymers, with several products identified for automotive use.
The company has also reported measurable growth in its circular-material activities. According to LG Chem’s summary of its 2025 sustainability results, reused and recycled material represented 8.2% of its polycarbonate product line during 2025, an increase of 2.9 percentage points from the previous year. Recycled-material use also increased in product groups including ABS. LG Chem reported Global Recycled Standard certification for 30 products covering materials such as ABS, polycarbonate and polypropylene. Those numbers do not tell how much Volkswagen will ultimately purchase, but they show that the supplier already has a commercial recycling platform on which joint automotive development can build.
Cost, Quality and Traceability Will Decide Adoption
Turning discarded plastic into automotive-grade material remains more difficult than simply collecting and remelting it. Recycled feedstocks can arrive with different colours, additives, contaminants and histories, making consistency and chemical control critical. A 2026 OECD report on recycled plastics stressed the importance of standards, analytical testing and traceability systems for verifying chemical content and supporting safe circular use. Those requirements become especially important when a manufacturer intends to produce the same component in large volumes for years.
Vehicle recycling presents another challenge. Research published by the European Commission’s Joint Research Centre in 2023 found that only 19% of plastic fractions recovered after shredding end-of-life vehicles were being sent for recycling at that time. It also reported that fewer than 10% of EU recycling facilities could efficiently sort and recycle plastic fractions coming from end-of-life vehicles. The regulatory environment has since evolved, but those findings illustrate why Volkswagen and LG Chem are explicitly discussing cost-efficient solutions. Recycled content has to work technically and economically if it is going to move into high-volume components.
The Real Work Begins With Feasibility Testing
The signing ceremony may provide the headline, but the more consequential work will happen during material testing and component development. LG Chem says the companies have agreed to cooperate on research and development initiatives that include feasibility studies for specific material applications. They will also exchange information about technology trends and developments in the global market for next-generation mobility materials.
Volkswagen representatives received a closer look at LG Chem’s capabilities during their visit to South Korea. Executives toured exhibition booths and attended seminars at LG Chem’s Osan Customer Solution Campus, where the focus included PCR-based circularity, electrification, high-performance materials and cost competitiveness. They also visited LG Science Park in Magok to examine broader mobility research and development capabilities. Those details make the agreement more tangible than a simple ceremonial signature. Before any new polymer appears in a production Volkswagen Group vehicle, engineers will have to determine whether it meets the required mechanical, visual, manufacturing and economic standards for the chosen component.
What the Agreement Does — and Does Not — Promise
For now, the Volkswagen-LG Chem partnership should be viewed as a development framework rather than a confirmed large-scale supply program. LG Chem’s announcement describes an MOU covering joint development, feasibility work, recycled materials and cost-efficient solutions. It does not identify a specific Volkswagen, Audi, Porsche, Škoda or other Group model that will receive the new materials, nor does it disclose procurement volumes, financial terms or a date when jointly developed components will enter series production.
That leaves several important milestones still ahead. Specific materials will need to move through feasibility studies, component validation and procurement decisions before the commercial effect of the agreement becomes clear. Even so, the direction is notable. Vehicle efficiency is increasingly connected not just to batteries, aerodynamics and powertrains but also to the kilograms and materials hidden throughout the cabin and body. At the same time, European rules are creating concrete demand for recycled plastics. Volkswagen and LG Chem are positioning themselves where those two trends meet: lighter components, higher recycled content and materials capable of surviving the demands of mass-market automotive production.
