How Policies Driven China NEV Market?

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Electrification

How policies driven China NEV market?

Lancy Zhang, Powertrain and NEV LMC Webinar 8th October, 2020

• NEV Definition

• Government Policy and Regulations

• NEV Market Status

• Outlook

▪ Different definitions to NEV between the China government and LMC ❖ BEV: battery electric vehicle ❖ PHEV: plug-in hybrid electric vehicle

Plug-in

Geely Kandi BAIC EU260 BYD Qin SAIC Roewe 550 ❖ EREV: extended range electric vehicle ❖ PFCEV: fuel cell electric vehicle

Lixiang One Honda Clarity

❖ MHEV: mild hybrid electric vehicle ❖ FHEV: full hybrid electric vehicle

Non-plug

▪ Subsidy will extend to 2022, but the amount will decrease slightly 0,000 RMB 6 2017 2018 2019 2020 2021F 2022F 1.4 2017 2018 2019 1.2 5 1 4 0.8 3 0.6

2 0.4

1 0.2

0 0 PHEV ≥50 100 - 150 150 - 200 200 - 250 250 - 300 300 - 400 ≥ 400 90 - 105 105 - 125 125 - 140 140 - 160 ≥ 160 BEV Range (Km) Energy Density (Wh/Kg)

Battery- Purchase Note: Swapped Tax Free - 23rd Apr to 22nd Jul 2020 is the Year 2020 2021 2022 Vehicles interim period

300,000 - subsidy only available for Decrease 10% 20% 30% vehicle’s price below 300,000 RMB RMB, except for battery- swapped vehicles © 2020 LMC Automotive Limited, All Rights Reserved. 4 Government Policy_Local Government

▪ Local governments offer some incentives on NEV since COVID-19 outbreak

25.03.2020/Beijing: 27.05.2020/Shaanxi: 10,000RMB per vehicle 6,000RMB per vehicle Add 20,000NEV car plates

09.04.2020/Ningbo: 10,000RMB per vehicle

23.04.2020/Shanghai: 5,000RMB for charging fee

03.03.2020/Guangzhou: 10,000RMB per vehicle 09.04.2020/Shenzhen: 08.05.2020/Hainan: 10,000RMB per vehicle 10,000RMB per vehicle

▪ Change of test procedure China Automotive Testing Standard Import Schedule Before 2025 After 2025 Gasoline Type Light Vehicle All types (CVW≤3.5t) Diesel WLTC Fuel consumption • Gasoline/Diesel • TCAFC will adjust Hybrid Vehicles WLTC Gaseous • Alternative fuel Vehicle CLTC according to WLTC • BEV CLTC • Fuel Cell Vehicles Plug-in hybrid Fuel consumption WLTC Electric consumption Fuel type Ratio WLTC/NEDC* Pure electric range Non plug-in hybrid Gasoline 1.22 Diesel 1.20 LPG 1.16 BEV Electric consumption Gas 1.36 CLTC Range HEV gasoline 1.32 FCEV HEV diesel 1.34 PHEV 1.00

After 2025, all vehicle types will change to CLTC Source: *Stefanos Tsiakmakis etc.. From NEDC to WLTP: effect on the type-approval CO2 emissions of light-duty vehicles © 2020 LMC Automotive Limited, All Rights Reserved. 10 Revised Dual-Credit regulation published

▪ Flexible relationship between NEV credits carry-forward and ICE’s CAFC

year +1 year +2 year +3 year +4

2019 NEV positive credit 100% 50% off 50% off

2020 NEV positive credit 50% off 50% off 50% off

퐼퐶퐸 퐶퐴퐹퐶 ≤ 123% 2021 or after 푆퐶퐴퐹퐶 NEV positive credit 50% off 50% off 50% off

Data source: MIIT, LMC Automotive

▪ a) New NEV quota is set for 2021-2023

▪ b) Standard credit per vehicle is declined

▪ c) New concept, LFC, is proposed previous new Year 2018 2019 2020 2021 2022 2023 required quota 8% 10% 12% 14% 16% 18%

BEV 0.012*R+0.8 0.0056*R+0.4

Standard credit per vehicle PHEV 2.0 1.6

FCEV 0.16*P 0.08*P

Low Fuel Consumption (LFC) Vehicle - 0.5 0.3 0.2

Data source: MIIT, LMC Automotive

Fuel Consumption Target Value 2021 LFC condition(123%) 2022 LFC condition(120%) 2023 LFC condition(115%) L/100km 9.00 LFC Assessment requirement: Comprehensive fuel consumption ≤ Vehicle target value x Annual compliance requirement 8.00

