ELECTRIC CARS AN OVERVIEW OF THE INDUSTRY AND ASSOCIATED TECHNOLOGY Table of contents

Technology: The road to greater range and faster charging Adoption: The drivers behind demand

▪ Batteries ▪ Sales growth

▪ Range ▪ Penetration rate

▪ Charging infrastructure ▪ Sales potential

Investment: The ideas leading to innovation Revenue: The segments and regions of growth

▪ Auto industry R&D ▪ Market growth

▪ EV investments ▪ market size

▪ Patents ▪ EV battery market size

Production: The leading regions, companies, and models Sustainability: The issues that need to be tackled

▪ Assembly ▪ Transportation-related emissions

▪ Manufacturers ▪ Renewable sources in power generation

▪ Models ▪ Materials used in batteries

2 Executive Summary

The history of motor vehicle manufacturing can be compared to a long and winding road which began in the second half of the 19th century. Although the early 20th century saw the electric car accounting for about one third of road vehicles in operation in the United States and Europe, this type of vehicle quickly became marginalized by diesel and gasoline-powered automobiles, including Ford’s Model T. The so-called Tin Lizzy was built at such an exceptionally low cost that it became hard for electric vehicles (EVs) to compete. The superior driving range of the internal combustion (ICE) used in gasoline and diesel-powered cars, coupled with a growing number of gas stations which made refueling quick and easy, added further to the decline in the electric car’s popularity. However, the love for diesel and gasoline-powered vehicles among customers in Europe and North America still took some unexpected turns between 1973 and 2011. During these four decades, several instances of fossil fuel shortages roiled the world’s leading economies and affected the prices of petroleum products. Additionally, some countries began to introduce higher taxes on fuel to incentivize ecological sustainability. Since the first United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties was held in 1995, the rise of greenhouse gas (GHG) emissions has raised concerns among the United Nations member states that greenhouse gases will increase surface temperature levels and thus lead to the destruction of the earth’s ecosystem. Considering that the transportation sector is one of the leading producers of greenhouse gases, cutting GHG emissions from car travel has emerged as an effective way to curb emission growth. In light of these efforts to tackle GHG emissions, passenger electric vehicles have made a comeback: If electricity from renewable energy sources is used to fuel them, EVs have the potential to play a vital role in the reduction of carbon dioxide and nitrogen oxide emissions. This is an even more important undertaking today, as the light vehicle market has increased tremendously over the past two decades, approaching the 100 million vehicle sales mark. Batteries remain the electric car’s greatest vulnerability. Recharging will have to become easier, and range will have to improve. In the end, EVs can only be environmentally benign if the industries providing the commodities used in electric vehicle batteries are able to reduce their impact on the planet.

3 Electric vehicle timeline

1832 Robert Anderson creates the first crude electric carriage 1900 Ferdinand Porsche develops the world’s first hybrid 1935 Gasoline-powered cars force EVs out of the market 1996 General Motors launches the EV1 1997 Toyota releases the Prius - the first mass-produced hybrid car 2008 Tesla Motors launches its Roadster, an all-electric luxury BYD releases the F3DM - the world’s first plug-in hybrid compact 2010 General Motors introduces the Chevy Volt - the first mass-produced plug-in hybrid; Nissan releases the all-electric Leaf 2014 sales surpass the 100,000 unit mark 2018 The Model 3 becomes Tesla’s best-selling model

4 01 Technology: The road to greater range and faster charging ▪ Batteries ▪ Range ▪ Charging infrastructure Improved battery technology is the key to competitiveness

While Toyota is betting big on fuel cell electric vehicles (FCEVs), many other carmakers are focusing on battery technology. There are two major categories of batteries holding the potential to power EVs: solid-state batteries and liquid electrolyte batteries. While solid- state batteries for EVs have not yet reached market commercialization, the latter have been used in EVs for many decades. In 2016, the lithium-ion batteries in some Samsung Galaxy Note 7 devices caught fire and exploded. This incident shows how difficult it is to manufacture lithium-ion batteries that are both efficient and stable. When the EV battery industry began to add nickel to their battery cells to increase the range of electric vehicles, the inclusion of cobalt and manganese was required to prevent the battery from losing stability by controlling how nickel and lithium ions move between the battery cell’s anode and cathode. ▪ Research into technology aims to achieve the following: › low costs › high capacity and stability › quick and easy recharging ▪ 50 percent of BEV manufacturing costs are powertrain-related ▪ Declining battery costs are expected to push electric vehicle sales ▪ Finding the right material mix will be key to winning the EV battery race ▪ Consumers demand higher range, lower costs, and easier access to charging infrastructure ▪ Electric vehicle energy charging demand will push electricity use in the United States – and probably across all other markets too

6 50 percent of BEV manufacturing costs are powertrain-related As of 2018, the costs unrelated to the electric powertrain in a (BEV) only account for about 50 Share of BEV manufacturing costs in 2018 percent of the overall 0 10 20 30 40 50 60 manufacturing costs. Battery cells currently Battery cell 25 account for around 25 percent of costs attributed to the manufacturing of all- electric vehicles, and thus hold the greatest potential and power electronics 15 for cost reduction.

Battery integration 10

Costs unrelated to the powertrain 50

Note: Worldwide Source(s): JPMorgan Chase; BCG 7 Lithium-ion battery pack costs are set to reach a record low in 2019 This year, lithium-ion battery pack costs are expected to drop to 158 U.S. dollars per kilowatt hour. 1200 Estimated cost in 2018 in U.S. dollars per battery pack Battery pack costs are 0 500 1000 1500 2000 driven by size, production 1,000 1000 volumes, and costs Cobalt 1,764 attributable to the commodities used in the 800 manufacturing process. Electric vehicles may be 599 Nickel 1,433 less vulnerable to fossil 600 fuel prices, but they continue to be susceptible

400 to a volatile commodity Lithium carbonate 1,005 market. As a result of 273 cobalt’s contribution to EV 200 158 battery pack costs in 2018, automotive manufacturers

Costs between 2010 and 2019 in U.S. dollars per kilowatt hourkilowatt U.S. perdollars in 20192010andCosts between Graphite 536 and suppliers are now 0 seeking alternatives to this 2010 2013 2016 2019* commodity and other expensive materials.

