Hybrids Electric Vehicles Slides Revue Chris

Hybrids & Electric Vehicles Challenges and Opportunities Pascal Colombani Chairman, Valeo

Sharing Knowledge Conference Mövenpick Hotel by the Dead Sea, Jordan, March 1, 2010 Context and customer attitude

Hybrid worlds and technical considerations

Industrialization and markets

Infrastructures and new business models Environmental concerns, Security of Supply, CO2 Regulations

L/ 100 km - g CO2/km 11 260 USA

10 240

9 220 200 8 JAPAN 180 Federal 7 160 6 140 EUROPE California ?

5 120

100 4 Source: International Energy Agency 80 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

CO2 Reductions driven by regulations AND enduser expectations

March, 1 2010 © Valeo 2009 3 I Millions of electric vehicles ?

EV / PHEV / HEV experimentations in Europe

"The future belongs to the electric Amsterdam Denmark vehicle – using electricity from the power plug" Martin Winterkorn, CEO Volkswagen, 2008 London Berlin

"The Obama-Biden comprehensive New Energy for America plan will put 1 million plug-in hybrid electric cars on the road by 2015" Strasbourg Munich Barack Obama, President of the United States

"Millions of electric vehicles will be rolling on German roads within the next Portugal Bregenz 20 years" Jürgen Gromann, CEO RWE

Spain Monaco Milan, Pisa "Americans need one electric car per & Roma household. That's 100 million cars right there. And it can be done" Shai Agassi, CEO Better Plance Nice to have or must have?

Source: A.T. Kearney March, 1 2010 © Valeo 2009 4 I Automotive demand 2007 - 2008

Alternative Drive in the Future* 2007 2008

Europe USA Japan China Which System would you prefer?

Natural gas drive 12,7% 4,1% 2.1% (combustion engine driven by natural gas) 8,5% 1,7% 15,7%

Hybrid drive 12,5% 26,6% 37,1% (combination of electric engine and combustion engine) 21,2% 34,5% 41,2%

Hydrogen drive 12,4% 8,6% 6,1% (combustion engine driven by 8,8% 7,3% 3,1% hydrogen)

Ethanol drive 9,2% 18,6% 2,1% (combustion engine driven by ethanol respectively bi-fuel ,ethanol + 4,2% 5,7% 7,5% petrol) Fuel cell 4,7% 7,8% 6,3% (hydrogen fuel cell supplying the 3,8% 7,4% 3,4% electric engine with electricity) Don't know 48,6% 34,3% 46,2% 29,1% 20,1% 8,2% Don‘t consid. Alt. drive 20,9% 17,1% 21.0% 2007 In % In % In % In % * Prospective Car Buyers, n = 1.394 2008 *Brand new car Buyers : 1790 *Brand new car Buyers : 782 * Prospective Car Buyers, n = 2347

March, 1 2010 © Valeo 2009 5 I EV technologies' CO2 equation is not obvious, depending on the power source and traditional engines improvements

CO2 emissions – well to wheel balance for an average car - CO2 g/km - Well Tank Wheel

Fuel/Gasoline * 120 - 180 145 - 205

Gasoline Hybrid(1) * * 90% Fuel/Gasoline reduction * * – 2020 estimate(2)

95% nuclear power ~15% and renewables reduction

European average electricity mix(3)

Electric drive Electric 0% nuclear power and renewables

Notes: (1) Gasoline hybrid assumed to have 25% lower fuel consumption in combined city and highway driving (2) 30% reduction in oil consumption in 2020 (3) 35% nuclear and renewables in 2009 Source: A.T. Kearney March, 1 2010 © Valeo 2009 6 I Two hybrid worlds

Micro to Mild Hybrid World EV to Full Hybrid World

Hybridization aiming at assisting Hybridization aiming at running the combustion engine the vehicle by electric propulsion

st Valeo launched their 1 Stop- From 1995 to 2005, Valeo Start in 2004 with Valeo’s StARS developed electric drivetrain (belt drive) system on the systems for the French OEM’s Citroën C3. Reinforced starters Peugeot/Citroën and Renault have been added to complete our micro-hybrid offer More than 12 000 EV vehicles, more than 1 billion km driven

StARS ReStart

March, 1 2010 © Valeo 2009 7 I Hybrid / Electrical Vehicles on the market

Stop-Start Mild Hybrid Full Hybrid Plug-In Hybrid Full Electric

BYD F3DM Nissan Leaf

Toyota Prius 3 iMiev Ford Fusion

Mercedes S400 GM Volt Renault ZE Saturn View Smart mhd Toyota Prius3 + Electric Drive Smart Honda Insight + Electric Take-off Saturn Aura + Engine Assistance