7.00 T=6.57

6.00

5.00

T=4.02 4.00

3.00 Curb Mass (kg) 1090 2510 Data source: MIIT, LMC Automotive

▪ LFCs has coefficient bonus when calculating the output

▪ It gives OEMs more options in powertrain fitment not only focusing on pure electricity

▪ Japanese OEMs will benefit from it as their have LFCs L/100km 9.00 2021 2022 2023 8.08 8.00 7.73

6.95 7.00

6.00 5.85 5.51 Odyssey HEV 5.17 5.00 Camry HEV Corolla HEV Accord HEV Crider HEV 4.00 1090 1350 1500 2000 2350 2510 kg © 2020 LMC Automotive Limited, All Rights Reserved. 15 What will be the impact by LFC?

▪ For example

NEV Credit

NEV Actual NEV Standard Credit Credit

Credit per NEV Total NEV Standard ICE Total NEV Vehicle Volume Percentage Volume

ICE LFC *0.5

Version 1.0 Version 2.0 ICE 30,000 30,000 Low fuel consumption* 20,000 20,000 NEV Percentage 14% 14% NEV Standard Credit (30,000+20,000)*10%=5,000 (30,000+20,000*0.5)*10%=4000 © 2020 LMC Automotive Limited, All Rights Reserved. 16 CAFC performance

▪ CAFC has met the target, but there is still lots of pressure in the following years

L/100km CAFC with NEV bonus* CAFC without NEV** 7.5 6.88 6.78 6.62 6.48 6 6.43 6.05 5.8 5.56 4.60 4.5

1.5

0 2016 2017 2018 2019 2023 Target

T CAFC credit = (TCAFC – CAFC) * output Year CAFC Multiple of vehicle/Wi L/100km ➢ TCAFC target is becoming smaller 2019 5.5 3.0 ➢ CAFC is becoming bigger due to W 푁 i 2020 5.0 2.0 σ 퐹퐶푖 × 푉푖 퐶퐴퐹퐶 = 푖=1 bonus coefficient 2021 4.9 2.0 σ푁 smaller 푖=1 푉푖 × 푾풊 2022 4.8 1.8 2023 4.6 1.6

▪ The more NEV share, the better CAFC performance

2017 2018 2019

Geely SAIC SAIC SAIC Geely GAC FAW-VW Brilliance BWM Brilliance BWM Brilliance BWM GAC-Toyota GAC-Toyota SGM FAW-VW Great Wall FAW-Toyota FAW-Toyota FAW-Toyota SVW SVW Geely GAC-Toyota Great Wall GAC-Honda Beijing-Benz Beijing-Benz DF-Honda DF-Honda DF-Honda SVW GAC-Honda GAC Beijing-Benz GAC GAC-Honda FAW-VW Great Wall SGM SGM Positive credit: Actual value < standard value Data source: MIIT LMC Automotive © 2020 LMC Automotive Limited, All Rights Reserved. 18 NEV credit performance

▪ NEV credit is surplus， but will decrease sharply under new regulation NEV credit per vehicle Actual NEV quota 4.20 4.10 22.8% units 3.60 20.2% 3.00 2.90 16.5%

2020 target 12% 6.8% 4.1%

2016 2017 2018 2019 2020 (Jan-Aug) 2016 2017 2018 20192020 (Jan-Aug)

units under previous policy under new policy 8

0 Tesla Model3 standard BYD Han Luxury NIO ES8 2020 415KM NIO ES6 2020 430KM Trumpchi Aion S Buick Velite6 range performance © 2020 LMC Automotive Limited, All Rights Reserved. 19 NEV market saw 29% decline in Q2

▪ Q2 market improved greatly from Q1, but demand was still at a low level 180 500% 160 400% 140 -24.0% 28.7%

Thousands 120 -30.8% 300% 23% EREV 100 -32.4% -47.0% -45.7% 200% 80 PHEV 60 -71.9% 100% BEV 40 0% YoY 20