Note: Worldwide Source(s): Bloomberg New Energy Finance; Bloomberg; PwC; Strategy&; Various sources 8 Battery chemistry trends diverge between China and the rest of the world By 2020, natrium- manganese-nickel (NMC) battery cathodes are LMO LFP NCA NMC-622 NMC-811 expected to include more 120.0% nickel than today’s batteries and the cobalt content in the more novel

100.0% NMC-622 and NMC-811 types is projected to be 15% significantly lower than in 32% the NMC-111 batteries that 80.0% are used most commonly today. Taking into consideration that cobalt 60.0% prices rose fourfold between 2016 and 2018, 40% 73% the trend towards lower

40.0% cobalt levels may make Projected market share in 2020in sharemarketProjected EV batteries more cost- effective in the long run.

20.0% Concurrently, the level of 26% nickel in the NMC-811 and 2% the nickel-cobalt-aluminum 10% 2% (NCA) variants is set to 0.0% Worldwide (excluding China) China exceed the 80 percent mark, leading to enhanced battery capacity. Note: Worldwide Source(s): McKinsey 9 Battery chemistry composition is expected to drive mild increases in battery capacity levels

Plug-in hybrid electric vehicles Battery electric vehicles

50 45 45 43 41 40

35

30

25

20

15 10.2 10.6 11

Estimated battery capacity in kilowatt hoursincapacitykilowatt battery Estimated 10

5

0 2017 2021 2025

Note: Worldwide Source(s): Various sources; BMO Capital Markets 10 Consumers are expected to welcome the converging range gap between electric and ICE cars

EV range in kilometers Share of respondents surveyed in 2018 who will not consider buying 500 EV 0.0% 10.0% 20.0% 30.0% 40.0% 450 440

Price/cost 35% 400 380

350 Charging 24% 300 300

Range 18% 250

200 Uncertainty about future Cost reductions, 12% tech developments better charging 150 infrastructure, and longer 100 Suitability for daily use 11% ranges will help convince those 50 who said they Image 1% would not switch 0 to an electric car 2020 2025 2030 in 2018.

Note: Worldwide; 18 years and older; 2,028 Respondents; Source(s): Oliver Wyman; VDA; Merrill Lynch; KPMG 11 Electric vehicle public charging infrastructure growth is waning globally

80.0%

71% 69% 70.0%

60.0%

50.0%

40.0% 33%

30.0%

20.0% EV public charging infrastructure percent growth percentinfrastructurechargingpublic EV

10.0%

0.0% 2015 2016 2017

Note: Worldwide Source(s): AlixPartners 12 Range anxiety remains a common concern among those consumers who are hesitant to purchase an electric car. In addition to this, consumers are concerned that the electric car charging infrastructure in place today is not yet sufficient for widespread, carefree recharging. No matter how much the number of charging outlets has grown over the past decade, consumers want to be able to recharge whenever their battery is low – and they want to do it fast.

13 Slow Fast Number of chargers was not equally Number of EV chargers in 2017 0 50000 100000 150000 200000 250000 distributed across markets in 2017 China Consumers cannot yet United States expect to find a charging outlet whenever they need Netherlands it although the number of electric vehicle supply Japan equipment (EVSE)

Others chargers grew a thousandfold between Germany 2007 and 2017. Moreover, there is a France distinction between slow

United Kingdom and fast chargers, different socket standards, and Norway payment methods, making it even more difficult for Canada consumers to find the charging point they need. Korea

Sweden

Note: Worldwide Source(s): IEA; EAFO 14 Despite being the second largest sales market for electric vehicles, the United States trailed most countries in terms of electric vehicle charging density in 2017. In addition to this, the charging outlets that do exist are provided by a number of charging networks using varying standards in terms of plug size and power limits.

15 Electric vehicle charging infrastructure fragmentation left consumers confused in 2018

Number of charging outlets as of July 18, 2018 by network 0 5000 10000 15000 20000 25000 30000

ChargePoint 23,992

Tesla 7,758

Blink 3,494

SemaConnect 2,657

EVgo 2,372

Greenlots 992

Note: United States Source(s): Alternative Fuels Data Center; Automotive News 16 Energy demand for electric vehicle charging is expected to be highest in North America by 2030

Projected demand in 2030 in megawatt hours 0 50 100 150 200 250

North America 78.74

China 68.32

Europe 34.16

Japan 10.17

Worldwide 207.99

Note: Worldwide Source(s): Wood Mackenzie; Bloomberg 17 Electric vehicle energy charging demand will push electricity use in the United States

EV charging demand in billion kilowatt hours Electricity use in billion kilowatt hours 60 6000

53 5,193 4,932 50 5000 4,712 4,509 4,352 4,203 4,039 40 4000 3,853

30 3000

23

20 2000

10 1000 6

0 0 2020 2025 2030 2017 2020 2025 2030 2035 2040 2045 2050

Note: United States Source(s): McKinsey; EIA 18 02 Investment: The ideas leading to innovation ▪ Auto industry R&D ▪ EV investments ▪ Patents Investments are the foundation on which the industry stands

Investments need to be made not only in the field of electric vehicle-related battery technology, but also with regards to the sufficient provision of charging outlets. Providing the infrastructure for all the various types of electric vehicles proves to be a difficult task, after an entire industry had focused on diesel and gasoline-propelled motor vehicles for almost a century. The tightening of environmental regulation puts pressure on carmakers and suppliers alike to invest in emerging electric vehicle technologies. The shift away from internal combustion may not come without risks, but the introduction of new technologies offers additional opportunities for automotive suppliers and manufacturers. While some original equipment manufacturers (OEMs) in the motor vehicle manufacturing and parts industry started shifting their attention towards the connected driving and mobility services realms, others have made it paramount to invest in green vehicles: • Globally operating traditional automakers invest most heavily in R&D activities • Tesla has the highest R&D intensity in the industry • France is the leading European nation in terms of electric vehicle-related technology

20 „ “I hope you will still recognize us as being the inventor of the car, but we should be defined by our future, not by our past.”

– Dieter Zetsche, Chairman of Daimler AG and Head of Mercedes-Benz Cars

21 Traditional OEMs invest most heavily in R&D activities Traditional automotive OEMs were the ones investing most heavily in R&D spending in FY 2018 in billion U.S. dollars research and development 0 2 4 6 8 10 12 14 16 18 (R&D) activities during the 2018 fiscal year.