BMW 1&3 + Kinetic Energy Recovery Stop & Start

March, 1 2010 © Valeo 2009 8 I The Electric Vehicle landscape will be a continuum of powertrain solutions

Future Passenger Car powertrain Portfolio

Powertrain Primary and secondary Primary and secondary concept powertrain energy storage

Combustion Gasoline / Conventional engine Diesel tank

Medium size Hybrids Small battery (series / parallel) electromotor

Medium size Plug-in Hybrid Medium size gasoline / battery diesel

Electric Large size Electromotor vehicle battery

Fuel cells Fuel cell H2 tank

Source: A.T. Kearney March, 1 2010 © Valeo 2009 9 I Lithium-ion battery, a major building block of EV

Lithium-ion battery production & assembly value chain

Cell materials Cells Battery pack Precursors Recycling Cathode Anode Electrode Electrode Battery active mat. active mat. Electrolytes Separators base material processing Cells pack Electronics

End product of VC step: •Intermediate •Active •Active •Electrolytes •Separators •Complete •Complete •Raw pro-ducts material material ready-to-use ready-to-use cells based battery pack materials between raw ready-to- ready-to- for cell for cell manu- on consisting of and waste materials use for use for manu- facturing electrodes, cells, battery after (often from cathode anode facturing •Polyolefin- separators management deconstruct mining), e.g. production production •Powder form based film/ and system, ing the cobalt metal, at cell at cell or liquid semi- electro- cooling battery lithium, and supplier supplier permeable lytes system and pack active •Powder •Powder membrane or housing materials form form polymer- •Powder form matrix incl. ceramics Example: •CoO2 •LiCoO2 •Graphite •3M's •LG Chem's 'Sa- •A123's •Valence's •Various flourinated fety Reinforced high power automotive metals, e.g. lithium salts Separator' coated "AHR32113 battery pack cobalt with ceramics M1Ultra" cell Within the Lithium-ion battery value chain, initial steps are material driven, later ones are mechanics & electronics

Source: A.T. Kearney March, 1 2010 © Valeo 2009 10 I Asian suppliers dominate battery markets – OEM have struck alliances on cells and packs with key suppliers Key player groups entering automotive LIB market and profit pool - Estimated margin and turnover 2020, bn$, % -

Raw materials Chemical companies Cell & pack manufacturers Today's comp. player groups

Precursors Cell materials Cells Battery pack Recycling

10-15%

Margin 6-10% 6-12% 5-10% 18,7 Market size, 9,1 51,4 86,7 0-5% bn$ 0,6 * * * * *

Raw materials Chemical companies Cell & pack New comp. manufacturers Player OEM groups suppliers OEMs

Source: A.T. Kearney March, 1 2010 © Valeo 2009 11 I Longer term considerations

Lower cost Li-Ion batteries

Optimization of engine electronic management

Optimization of comfort, security, lighting (LED), thermal equipment, solar panels

More radical solutions with a rethinking of vehicle architecture

Battery cost will decrease but remain high

Fast recharge of battery

Fast change of battery

Deployment and cost of infrastructures

CONVENTIONAL 95%

Emergence of StopStart Emergence of Electric Stop-Start MILD 5% FULL EV

Extract from PTE TDP 2010-2020 Source: PTE Hybrid Database – Release July 2009 March, 1 2010 © Valeo 2009 15 I New EV-mobility business model will arise, e.g. Renault & Better Place or Bolloré concept

The Renault-Better Place project (Israel) The Bolloré concept

"Raw" vehicle Battery Power supply (without engine) ~10 000 & assistance Partnerships 10-15 000

•Leasing

•Battery swap •Fast charging •No specific •Normal charging infrastructure

Optimal Partnerships Political Technology Sourcing geography support

50 km

Source: A.T. Kearney March, 1 2010 © Valeo 2009 16 I Other players can be attracted by new business models in the EV-mobility market

Distribution of electric cars Charging of electric vehicles Charging Infrastructure

Network of ~ 500 agencies

•Possible mandatory pressure of public authorities to install charging stations to get additional Own concessions maintenance network Fuel Distribution

•Use of commercial presence •Knowledge of automotive market, as well as maintenance capacities •Pro's: diversification & image, control of distribution •Possible "dual" offering: EV-week & petrol- turnover erosion weekend •Con's: resale of electricity with limited added-value

Users

Energy Automotive Equipment companies players providers (OEMs & suppliers)

Public authorities

Source: A.T. Kearney March, 1 2010 © Valeo 2009 18 I Major actors as well as new entrants have a potential to occupy the EV landscape Consumer Leasing and associations financing companies Fleets Battery suppliers

Users Utilities Infrastructure

Energy Automotive Equipment companies players providers Chemical companies

Petroleum Companies Public Communication authorities Electronics Municipalities and governments Regulative / tax / subsidies