0 -100%

Jul-18 Jul-19 Jul-20

Jan-18 Jan-19 Jan-20

Jun-18 Jun-19 Jun-20

Oct-18 Oct-19

Apr-18 Apr-19 Apr-20

Feb-18 Sep-18 Feb-19 Sep-19 Feb-20

Dec-18 Dec-19

Aug-18 Aug-19 Aug-20

Nov-18 Nov-19

Mar-18 Mar-19 Mar-20

May-18 May-19 May-20 180 160 140

120 2017 Thousands 100 2018 80 2019 60 40 2020 20 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data source: CAAM, LMC Automotive © 2020 LMC Automotive Limited, All Rights Reserved. 21 NEV sales decline by major segment and OEMs

NEV sales (Thousand)

-49% -64% -39%

-55% 118%

BEV sales (Thousand) PHEV sales (Thousand)

-54% -70% -85% -42% -37% -93% -71% -13% -55% -23% -39% -8%

60.0% KR

40.0% JP 20.0% EU 0.0%

201801 201802 201803 201804 201805 201806 201807 201808 201809 201810 201811 201812 201901 201902 201903 201904 201905 201906 201907 201908 201909 201910 201911 201912 202001 202002 202003 202004 202005 202006 202007 202008

PHEV 100.0% 80.0% 60.0% 40.0% 20.0% 0.0%

Data source: CAAM, LMC Automotive © 2020 LMC Automotive Limited, All Rights Reserved. 23 NEV market: a volatile environment continues… ▪ New start-up companies facing more direct competition from Tesla

▪ Meanwhile Tesla is struggling with disruption of supply chain due to low local content rate.

NIO Xpeng Weltmeister Model 3 (domestic) NIO share Xpeng share Weltmeister share Model 3 (domestic) share 16 25.0%

14 21.0% 12

Thousands 17.0% 10 13.0% 8 9.0% 6 5.0% 4 2 1.0%

0 -3.0%

Jul-18 Jul-19 Jul-20

Jan-19 Jan-20

Jun-18 Jun-19 Jun-20

Oct-18 Oct-19

Apr-19 Apr-20

Feb-20 Sep-18 Feb-19 Sep-19

Dec-18 Dec-19

Aug-18 Aug-19 Aug-20

Nov-18 Nov-19

Mar-19 Mar-20

May-19 May-20

BEV PHEV EREV 4,000

3,500 909

3,000 Thousands 2,500

2,000

1,500 3,025

230 1,000 296 212

114 500 792 882 795 94 61 466 0 124 227 2015 2016 2017 2018 2019 2020F 2025F

Data source: MIIT, LMC Automotive

US LV Electrification In Turbulent Times

Kevin Riddell, Senior Manager Global Light Vehicle Powertrain Briefing 8 October 2020

▪ June: Washington state adopted California ZEV regulations.

▪ June: The new SAFE regulations take effect.

▪ California restricted from instituting more stringent CO2 standards.

▪ August: California finalizes voluntary agreements with BMW, Ford, Honda, VW, Volvo to meet stricter fuel economy standards.

▪ August: A reduction in fines imposed by NHTSA for missing fuel economy targets reversed in U.S. Court of Appeals.

▪ September: Governor of California files and Executive Order that by 2035 new LV sales are to be Zero Emission.

VS.

Track record of reducing/removing Ensure the U.S. achieves a 100% environmental regulations to boost clean energy economy and net-zero the economy. emission no later than 2050.

70 60 50 40 30

20 Thousands 10 0

BEV FCEV PHEV HEV ▪ Despite steady supply of new products, increased sales has been slow.

▪ In first half of the year BEV sales down.

1,000 US LV BEV Sales • Coronavirus significantly 900 lowered near-term BEV sales. 800 2020 Outlook from 2019 Q4: 288,000 700 2020 Outlook from 2020 Q3: 215,000 600 500 BEV Topline Change: 25% 400

Thousands BEV Market Share: 1.5% 300 200 • BEVs stated as top priority. 100 • Stable incentives. 0

• Many new entries coming.