Volkswagen* 15.53 That said, the highest ratio of R&D spending to revenue was yielded by a firm with a comparatively Daimler* 10.36 small sales base: Tesla.

Toyota** 9.58

Ford 8.2

General Motors 7.8

Note: Worldwide Source(s): Statista; Volkswagen; Daimler; Toyota; Ford; General Motors * VW: the value refers to R&D costs in the automotive division; VW & Daimler: These figures have been converted at the following rate, correct as of March 1, 2019: 1 euro = 1. 13835 U.S. dollars; ** this figure has been converted at the following rate, correct as of March 1, 2019: 1,000 Japanese yen = 9. 00558 U.S. dollars; the figure is for FY ended March 31, 2018. 22 R&D intensity by carmaker as of June 2018 Tesla outperformed its larger 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% competitors in terms of R&D to sales ratio in 2018 Tesla 11.7% The following list includes a selection of investments and partnerships: Volkswagen Group 5.7% ▪ Daimler: invests in ChargePoint, collaborates with BYD, is part of IONITY Honda 5.4% ▪ BMW: invests in ChargePoint, is part of IONITY, collaborates with Umicore, Ford 5.1% Northvolt ▪ VW: invests in ChargePoint , is part of

Isuzu Motors Limited 5% IONITY ▪ Ford: is part of IONITY

BMW 5% ▪ GM: invests in Evgo ▪ Hyundai: collaborates with Hawtai General Motors 5% ▪ Delphi: is owner of NuTonomy ▪ Shell: is owner of NewMotion, invests in Renault 4.4% Sonnen ▪ BP: invests in PowerShare, FreeWire, Suzuki Motors 4.4% StoreDot, Chargemaster ▪ Total SA: is owner of G2mobility, Saft SA, collaborates with Nexans Note: Worldwide Source(s): PwC; Strategy&; Various sources According to the source, all sales and R&D expenditure values in foreign currencies were converted into U.S. dollars at an average of the exchange rate over the relevant period; all figures are for the last fiscal year, as of June 30, 2018. 23 Daimler and Tesla dedicated ~ 90 percent of patents to green vehicles between 2012 and 2016

0 10 20 30 40 50 60 70 80 90 100

Daimler 90.4

Tesla 90.4

VW 84.2

Audi 77

BMW 76.3

GM 35

Note: Worldwide Source(s): Oliver Wyman; WIPO

24 Globally operating carmakers are projected to account for almost two thirds of investments in 2023

Projected R&D funding in 2023 by investor in billion U.S. dollars 0 50 100 150 200 250 300

Globally operating OEMs 184

Chinese OEMs 32

Globally operating suppliers 21

Chinese suppliers 10

EV niche OEMs 9

Total 255

Note: Worldwide Source(s): AlixPartners 25 Qualcomm has filed one of the most valuable patents in the field of EVs Qualcomm’s 2017 R&D costs-to-revenue ratio was comparatively high with around 25 percent. The company filed some 2,163 4500 4,024 patents in 2017. 4000 3500 2,965 In 2018, an EV wireless 3000 2,637 2,521 2500 2,163 charging patent application 1,945 1,818 2000 1,757

2017 was submitted on behalf of 1500 1000 Qualcomm and approved 500 by the USPTO.

0 Number of applications inapplications Numberof Huawei ZTE Corp. Intel Corp. Mitsubishi Qualcomm Inc. LG Electronics BOE Samsung Technologies Electric Technological Electronics It was considered a Group scientific breakthrough and acquired by WiTricity in 2019. 30.0% 25% 25% 25.0% 22% 20.0%

15.0%

10.0% share of revenueshare

5.0%

development costs as aas costs development Qualcomm’s research and researchQualcomm’s 0.0% 2016 2017 2018

Note: Worldwide Source(s): WIPO; Qualcomm 26 9000 Moderate 8,500 growth in

8000 EV-related 7,500 patent filings 7000 can be anticipated 6000 Most electric vehicle-

5000 related

patents were related patents filedpatentsrelated

- granted in the 4000 electric propulsion and Number of EV Numberof 3000 secondary cell manufacturing

2000 segments, with most of the activity 1000 occurring in China and the United States. 0 2018 2020

Note: Worldwide Source(s): Power Electronics World (powerelectronicsworld.net) 27 Technology Industry Market France seemed better equipped in terms of technology than other Index score 0 2 4 6 8 10 12 European markets in 2018 Not only is France home to some of the China 0.9 5 5 world’s leading automotive manufacturing groups, such as Groupe Renault and Groupe PSA, but the country is also the domestic market of Total SA-owned Saft U.S. 1.8 4.6 4.5 Groupe SA, one of the few battery manufacturers in Europe with an international presence. Japan 1.8 4.3 4.2 France’s carmakers offer a range of electric vehicles in the non-premium segment, including Europe’s second-best-selling all- Germany 2.2 3 5 electric car, the Renault Zoe.

France 2.9 1.5 5

South Korea 2.1 3.8 3.1

Note: Worldwide Source(s): Roland Berger; fka

The indicators are defined by the source as follows: Technology: Current status of electric vehicle-related technology developments made by domestic OEMs, and national subsidy program support Industry: National vehicle, system and component production industry added value 28 Market: National electric vehicle market size based on current customer demand 03 Production: The leading regions, companies, and models ▪ Production volume ▪ Models ▪ OEMs „ “The first step is to establish that something is possible; “ then probability will occur.” – Elon Musk, CEO of Tesla, Inc. and SpaceX

30 Production volumes are beginning to pick up after a slow start

Policymakers saw the opportunity to replace ICE cars with electric vehicles as soon as the effects of road transportation on air quality became apparent. However, the CEOs of traditional carmakers, such as Volkswagen or General Motors, seemed to lack the imagination to believe in the electric vehicle’s success for the best part of two decades. Some 16 years after Tesla’s founding, traditional automotive manufacturers have likely turned a corner, and, along with new entrants from the Chinese mainland - including BYD, Chery, and Hawtai - they are now hot on Tesla’s heels. It is expected that over 30 million hybrid cars and plug-in electric vehicles will be produced by 2025, with battery electric vehicles accounting for almost 50 percent of total production. ▪ Worldwide production volume of all-electric vehicles is expected to grow fourfold ▪ Growth is expected to be highest in the plug-in electric vehicle segments, but hybrid production will continue to rise ▪ China is predicted to remain the largest market in terms of electric vehicle production by country ▪ Additional model launches are expected to trigger consumer demand

