5/5/2015

The Future of the Automotive Sector (and how it relates to South Carolina)

SCEDA 2015 Annual Conference Frederick M. Cartwright Executive Director, CU-ICAR

May 8, 2015

Automotive History – 130+ years!

Benz Patent Motorwagen (1885) German Flocken Elektrowagen (1888) Cugnot’s Steam Wagon (1771) 1st Prod’n Vehicle with ICE 1st Electric Vehicle

Ford Model T (1908-1927) Plymouth Savoy (1954) Corolla (2011)

1 5/5/2015

Automotive Current – rapid change abounds!

Chevrolet Volt (2010) Nissan Leaf (2010) Tesla Model S (2012) Plug-in Hybrid EV Electric Vehicle Electric Vehicle

BMW i3 (2014) Google Driverless Car (2014) Toyota Mirai Vehicle (2016) EV and Range Extended EV Concept

But, then again…..much has remained the same

Top Sellers in the U.S .

2004 2014

#1 Ford F-150 #1 Ford F-150 #2 Chevrolet Silverado #2 Chevrolet Silverado #3 #3 Toyota Camry

U.S. Market Size= 16.9 million U.S. Market Size = 16.5 million

2 5/5/2015

What has changed in the U.S. in this timeframe?

ß One of the worst economic recessions in history ‰‰‰ U.S. market size drops to 10.4 million cars

ß Introduction of PHEV and BEV’s to the US market ‰‰‰ 120,000 Plug-in vehicles sold in 2014; U.S. is the largest EV market worldwide; more that 10,000 EV charging stations deployed nationwide

ß Exponential growth of the use of smart phones ‰‰‰ In 2005, less than 4 million sold; In 2014, 50 million sold (Apple 50% market share, followed by Samsung with 26%)

ß Growth of renewable energy ‰‰‰ Solar and wind power generation

ß Independence from foreign oil ‰‰‰ Level of oil import is at historic low (2014 and 1975 levels are similar)

What has changed outside the U.S. in this timeframe?

ß China is now the largest automotive market in the world and produces by far the largest number of vehicles per year worldwide • 21.98 million new vehicles sold in China in 2014; significant environmental challenges (emissions, road congestion) • 23.7 million vehicles produced in China in 2014 (1 out of 4 new cars in the world is produced in China)

ß The automotive market worldwide is on a steady growth path • In 2010, first time that more than 1 billion cars were driving on the roads worldwide • Global car production is increasing (3% steady growth)

ß Asia dominates in Megacities • The Top 5 Megacities (>20 million people) are all in Asia; rapid urbanization in China and India

3 5/5/2015

What has changed outside the U.S. in this timeframe (cont’d)?

ß Europe issued the tightest emissions regulations worldwide

• 2021 EU emissions goal of 95g/km CO 2 causing heavy European OEM investment in EV’s, despite limited home market penetration

ß Mexico replaced Canada as largest vehicle exporter to the US • Mexico surpassed Japan as No. 2 automotive exporter to the US in 2014 and is expected to surpass Canada as No.1 automotive exporter in 2015

Corporate Avg. Fuel Economy (CAFÉ) 2025: 54.5 mpg (sort of)

Segment Make & Model 2012 mpg goal 2017 mpg goal 2021 mpg goal 2025 mpg goal

Subcompact Car Kia Soul 34.6 41.7 48.6 58.4

Midrange Sport Chevrolet 33.4 40.0 46.6 56.0 Car Corvette

Compact Car Chevrolet Cruze 33.4 40.0 46.6 56.0

Midsize Car Toyota Camry 32.3 38.4 44.8 53.8

Premium Luxury BMW 7 Series 28.0 32.7 38.0 45.6 Car

Compact Ford Escape 29.0 34.9 40.2 48.4 Crossover SUV

Compact Truck 27.2 31.8 36.6 44.1

Midsize Ford Explorer 25.9 29.9 34.2 41.2 Traditional SUV

Minivan 24.8 28.3 32.1 38.6

Large Truck Ford F-150 22.3 25.1 25.3 30.2

4 5/5/2015

The automotive industry has reached an inflection point of new technologies, new players and new locations

New Technologies Converge

5 5/5/2015

New Players: Shifting from horsepower to computing power – smartphones on wheels?

March 27, 2015

New Locations: Other North American locations not standing still

Proximity to Mexican parts suppliers could provide a logistical advantage for plants located in the Auto West Corridor, if the trend toward increased Mexican parts content continues.

6 5/5/2015

Mexico: Competition south of the border

While the southeast automotive region has done well in terms of investment……

Mexico is outpacing our region with announcements of new vehicle assembly plants

7 5/5/2015

Mexico: Rapid increase in engineering capability.

Enterprise Number of Engineers

FORD 800 1,100 Chrysler 500 General Motors 600 Volkswagen 600 Nissan 700 Delphi 1,500 Continental 700 Faurecia 300

6,000 engineers located in automotive and tier 1 technical centers . (Source: Industria Nacional De Autopartes, A.C.)

How do we become more globally competitive??

8 5/5/2015

9 5/5/2015

10 5/5/2015

Thank You!

11