2019 2015 2016 2017 2018 2020 2021 2022 2023

EV segment trends – CAGR 2019-2030

Non-premium Segments 17%

23% 27% 3% 40%

SUV Pickup Car/Sporty MPV/Van

Premium Segments 15%

100% 23% 8% 7%

SUV Pickup Car/Sporty MPV/Van

Non-premium Segments 30%

51% 36% 2% 139%

SUV Pickup Car/Sporty MPV/Van

Premium Segments 10%

100% 27% 8% 2%

SUV Pickup Car/Sporty MPV/Van

© 2020 LMC Automotive Limited, All Rights Reserved. 10 Source: LMC Automotive Content ▪ US Electrification Environment ▪ US EV Sales Outlook ▪ North American EV Production Outlook ▪ Alternative Scenarios

4.5 ▪ BEV growth from 4.0 established OEMs 3.5 and startups. 3.0 ▪ BEV, FHEV, MHEV 2.5 production shares 2.0 Millions trending at similar 1.5 rates. 1.0 ▪ Electrification 0.5 strategy varies

0.0 significantly

2015 2016 2018 2019 2020 2021 2022 2023 2025 2024 2017 between OEMs. BEV PHEV HEV

Battery Requirements (GWh) for NA Light Vehicle Production ▪ Estimated 106 GWh 120 of storage capacity

100 required for 2025.

80 ▪ Larger battery packs accelerating the 60 curve.

40 Avg BEV pack capacity 20 (kWh) 2015: 57 0 2020: 72

2025: 86

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

© 2020 LMC Automotive Limited, All Rights Reserved. 13 Source: LMC Automotive Content ▪ US Electrification Environment ▪ US EV Sales Outlook ▪ North American EV Production Outlook ▪ Alternative Scenarios

3 2030 Change over Baseline Millions XEV: -14% 2 BEV: -24%

1 ▪ SAFE entrenched. No ZEV regulations.

▪ Higher percentage of HEV are 48-volt. 0 2018 2021 2024 2027 2030 ▪ BEVs still see significant growth, but slower.

HEV PHEV BEV ▪ California/OEM agreement supporting EV sales. © 2020 LMC Automotive Limited, All Rights Reserved. 15 Source: LMC Automotive Democrats Win in November, California Lawsuit Win US Light EV Sales

6 2030 Change over

5 Baseline Millions 4 XEV: +67%

3 BEV: +60%

2 ▪ State ZEV membership growing. 1 ▪ Larger infrastructure ease plug-in anxiety. 0 2018 2021 2024 2027 2030 ▪ Tougher future CO2 targets?

HEV PHEV BEV

▪ Highly fluid US market providing plenty of uncertainty for electrification rollout.

▪ COVID-19, SAFE regulations, SAFE litigation, presidential elections

▪ Many factors continue helping BEV sales increase.

▪ Consumer costs continue falling, more diverse products, sustained incentives, continued infrastructure investments

▪ NA EV production base remains important despite the US losing its global sales lead.

▪ Strong investments, high quantity of local talent

Can Europe Sustain Momentum Amid the Turmoil?

Al Bedwell, Director, Global Powertrain Global Light Vehicle Powertrain Briefing 8th October, 2020

On the whole, OEMs are striving to protect their xEV programs during the pandemic

• ID.3 build restarted in April with same 2020 New BEV model launches target – Norway’s top-seller in September 60 • Mercedes-Benz back on track to produce 50k EQC this year – the original target • Hyundai expands Kona Electric production in Europe to 30k to ease supply constraint 30 • Tesla is forging ahead with the European Gigafactory – wants to achieve what it did in Shanghai – a 10 month build • Porsche won’t cancel any projects. Taycan Cross Turismo has a minor delay (but 0 that’s due to strong demand for Taycan) 2016 2017 2018 2019 2020 2021 2022

Monthly PV BEV sales

Europe vol ('000s) Europe % 60 5 BEV share 2020 4 40 3 BEV share 2019 2

20 Share (%) Share

Sales (‘000s) Sales 1 0 0

Source: LMC Automotive Global Hybrid & EV Forecast Includes pan-Europe + CIS • …

© 2020 LMC Automotive Limited, All Rights Reserved. 3 Europe: Incentives+OEM Action Create Record BEV Sales Monthly BEV sales, ‘000s France Spain 16 25 Germany 5 Italy 3 25 UK 14 20 4 20 12 2 10 15 3 15 8 6 10 2 10 1 4 5 1 5 2 0 0 0 0 0

= Record BEV sales Source: LMC Automotive Global Hybrid & EV Forecast Includes pan-Europe + CIS • Many markets set BEV sales records, despite the patchy recovery in car demand • But will we see a cliff-edge decline when the boosted incentives expire? © 2020 LMC Automotive Limited, All Rights Reserved. 4 Europe: PEV* Market Moves into a Global Lead

PEV sales PEV sales 800 Jan-Jul: 2019 800 Jan-Jul: 2020

600 600

400 400

‘000s ‘000s 200 200 501 486 128 0 0 USA Europe China USA Europe China Source: LMC Automotive Global Hybrid & EV Forecast *PEV: Plug-in Electric Vehicle comprising BEV, EREV and PHEV Includes pan-Europe + CIS • For first time since the start of China’s NEV boom, Europe’s plug-in sales lead • Will China move ahead once more, or will Europe retain its position?