31 Battery and plug-in hybrid vehicles are projected to experience the highest growth

16 12 14.8 10.5 14 10

12

8 10

8 6

6 BEV production in millionsin production BEV

PHEV production in millionsin production PHEV 4 3 4 3.5

2 2

0.5 0.2 0 0 2015 2020 2025 2015 2020 2025

Note: Worldwide Source(s): McKinsey 32 6 Hybrid production will continue despite 5.4 smaller output levels

5 The production of hybrid electric vehicles is projected to grow to about 5.4 million units globally by

4 2025. This volume is significantly lower than the anticipated 10.5 million units in the 3 2.9 plug-in segment and the 14.8 million units in the battery electric vehicle Hybrid EV production inmillions productionHybrid EV 2 segment but the market is still likely to grow.

1.2

1

0 2015 2020 2025

Note: Worldwide Source(s): McKinsey 33 Asia will remain the leading producer of electric vehicles throughout 2030

Expected xEV production volume by 2030 in million units 0 5 10 15 20 25 30 35 40

Asia* 37.6

Europe 16.5

North America 4.4

South America 0.8

Middle East and Africa 0.4

Note: Worldwide Source(s): IHS Markit * The figures for India, China, Japan, South Korea, and the ASEAN region have been added up. The term xEV refers to battery and plug-in hybrid vehicles. 34 EV* production in 2021 in thousand units China will continue to lead on a 0 1000 2000 3000 4000 5000 6000 7000 8000 country-by-country level through ‘21 The following list presents a selection of China 6,843 announcements on EVs made by OEMs: ▪ Toyota is expected to release 10 EV models by 2020

United States 3,058 ▪ VW is committed to launch more than 50 BEV models by 2025 ▪ Renault-Nissan wants EVs to account for 20 percent of sales by 2023 Germany 2,247 ▪ GM will launch two EV models in 2019

▪ PSA is to launch 27 EV models by 2023 Country

Japan 1,023 ▪ Ford plans to release 40 EV models by 2022 ▪ By 2022, Daimler plans to release 10 EV models France 763 ▪ BMW is expected to launch the Mini E, the i5, and the X3 i between 2019 and 2021 ▪ BAIC intends to add 10 EV models to its South Korea 632 portfolio by 2025 ▪ Geely plans to launch two more models under its Polestar brand by 2025 Note: Worldwide Source(s): Forschungsgesellschaft Kraftfahrwesen Aachen; Roland Berger * Numbers refer to battery-powered and plug-in hybrid vehicles. 35 Global number of battery electric vehicle model launches between 2015 and 2020

80 73

70

59 60 55

50 44

40

30 Number of new BEV model launches BEV modelnew Numberof 20 17 14

10

0 2015 2016 2017 2018 2019 2020

Note: Worldwide Source(s): LMC Automotive; Citigroup 36 Global number of plug-in hybrid electric vehicle model launches between 2015 and 2020

70 64

60

50 45 42

40

30

20 20 Number of new PHEV model PHEV launchesnew Numberof 16

10 7

0 2015 2016 2017 2018 2019 2020

Note: Worldwide Source(s): LMC Automotive; Citigroup 37 04 Adoption: The drivers behind demand ▪ Sales ▪ Penetration rate ▪ Forecasts Demand is affected by cost competitiveness and mobility trends

Ten years from now, plug-in electric vehicles are expected to account for close to half of all vehicle sales. It is also projected that electric vehicle adoption will be driven by growing access to public charging infrastructure in tandem with increased vehicle model availability. Furthermore, electric vehicles are projected to pique consumers’ interest, once the cost of ownership reaches parity with ICE vehicles; this is predicted to happen over the course of the next two to four years. Innovative trends in the field of mobility services such as car-sharing, ride-sharing, and ride-hailing are forecast to raise consumer awareness and help users familiarize themselves with EV technologies. ▪ The share of ICE cars in overall light vehicle sales is forecast to fall to almost 50 percent by 2030 ▪ As adoption levels pick up, the electric vehicle market is projected to gain traction ▪ Mobility service fleets are set to fuel electric vehicle demand ▪ Tesla has emerged as the market leader in battery electric vehicle sales ▪ The Model 3 has become Tesla’s best-selling model

39 Key drivers of electric vehicle adoption It is predicted that EV buyers want the total cost of ownership in tandem with potential government subsidies to be within the Supply side factors Demand side factors range of what they would

Electricity/ oil normally have to pay for a prices comparable ICE car.

Efficiency New mobility trends are Availability of projected to help vehicles Manufacturing consumers familiarize costs themselves with EV Variety of Cost is driven OEM competition increases models competitiveness by National technologies. subsidies As soon as consumers are Maintenance Political EV satisfied with the triggers costs frameset adoption availability of suitable are Availability of Consumer attitudes chargers affected by models and a sufficient Range anxiety Implementation charging infrastructure, increases of infrastructure adoption levels can be Awareness expected to pick up speed. Speed of Adoption of new are charging mobility trends affected by Availability of Mobility services

Availability of Autonomous cars

Note: Worldwide Source(s): Statista; Nytimes.com; ICCT; Consumer Affairs; Renew Economy; L.E.K. 40 The cost of refueling ICE cars is often higher than the running costs of electric vehicles

8 6.89 Assuming that 7 6.6 6.48 6.12 6.09 5.95 5.83 an average 6 4.85 4.7 ICE sedan 5 4.22 3.95 3.95 3.94 3.88 4 has a fuel 2.6 2.48 3 2.06 economy of 2 30 mpg, and 1 0.54 0 thus a

in U.S. dollars per gallonU.S.perdollars in consumption Gasoline prices as of Q4 2018 Q4 ofas prices Gasoline level of about 3.3 gallons per 100 miles, U.S. Norway France Germany low power 12 rates may 9.57 9.68 10 help convince 8.07 8.25 consumers to 8 5.69 5.69 5.75 5.76 switch to an 6 4.79 4.8 4.9 4.91 3.58 3.61 electric car,