1.8 BEV 1.8 PHEV

0.9 0.9

Sales (mn units) (mn Sales Sales (mn units) (mn Sales

0 0.0 2020 2021 2022 2020 2021 2022 Q4 2019 Forecast Q3 2020 Forecast Q4 2019 Forecast Q3 2020 Forecast Source: LMC Automotive Global Hybrid & EV Forecast Includes pan-Europe + CIS • For BEV in 2020, incentives, OEM push & buyer awareness balance COVID-19

BEV sales Tesla sales Tesla sales Aug YTD 19 v. 20 Aug YTD 19 v. 20 Monthly 400 60

20 Q1 Q2 Q3 Q4 Q1 Q2 Q3

‘000s ‘000s

0 0 0

2019 2020 2019 2020

Jul-19 Jul-20

Oct-19

Jan-19 Apr-19 Jan-20 Apr-20

Feb-19 Mar-19 Jun-19 Feb-20 Mar-20 Jun-20

Sep-19 Dec-19

Nov-19

Aug-19 May-20 Aug-20 Source: LMC Automotive Global Hybrid & EV Forecast May-19 Includes pan-Europe + CIS • Is the competitor OEM BEV onslaught impacting Tesla, or is it a capacity issue? • July, August look poor, but Tesla’s sales are often loaded to quarter-end

BEV PHEV Mainstream models on sale Mainstream models on sale 200 200

255 100 100 222 170 144 122 137 71 82 31 0 22 30 0 24 2016 2018 2020 2022 2024 2026 2016 2018 2020 2022 2024 2026

Source: LMC Automotive Global Hybrid & EV Forecast Includes pan-Europe + CIS • Available PEV models jump from 77 last year to almost 300 by 2022

• PHEV is vital for meeting the next CO2 target, but then we think growth slows

100 20 BEV PHEV HEV PEV % ICE %

80 15 60 10 40

BEV= Sales of % 5 Sales (mn units)(mn Sales BEV= 8.8mn 20 0 3.8mn 0 2017 2020 2023 2026 2029 2032 Source: LMC Automotive Global Hybrid & EV Forecast Includes pan-Europe + CIS • More than 90% of passenger car sales will be electrified by early next decade • Plug-ins will account for 50%+ of the market, dominated by BEV

26 -12

YoY Monthly Variance (PP) Variance Monthly YoY

Diesel % of New Car Sales Car New % of Diesel

Apr-16 Apr-12 Apr-13 Apr-14 Apr-15 Apr-17 Apr-18 Apr-19 Apr-20

Dec-12 Dec-11 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19

Aug-19 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 Aug-20

Source: National Sources Figures include diesel hybrid ▪ Decline has slowed with YoY share falling at between 2 and 4 percentage points

▪ 2020 forecast: 28.7% (-3.3pp), with diesel still needed for CO2 compliance © 2020 LMC Automotive Limited, All Rights Reserved. 10 Europe: Diesel Outlook W. Europe Car Market Diesel volume (left axis) Diesel share (right axis) 8 50

32% 29% 4 25

4.6mn 7% 3.2mn Sales % of Diesel 1.1mn

New Diesel PV Sales (mn) Sales PV Diesel New 0 0

Source: National Sources, LMCA European Diesel Forecast; Includes diesel hybrid

▪ Diesel PV sales lose 2mn by 2032, becoming confined to the largest vehicles

Electrification

A selection of various battery trends

Sam Adham, Senior Powertrain Analyst Global Powertrain Webinar 8th October, 2020

700 10,000 EMEA cumulative ROW cumulative EMEA annual ROW annual 9,000 600 8,000 500 7,000 400 6,000 5,000 300 4,000