4 3.01 3.08 especially in per 100 miles100per 2 markets

Costs* in 2018 in U.S. dollars U.S. 2018inCosts*in 0 where gas Hyundai IONIQ Tesla Model 3 Nissan Leaf II Renault Zoe prices are Note: Worldwide high. Source(s): Bloomberg; IMF; UN; World Bank; CleanTechnica; nextmove.de; Eurostat; chooseenergy.com * The results are based on estimated consumption rates by model and average residential electricity prices by country. The values have been converted from euros to U.S. dollars at an average annual rate of 1 euro = 1.18 U.S. dollars, as retrieved from the ECB. 41 The sales share of ICE vehicles continues to decline globally

Gasoline Diesel Mild hybrid electric vehicle (MHEV) Hybrid electric vehicle (HEV) Battery electric vehicle (BEV) Plug-in hybrid electric vehicle (PHEV)

120.0%

100.0% 1% 6% 1% 19% 2% 14% 80.0% 1% 13%

60.0% 15%

5% Share of car salescarofShare

40.0% 76%

47% 20.0%

0.0% 2017 2030

Note: Worldwide Source(s): BCG 42 Projected size of the global electric vehicle fleet between 2020 and 2030

140

127

120

100

87

80

60

60 Vehicles in fleet in millionsinin fleet Vehicles 40 40

25

20 13

0 2020 2022 2024 2026 2028 2030

Note: Worldwide Source(s): Business Insider 43 „

“ “We are convinced that the future of carsharing is electric.”

– Olivier Reppert, CEO of Share Now

44 Fleet size in 2025 in million units Mobility fleet electrification is set to 0 5 10 15 20 25 30 35 40 45 50 spark EV adoption Electrification will be key to other mobility areas due to growing environmental Carpooling 44.98 commitments and lower maintenance costs associated with the parts in battery electric vehicle motors. Some firms have begun to unlock the value of mobility services:

Ridehailing 35.93 ▪ Daimler: is owner of Share Now, ViaVan ▪ BMW: is owner of Share Now, Moovit › Share Now has 3,200 BEVs in fleet1 ▪ VW: is owner of Moia 2 Car rental & sharing 7.26 › Moia has 100 BEVs in fleet ▪ GM: is owner of Maven, BOOK, invests in Lyft › Maven has 20 BEVs in fleet3 ▪ Hyundai-Kia: invests in Grab Carsharing (fleet-based and P2P) 1.42 ▪ Avis: is owner of Zipcar ▪ Uber: collaborates with Daimler, Toyota, VW ▪ Didi: collaborates with VW Note: Worldwide Source(s): Bank of America; Merrill Lynch 45 Battery electric vehicles Plug-in hybrid electric vehicles Hybrids China

12000 holds the potential to extend its lead with 10000 636 regards to EV sales throughout 8000 2030 3,863 It is expected that sales to 6000 customers in China will 592 continue to be crucial for EV 4000 436 1,976 manufacturers throughout Projected 2030 vehicle sales in thousand units thousandvehicleinsales 2030Projected 1,638 5,507 2030. This is true for the 2000 hybrid and 2,864 2,293 plug-in electric 0 vehicle U.S. Europe China segments.

Note: Worldwide 46 Source(s): Citigroup 47 Estimated electric vehicles in use in selected countries as of 2017

PHEV BEV

Number of electric vehicles in thousands 0 200 400 600 800 1000 1200 1400

China

U.S.

Japan

Norway

Germany

Note: Worldwide Source(s): IEA 48 China’s electric vehicle registration share is expected to grow While historical light vehicle registration data shows that Norway might reach an electric vehicle sales share of 50 percent

Plug-in hybrid electric vehicle sales in China EVs as a share of light vehicle registrations in 2017 soon, several experts’ Battery electric vehicle sales in China 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% outlook figures show that 900000 China has the potential to Norway 39.2% ~ 770,000 PEV become the undisputed sales in 2017 800000 Sweden 6.3% leading market in terms of 125,000 EV sales by 2030. 700000 Netherlands 2.7% The country has great 652,000 Finland 2.6% 600000 potential with combined China 2.2% battery and plug-in electric 500000 98,000 vehicle sales of around UK 1.7% 400000 770,000 units and a 409,000 France Number of unitsNumberof 1.7% registration share of 2.2 300000 83,610 Germany 1.6% percent in 2017.

200000 247,482 United States 1.2%

100000 New Zealand 1.1%

0 Canada 1.1% 2015 2016 2017

Note: Selected countries Source(s): CAAM; IEA 49 Battery-electric vehicle sales worldwide in the 1st quarter 2018, by brand

Sales in Q1 2018 in units 0 5000 10000 15000 20000 25000 30000

Tesla 27,529

BAIC 26,409

Nissan 22,666

JAC 11,597

Renault 10,482

Chery 8,193

VW 6,779

Zotye 5,640

Hyundai 5,494

Chevrolet 5,159

Note: Worldwide Source(s): JATO 50 Worldwide plug-in electric vehicle sales in 2018, by model

Sales in thousand units

0 20 40 60 80 100 120 140 160

Tesla Model 3 145.85

BAIC EC-Series 90.64

Nissan Leaf 87.15

Tesla Model S 50.05

Tesla Model X 49.35

BYD Qin PHEV 47.45

JAC iEV E/S 46.59

BYD e5 46.25

Toyota Prius PHEV 45.69

Mitsubishi Outlander PHEV 41.89

Renault Zoe 40.31

BMW 530e 40.26

Chery eQ EV 39.73

Note: Worldwide Source(s): EV Sales; insideevs.com 51 Tesla has ramped up its Model 3 deliveries after a slow start After production and delivery volume targets were missed in late 2017 and early 2018, the Model 3 has turned into Tesla’s Model S Model X Model 3 best-selling model during 100000 the fourth quarter of 2018.

90000 As of February 2019, the Model 3 is Tesla’s most 80000 recent model addition, as the first units rolled off the 70000 assembly line in 2017. It comes at a price tag of 60000 63,150 35,000 U.S. dollars (and up), thus targeting broader 50000 customer segments than

40000 the Model S and Model X,

both of which are aimed Number of vehicle deliveriesvehicleNumberof 30000 1,550 towards the high-end market segments. Tesla’s 13,120 20000 14,050 new Model Y was unveiled in March 2019; production 10000 15,200 13,500 is expected to start in 2020. 0 Q4 2017 Q4 2018

52 05 Revenue: The segments and regions of growth ▪ Market growth ▪ Electric vehicle market size ▪ EV battery market size The electric vehicle market is beginning to gain momentum

The fact that electric car sales accounted for about two to three percent of overall light vehicle sales leaves great opportunities for growth for carmakers and automotive suppliers alike. Charging equipment manufacturers emerge as a third group of beneficiaries who can expect a golden age of electrified transportation. ▪ The United States and China are market leaders in terms of market growth, while Europe lags behind ▪ The electric vehicle battery market has enormous potential ▪ Wireless electric vehicle charging is set to revolutionize the sector

54 China’s rising affluence correlates with electric vehicle market growth The electric vehicle market in the Asia-Pacific region is expected to expand its volume at a compound annual growth rate of 40000 Market volume CAGR between 2016 and 2026 almost 30 percent 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 36,396.20 between 2016 and 2026. 35000 This comes as no surprise 31,194.80 Asia-Pacific 29.5% considering the vast 30000

in Chinain number of potential buyers 26,467.00 in this populous region, 25000 coupled with the rising 21,809.78 households affluence of its growing 20000 middle class.

urban North America

in yuan in 17,174.65 28.5% of

15000 income

10000

Percapita Europe 23.2% 5000

0 2009 2011 2013 2015 2017

Note: Selected countries or regions Source(s): National Bureau of Statistics of China; BIS Research 55 Size of the global market for electric vehicles in 2017 and 2025

600 567.3

500

400

300

200 Revenue in billion U.S. U.S. billiondollarsinRevenue

118.86

100

0 2017 2025

Note: Worldwide Source(s): Allied Market Research; PR Newswire 56 Projected global wireless EV charging market size in 2020 and 2025 Wireless charging infrastructure is

450 slated to be a game changer 407 400 The wireless technology is set to facilitate the charging process, and 350 customers are expected to welcome the 300 seamlessness that will accompany wireless

250 charging. Evatran and WiTricity are the leading providers in 200 this field.

150 Market size in million U.S. dollarsmillioninU.S. size Market

100

50

8 0 2020 2025

Note: Worldwide Source(s): MarketsandMarkets 57 58 Market cap of lithium-ion battery component manufacturers worldwide as of September 2017

Market cap as of September 4, 2017 in million U.S. dollars 0 2000 4000 6000 8000 10000 12000 14000 16000 18000

Asahi Kasei 16,597

Toray 15,328

Mitsubishi Chemical 14,042

Sumitomo Metal Mining 9,946

Umicore 8,406

Mitsui Chemical 6,020

Hitachi Chemical 5,610

Ube Industries 3,016

Mitsui Mining & Smelting 2,982

Central Glass 922

W-scope 641

Nippon Carbon 436

Note: Worldwide Source(s): Goldman Sachs; Various sources 59 Global market share of lithium ion battery makers in the 1st quarter of 2018

Market share 0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

Panasonic Sanyo 21.1%

CATL 14.41%

BYD 10.99%

LG Chem 10.59%

Samsung 5.57%

Note: Worldwide Source(s): electrive.com 60 06 Sustainability: The issues that need to be tackled ▪ Transportation-related emissions ▪ Renewable sources in power generation ▪ Materials used in batteries Today’s electric vehicles fall short of sustainability goals

While EVs clearly have the potential to outperform ICE cars in terms of fuel-related emissions, it is not easy to ascertain if electric vehicles are environmentally sustainable, or not. There is no denying in the fact that all motor vehicles have an impact on the environment, though. ▪ Questions about EVs financial sustainability aside, the key factors in gauging the sustainability of EVs include the following: › type of energy used as a source of power › battery material types ▪ Although electric cars have a smaller carbon footprint than gasoline or diesel-powered automobiles, a shift away from coal power will be necessary to soften the transportation sector’s carbon footprint ▪ To date, battery supply chain sustainability has not been achieved due to the continued unsustainable mining of key materials, including cobalt, lithium, and nickel ▪ The growing demand for those commodities that are used in the manufacture of electric vehicle batteries is likely to have an impact on spot prices

62 „ “(…) [E]lectromobility alone is not effective climate protection. We need an energy transition alongside the “ transport transition to truly improve our carbon footprint”

– Herbert Diess, CEO of Volkswagen Group

63 2 Rise in anthropogenic CO emission levels requires mitigation Since the second half of the 20th century, the combustion of fossil fuels has led to the release of unfettered volumes of carbon dioxide (CO2) emissions into the atmosphere. The resulting concentration of Emissions in 2016 in kilograms per capita CO2 in the atmosphere continues to 41,396.8 0 1000 2000 3000 4000 5000 exacerbate what has been dubbed the 36,396.8 Total emissions 4,350 greenhouse effect: The earth’s surface temperature rises because solar heat is 31,396.8 Electricity and heat generation 1,805 absorbed by molecules of carbon dioxide and other greenhouse gases, including 26,396.8 Transportation* 1,059 nitrous oxide, methane, and water vapor. 21,396.8 Manufacturing industries Higher surface temperatures have been and construction 822 16,396.8 linked to rises in sea levels, stronger Residential 254 hurricanes, and changes in precipitation 11,396.8 patterns. Other energy Emissions in million metric tonsmetricmillioninEmissions industries own use** 214 6,396.8 The transportation sector contributes some Commercial and eight gigatons of carbon dioxide 113 1,396.8 public services equivalents worth of emissions globally4. Under the auspices of the UN, 197 ratifiers -3,603.2 have thus agreed to mitigate vehicle- related fuel combustion CO2 emissions by replacing ICE vehicles with EVs.

Note: Worldwide Source(s): IEA, Global Carbon Project

* Includes international bunkers in transport sector. ** Includes emissions from own use in petroleum refining, the manufacture of solid fuels, coal 64 mining, oil and gas extraction and other energy-producing industries. Conventional sources represent ~ 90 percent of the power mix About 40 percent of electricity generation worldwide comes from the combustion of coal. In order to be environmentally benign, EVs need to make use of as little coal power as possible because of the severe 14.0% 12.1% 11% health effects caused by its combustion. If 12.0% 10% 9.2% renewable sources are used as the primary 10.0% 8% 8.6% 6.9% 8.0% 6.1% source of power though, the widespread 5.2% 5.3% 5.9% 6.0% adoption of electric cars is predicted to 4.0% reduce GHG emission levels in a significant 2.0% Share of renewablesofShare manner. 0.0% 2007 2009 2011 2013 2015 2017 Although the share of renewable power in electricity generation has more than doubled over the past decade, electricity generated from coal, oil, gas, nuclear, and

5.39 conventional hydro sources still accounts 4.76 for almost 90 percent of power generation. 4.04 4.03 Therefore, the current power mix is unlikely to lessen the carbon footprint associated 2.04 1.99 1.85 with emissions from the transportation

dioxide percapita dioxide sector.