GWh annual GWh 200 3,000

2,000 cumulative GWh 100 1,000 0 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Source: LMC Automotive Global Light Vehicle Powertrain Forecast with Battery & eMotor Module • If 24 GWh each, implies a need for at least 25 European ‘Gigafactories’ by 2032 • Compare with ICE production: Currently 60 active engine plants in Europe • BEVs account for 70% of total GWh demand now, rising to 90% in the future © 2020 LMC Automotive Limited, All Rights Reserved. 2 Europe: Importing Battery Cells & Packs isn’t Sustainable Known and assumed major PEV battery production operations in Europe Operator Location Capacity Comment Northvolt Sweden 16 GWh initial, rising to 32 GWh Expected 2021. Supplying VW, BMW Northvolt Germany 16 GWh initial, rising to 32 GWh Expected Q1 2024. Supplying VW, BMW CATL Germany 14 GWh initial, rising to 24 GWh Expected 2022 LG Chem Poland 10 GWh initial, rising to 65 GWh In operation SK Innovation Hungary 7.5 GWh initial, 17.3 GWh by 2022 In operation Samsung SDI Hungary 3 GWh current In operation BYD UK ? Prospective. Potential JLR partner Britishvolt UK 10 GWh initial, rising to 30 GWh 2023. Prospective. Potential JLR partner Tesla Germany Would need to be ~8 GWh initially Planning Saft/PSA France 8 GWh initial, rising to 24 GWh Expected 2023 Saft/PSA Germany 24 GWh Expected 2023. Plant conversion Daimler Germany ? In operation; 2 plants; pack assembly Daimler Poland ? In operation; pack assembly VW Czech Rep. ? In operation; PHEV pack assembly FCA Italy ? In operation. Final assembly PSA Slovakia ? Final assembly Volvo Belgium ? In operation. Final assembly © 2020 LMC Automotive Limited, All Rights Reserved. 3 BEV Battery Technology Development Global BEV battery capacity trend – weighted average by volume advanced lithium 70 65 diminishing gains 60

55 optimised lithium

Capacity (kWh) Capacity 50

45 Weighted Average Average Weighted

Battery Battery 40 Source: LMCA Global Light Vehicle Powertrain Forecast with Battery & eMotor Module 35 2015 2020 2025 2030

NEAR TERM: IMPROVING LITHIUM-ION MID-TERM: ERA OF DIMINISHING GAINS LONG TERM: BEYOND LITHIUM-ION • New anode and cathode materials • Low-hanging fruit is harvested by • Battery cost and performance breakthrough • Stable and higher quality electrolytes this time, and any advance is • Solid state as an alternative to liquid electrolyte and additives minimal, before switch-over to • Li-Air, Li-S, as an alternative to li-ion • Better pack design and materials next-gen batteries • Next gen liquid, gel, polymer electrolytes to • Advanced control enhance performance of new anode and • Better manufacturing processes cathode materials © 2020 LMC Automotive Limited, All Rights Reserved. 4 BEV Battery Pack Price Outlook ▪ This curve represents market average – in reality the cost 1,000 depends on the segment, vehicle, Past 10 years: -$85/yr OEM, and cathode chemistry! 500 ▪ Current view is that Li, Mn, Co & $~150 Ni supplies will be sufficient to 0 keep up with demand, but prices will be spiky 160 $156 (BNEF), $150 (McKinsey) ▪ We aren’t assuming a 120 commercial-level battery $100 (BNEF) Next 10 years: -$8/yr breakthrough such as solid state 80

$62 (BNEF) before 2030 Pack Wholesale Cost ($/kWh**) Cost Wholesale Pack Incentives needed BEV-ICE cost parity* BEV-ICE profit parity* 40 ▪ The outlook from here is Li-ion with scale, optimisation and incremental gains

▪ LFP share suffered a collapse towards 2019, but 2019 2025 is bouncing back in China LFP NMCA NCA LFP LNMO ▪ NMC is dominant, but (?) cobalt-free imperative is driving development of NCA alternatives

▪ LNMO is what we’re NMC NMC assuming to be future chemistry for Tesla and SVolt

Source: LMCA Global Light Vehicle Powertrain Forecast with Battery & eMotor Module

Typical battery sizes by segment Source: LMCA Global Light Vehicle Powertrain Forecast with 25 Battery & eMotor Module ▪ In Europe, WLTP forced larger packs ▪ Will keep increasing with incremental 20 improvements in volumetric energy density 2015 15 2020 2025