Transportation sector sectorTransportation

GHG GHG in2017emissions in metric tons of carbontonsmetricofin U.S. Canada Australia Saudi Arabia South Korea Germany France The transportation sector in the United States produced the highest volume of GHG emissions per capita in 2017, when the U.S. car parc comprised almost 270 Note: Worldwide million vehicles. Source(s): Enerdata; Climate Transparency; UNEP; Bloomberg New Energy Finance; FS-UNEP Collaborating Centre Large hydro is not considered a renewable energy source in this data set.

65 Power mix continues to affect the carbon footprint of EVs The increased use of electricity from renewable sources softens EVs’ carbon footprint, but electric car owners need to make an active choice to recharge where 2017 share of coal power 2017 share of electric generation worldwide vehicle stock worldwide coal is not used as the primary energy China 44.8% 39.5% source. However, this choice is not an easy United States 13.5% 24.5% one to make, considering the complex nature of the energy market with all its Japan 3.5% 6.6% regional regulations. Ultimately, it is the Germany 2.5% 3.5% share of coal power in a country’s Netherlands 0.3% 3.8% electricity mix that determines the carbon UK 0.2% 4.3% footprint of its EV fleet unless motorists France* 0.1% 3.8% select charging stations with low coal levels Norway** - 5.7% in the power mix. China has the largest EV fleet, but also the CO2 emissions in g/mile highest share of coal in its energy mix. 0 50 100 150 200 250 300 Norway’s EV fleet has shown impressive EVs in China 188.5 growth and the country’s coal use is EVs in the U.S. 147.5 nonexistent, but Norway’s overall car EVs in Japan 142.7 market is small: Norway saw passenger car EVs in Germany 140.4 sales of under 150,000 units in 20185. EVs in the UK 76.2 France seems to be well prepared, but its EVs in France 2.7 dependence on nuclear power has led Gasoline vehicles 248.5 some experts to question the sustainable viability of the French EV market. Note: Worldwide Source(s): IEA; BP; Statista; Bloomberg New Energy Finance; World Economic Forum Coal power: * The value for France (10.52 TWh) is for 2016; was taken from IEA's website, as this country was not listed. ** The figure for Norway (146 GWh) is for 2016; it's based on information on IEA's website, as this country was not listed. 66 Cobalt share of materials as of 2018 Cobalt remains a critical ingredient 0 5 10 15 20 25 30 35 40 45 in most battery types A growing electric vehicle industry is LCO 39 expected to spur the demand for several materials, most notably cobalt, lithium, and nickel. NMC-111 13 The composition of these commodities varies among the different types of lithium- ion batteries that are used in electric cars, NMC-433 11 most notably nickel manganese cobalt (NMC) batteries. Currently, most electric vehicles are NMC-532 8 equipped with NMC-111 batteries. In 2018, cobalt accounted for around 13 percent of materials used in NMC-111 batteries, while NMC-622 7 lithium cobalt oxide (LCO) batteries reached the highest level of cobalt with about 40 percent.

NCA 6

NMC-811 4

Note: Worldwide Source(s): Bloomberg New Energy Finance; Bloomberg NMC: nickel manganese cobalt; LCO: lithium cobalt oxide; NCA: nickel cobalt aluminum 67 Africa and the Middle East Americas Asia-Pacific Europe Regional breakdown

1600 of battery electric vehicle sales shows Asia-Pacific’s 1400 dominance The tremendous growth in 1200 electric vehicle sales that has already occurred globally is slated to trigger 1000 worldwide demand for the various commodities used in electric vehicle 800 batteries, too.

600 Vehicle sales in thousand units thousandinsalesVehicle

400

200

0 2012 2018

68 Lithium-ion batteries will likely drive lithium consumption

Battery consumption Other

600 160000

509 140000 134,897 500 118,505 120000 111,585 100,942 400 96,668 100000 24.7% CAGR 77,821 300 80000

64,398 equivalent 60000 200 39,463 Demand in kilotons of LCEkilotonsinof Demand 40000 29,058 87 100 20,026

20000 Consumption in metric tons lithiumcarbonatetonsmetricinConsumption

0 0 2017 2025 2008 2010 2012 2014 2016

Note: Worldwide Source(s): McKinsey; Roskill

69 Battery-related demand for cobalt drives Congolese cobalt production The batteries segment within the global cobalt market is expected to see a compound annual Share of global production in 2017 growth rate of just over 15 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% percent. 140 DR Congo 58.8% Cobalt is often extracted in Russia 5.14% regions where safe 120 117 Australia 4.59% working conditions are not always guaranteed, Canada 3.95% 100 including the Democratic Cuba 3.86% Republic of the Congo. An Philippines 3.67% 80 estimated 20 percent of Congolese cobalt comes Madagascar 3.49% from the country’s artisanal 60 Papua New Guinea 2.94% mining sector, where Zambia 2.66% workers lack basic 38 40 New Caledonia 2.57% protective equipment,

exposing them to toxic, related cobalt demand in kilotons of refined metalrefinedinof kilotons demandcobaltrelated - South Africa 2.3% metal-containing dust6. 20

United States 0.6% Battery

Other countries 5.42% 0 2017 2025

Note: Worldwide. Source(s): US Geological Survey; McKinsey

70 Low-level battery-related nickel demand is forecast to grow Nickel is expected to be the EV battery commodity yielding the highest compound annual growth rate between 2018 and 2025 Primary nickel consumption in 2017 in thousand metric tons with 41 percent. 0 200 400 600 800 1000 1200 1400 1600 1800 However, the toxicity of this metal has Stainless steel and special steels 1,562.2 sparked concerns about the negative impact of nickel mining on the environment Alloys 171.2 and production workers7. Electroplating 149.8 While the metal manufacturing industry Special steels 149.8 mainly uses low-grade nickel ores, the more stable nickel sulfate is required for Batteries 107 the manufacture of batteries. This might be the reason why batteries only accounted Other 21.4 for about five percent of primary nickel consumption worldwide in 2017. 700 665