10 Typical Battery Battery capacity [kWh] Typical 5

The European LCV xEV Market

David Leah, Senior Analyst Global Light Vehicle Powertrain Briefing 8th October 2020

3 Long term looks positive. Demand to be driven by various factors, such as:

Millions 2.75 Recovery 2.5 ▪ Shift in consumer behavior to online shopping/e-commerce COVID-19 2.25 Eurozone crisis impact ▪ Downsizing trends from HGVs to LCVs (agile supply chains) 2 -16% YoY ▪ Rise of last-mile delivery 1.75 ▪ Environmental Factors: rise in xEVs/CO targets/Incentives/ZEZs 1.5 2 /ICE bans/Social reasonability etc.… = boost renewals

2016 2018 2020 Key 0.5% 1.1% 2.4% xEV 4.9% 6.7% 5.7% Petrol Diesel

93.6% 91.2% 90.9% Other* CNG, LPG

1.0% 1.0% 1.0%

▪ xEV set to account for ~2.4% of sales in 2020 (2% YTD) ▪ xEV demand has increased at a CAGR of 48.6%, albeit low base ▪ Diesel has remained the dominant fuel type (TCO & >torque benefits versus petrol)

© 2020 LMC Automotive Limited, All Rights Reserved. 3 Current Situation Snapshot France market Total xEV sales Renault Kangoo leaders in volume +15% YTD best selling terms model ~6k 23k units YTD units YTD 1 2 3

~75% of xEV Norway highest 40% of xEV sales small sales = BEVs xEV market or car-derived sized vans share YTD

~7% Small vans 24% YTD 40% Medium vans

900 800 700 500 400 500 +0.1% 6,000 ~2.5% 100

900 800 800 800 700 600 +8% 5,500 ~3.5% 500 300

500 400 400 400 +210% 2,500 ~2.5% 300 200 100 100

260

1.6 100% Millions 1.2 80% ▪ BEVs to account for around a third of sales by 2032.

0.8 60% ▪ ICE vehicles set to account for around 50% of total sales by 2032. 0.4 40% ▪ Tipping point for LCVs to be around mid-2020 0.0 20% 2016 2018 2020 2022 2024 2026 2028 2030 2032 BEV PHEV HEV FCEV ICE %

Note: PHEV includes EREV.HEV includes MHEV (48V), MHEV & FHEV.

80 3 70

12 60 2 ▪ Average CO A seven fold 50 6 7 2 5 increase in model launches 40 between 2018 and 2025. 1 30 4 ▪ Competition set to intensify 2 48 20 43 putting pressure on OEMs. 10 23 6 10 0 2016 2018 2020 2022 2025 BEV PHEV HEV FCEV

Note: Includes Vans & Pick-ups only. PHEV includes EREV. HEV includes MHEV (48V), MHEV & FHEV

CO2 emission targets

200 2017: 175 g/km ▪ Average CO2 emissions of new 175 vans in the EU will have to be 2020: 147 g/km 15% lower in 2025 and 31% in 150 Historical emissions 2025: 125 g/km 2030 compared to the 2021 125 target. 2030: 101 g/km 100 ▪ The ZLEV credit system 75 enables OEMs with an xEV (0 to 50g/km) share >15% in 2025 50 and >30% in 2030 to benefit from less stringent CO 25 2 requirements (capped at 5%). 0 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Note: Figures are expressed in NEDC terms.*The binding emission targets for OEMs are set according to the average mass of their vehicles Source: European Commission; ICCT © 2020 LMC Automotive Limited, All Rights Reserved. 9 Industry Factors Incentives Tax Benefits Purchase Incentives Max (€) Subsidy Acquisition Ownership Company Car Incentives

≤20g CO2/km up to €7k subsidy ✓  ✓ ✓ (6k from 2021)

≤50g CO2/km up to €6k govt + €3k ✓ ✓ ✓ ✓ OEM subsidy (until 2022)

≤75g CO2/km & ≥16 km battery ✓ ✓ ✓ ✓ range = up to €8k subsidy

Tax based on Weight, CO2 & Nox ✓ ✓ ✓  levels: ~20 to 30% of passenger car rates ≥30 km battery range = €4.4k ✓ ✓  ✓ subsidy, rising to €6k if vehicle scrapped

 ✓ ✓ ✓ ≤60g CO2/km up to ~€6k subsidy

Source: ACEA

Proposed city-wide Zero Emission Zones (ZEZ)/ICE bans Scotland Oslo 2024 (2032) Netherlands London 2025 Amsterdam 2030 Norway Denmark UK France Paris 2024 2025 2030 2035 2040 ICE phase-out targets Rome Sweden Spain 2030

Iceland Note: On the whole, targets are progressive, starting in specific urban areas before expanding to entire city bans. In addition, some bans target diesel vehicles, others all ICE. Note: Phase out targets may exempt vans in some countries. *This slide does not include every country/city which Source: ICCT has announced ICE bans. © 2020 LMC Automotive Limited, All Rights Reserved. 11 Electrification

Global Summary

Al Bedwell, Director, Global Powertrain Global Light Vehicle Powertrain Briefing 8th October, 2020

Monthly PV* BEV sales

World vol ('000s) World % Linear (World vol ('000s)) Linear (World %) 200 3 150 2 100 1

50 (%) Share Sales (‘000s) Sales

0 0

Source: LMC Automotive Global Hybrid & EV Forecast *including N. America LV • Although volumes have suffered as a result of the pandemic, share is growing

World PV* sales Jan-Aug: 2020 vs. 2019 • World BEV PV sales from January to 0 August 2020 were 955k compared with Market BEV -8% 1,035k in the same period in 2019. -10 • The out-performance of BEV comes -23% despite China NEV sales being % hampered by reduced subsidies, some USA OEMs losing tax credit & cheap -20 gasoline almost everywhere. • It’s Europe that has driven the strong -30 performance. Tesla started the year well and there are more new models. But even ageing BEV models are in Source: LMC Automotive Global Hybrid & EV Forecast *including N. America LV demand, bucking the market.

Europe PV sales China PV sales NAM LV sales Jan-Aug: 2020 vs. 2019 Jan-Aug: 2020 vs. 2019 Jan-Aug: 2020 vs. 2019 60 60 60 40 40 40 +54%

20 20 20

% % 0 % 0 0 Market BEV Market BEV Market BEV -20 -20 -20 -16% -23% -20% -40 -34% -40 -26% -40 Source: LMC Automotive Global Hybrid & EV Forecast

• Europe’s BEV sales have greatly outperformed the market while China’s have been curtailed by policy changes, and the USA’s have tracked LV sales closely

World PV market (inc. NA LV) World PV BEV market (inc. NA LV) 80 1.9 -17% 1.8 +11%

60 80mn 1.7 1.8mn

67mn (mn) Sales 1.7mn 1.6

40 1.5 2019 2020 2019 2020 Source: LMC Automotive Global Hybrid & EV Forecast

▪ The positive result for BEV demand this year is entirely due to Europe

Global PEV Outlook by Major Market (mn units) 16mn BEV 0.6 3 12 20 4mn PHEV China Europe NAM 2 8 0.4 World 10 0.2 1 4

0.0 0 0 0 2015 2020 2025 2030

• Our analysis suggests that Europe retains the lead in plug-in sales this decade

Data source: MIIT, LMC Automotive

BEV 21% 20 All xEV 53%

10 PHEV

Sales (mn units) (mn Sales 5%

0 2017 2020 2023 2026 2029 2032 BEV PHEV HEV** FCEV Source: LMC Automotive Global Hybrid & EV Forecast *Including n. America light truck ** Full hybrid + mild hybrid + mild hybrid (48V) • Global PV electrification achieves more than 50% within 12 years

World BEV PV market* World xEV PV market* 20 50

Q3 2020 40 Q3 2020 Q4 2019 Q4 2019 30 10 20

Q4 19: 2020-31 - 111 mn Q4 19: 2020-31 - 356 mn

Sales (mn units) (mn Sales 10 Sales (mn units) (mn Sales Q3 20: 2020-31 - 115 mn Q3 20: 2020-31 - 350 mn 0 0

• There may be a net positive influence in BEV demand resulting from a reluctance to revert to the use of public transport (especially in China). • COVID-19 and the resulting improvement in air quality may act as a focal point for public opinion to shift in favour of faster elimination of fossil fuel emissions. Source: LMC Automotive Global Hybrid & EV Forecast © 2020 LMC Automotive Limited, All Rights Reserved. *Includes N. America light truck 20

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