600

500

400

tons 300

200

100 60

Consumption in thousand metricthousandinConsumption 0 2018 2025

Note: Worldwide Source(s): Norilsk Nickel; Various sources (Company data); UBS; Metal Bulletin 71 Glossary

BEV - Battery electric vehicles run only on electricity, using power from a battery. CO2 - Carbon dioxide is a greenhouse gas. EV - BEVs, FCEVs, PHEVs, and hybrid electric vehicles. EVSE - Electric vehicle supply equipment, or chargers, provide EVs with electricity. FCEV - Fuel cell electric vehicles run only on electricity, using power from a fuel cell. GHG - Greenhouse gases comprise methane, nitrous oxide, water vapor and carbon dioxide. GHG molecules absorb solar heat and thus lead to an increase in the earth’s temperature. Hybrid vehicles - Hybrid vehicles run mainly on gasoline or diesel, but have an electric motor as well. ICE - Internal combustion engines create energy from burning fossil fuels such as diesel and gasoline. MPG - Miles per gallon measure the number of miles a motorist can drive in a vehicle using one gallon. NMC batteries - Nickel manganese cobalt batteries, also abbreviated NCM PEV - Plug-in electric vehicles comprise PHEVs and BEVs, can be plugged in to charge from an off-board electric power source. PHEV - Plug-in hybrid electric vehicles run mainly on electricity, but have an ICE as well. Rechargeable batteries - In batteries, electricity is produced through the movement of electrons between anode and cathode. Rechargeable batteries function according to the same principle, but also have the ability to be recharged. xEV - BEVs and PHEVs

72 Footnotes

1 Share Now (2019): “Your Car is Always There”, retrieved from https://www.your-now.com/our-solutions/share-now 2 Moia (2019): “Premiere am Rathaus: MOIA startet Testbetrieb”, retrieved from https://www.moia.io/de-DE/blog/premiere-am-rathaus- moia-startet-testbetrieb-in-hamburg/ 3 General Motors (2018): “Maven Joins City of Austin, Texas in Deploying All-Electric Shared Use Fleet of Chevrolet Bolt EVs”, retrieved from https://media.gm.com/media/us/en/maven/pressroom.detail.html/content/Pages/news/us/en/2018/mar/0302-maven-austin.html 4 IEA (2019): “CO2 Emissions Statistics”, retrieved from https://www.iea.org/statistics/co2emissions/ 5 Opplysningsrådet for Veitrafikken AS (2019): “Registreringsstatistikk”, retrieved from https://ofv.no/registreringsstatistikk?selectedDistribution=Fylkesfordelt&selectedMonth=12&selectedVehicleCategory=Personbiler&selec tedYear=2018 6 O‘Driscoll, Dylan; University of Manchester (2017): “Overview of child labour in the artisanal and small-scale mining sector in Asia and Africa “, retrieved from https://assets.publishing.service.gov.uk/media/5a5f34feed915d7dfb57d02f/209-213-Child-labour-in-mining.pdf 7 CDC (2018): “Workplace Safety and Health Topics: Nickel“, retrieved from https://www.cdc.gov/niosh/topics/nickel/default.html

73 Sources

Alix Partners Electrive.com MarketsandMarkets Tesla Allied Market Research Enerdata Metal Bulletin Toyota Alternative Fuels Data Center Eurostat Merrrill Lynch UBS Automotive News EPA Moia UN Bank of America fka National Bureau of Statistics of China UNEP BCG Ford Nextmove.de US Department of Energy BIS Research FS-UNEP New York Times US Geological Survey Bloomberg General Motors Norilsk Nickel VDA Bloomberg New Energy Finance Global Carbon Project O‘Driscoll, Dylan Volkswagen BMO Capital Markets GlobeNewswire Oliver Wyman WIPO BP Goldman Sachs Opplysningsrådet for Veitrafikken AS World Bank Business Insider ICCT Power Electronics World Wood Mackenzie CAAM IEA PR Newswire World Economic Forum CDC IHS Markit PwC Chooseenergy.com IMF Qualcomm Citigroup Insideevs.com Renew Economy Climate Transparency JATO Roland Berger Consumer Affairs JP Morgan Chase Roskill Daimler KPMG Samsung EAFO McKinsey Share Now ECB L.E.K. Statista EIA LMC Automotive Strategy&

74 Recommendations

Dossiers Electric vehicles worldwide Electric vehicles in the U.S. Electric vehicles in Italy Electric vehicle industry in the Netherlands Tesla

Top lists Top 200 Companies: Electric Motors, Generators and Transformers

Mobility Market Outlook Tesla (Passenger Cars) In-depth: eMobility

Digital Market Outlook Ride Hailing

75 Authors, Imprint, and Disclaimer

Isabel Wagner Senior Researcher

Isabel Wagner is the Statista specialist for research on transportation, metals, and electronics in the U.S. She is an expert for mobility-related trend topics such as electric and autonomous vehicles.

E-Mail: [email protected]

Released: March 2019

Imprint Statista, Inc. ▪ 55 Broad Street, 30th floor ▪ New York, NY 10004 ▪ +1 (212) 433 2270 ▪ www.statista.com

Disclaimer Statista, Inc. shall not be liable for any loss, injury, claim, liability, or damage of any kind resulting in any way from (a) any errors in or omissions from the Statista, Inc. industry report(s) or any Materials available or not included therein, (b) the unavailability or interruption of the Statista, Inc. industry report(s) or any features thereof or any Materials, (c) An Authorized User or Member's use of the Statista, Inc. industry report(s), Online Services, or Materials, (d) the loss or corruption of any data or equipment in connection with the Statista, Inc. industry report(s), (e) the content, accuracy, or completeness of Materials, all regardless of whether you received assistance in the use of the Statista, Inc. industry report(s) from a Covered Party, (f) any delay or failure in performance beyond the reasonable control of a Covered Party, or (g) any content retrieved from the Internet even if retrieved or linked to from within the Statista, Inc. industry report(s).

76