NEWSLETTER Industrials Electric Vehicles The Future of Mobility February 2020 1 NEWSLETTER: INDUSTRIALS – ELECTRIC VEHICLES www.globalma.comwww.globalma.com India-exclusive member of Global M&A Partners Leading partnership of boutique advisory firms | Present in 30+ countries | Successful completion of over 1500 transactions & in value over Euro 42 bn since 2010 | 200+ active dealmakers M & A Advisory PE Fund Raising We advise Companies and We advise Companies to raise Business Owners on equity from PE Funds to acquisitions and support their growth plans. divestitures of businesses. SERVICES JV Advisory Valuations We provide valuation We advise Companies to advisory services for enter into strategic joint regulatory and ventures with like- governance purposes. minded partners. Pre-Transaction We assist Company management to prepare for a strategic transaction. GLOBAL REACH Argentina Austria Baltics Belgium Brazil Canada Chile China Colombia Denmark Finland France Germany Hungary India Israel Italy Japan Mexico Netherlands Norway Peru South Korea Sweden Switzerland Taiwan Tukey UK USA To access the soft copy of this document, visit www.acquizon.com/news-and-publications/. We would be happy to receive any feedback from you.You can reach out to us as follows: Deepak Ladha Mihir Shah Managing Director Director, Investment Banking E: [email protected] E: [email protected] P: +91 98203 48614 P: +91 98193 33693 2 NEWSLETTER: INDUSTRIALS – ELECTRIC VEHICLES www.globalma.com CONTENTS 1 Introduction 04-07 2 Global EV Status and Forecast 08-11 3 Global EV Adoption Targets 12-19 4 Electric Vehicles Value Chain 20-40 5 Key Trends and Growth Drivers 41-44 6 Trading Comparables 45-52 7 M&A Trends 53-57 8 Share Price Performance 58-62 9 GMAP Industrials Team 63 3 NEWSLETTER: INDUSTRIALS – ELECTRIC VEHICLES www.globalma.com Electric Vehicles Introduction 4 NEWSLETTER: INDUSTRIALS – –ELECTRICELECTRIC VEHICLES VEHICLES www.globalma.com Introduction Electric Vehicle Introduction Electric Vehicles (EV) have emerged as a green and reliable alternative to conventional internal combustion engine (ICE) vehicles. Existing OEMs and new specialised players in major parts of the US, Europe and Asia are focusing on transforming the automotive value chain for smooth transition to EV. Green aspirations of authorities has lead to less initial requirements for OEMs to manufacture EVs. This governmental/regulatory pressure linked with technological advancements, increased charging infrastructures and growing demand for fuel efficient vehicles has triggered the adoption rate. EV cars mechanically are less complex when compared to traditional ICE vehicles. This leads to cutting down the jobs and labor in operations related to vehicle production. EVs Will Impact Existing Segments Exhaust Transmissions ICE engines Fuel systems systems However, new opportunities would open in the segment of batteries, and related products Various cities including Paris, Copenhagen, London, Beijing are planning to ban gasoline and diesel vehicles from the city in near future. The huge push from the authorities have made China the largest consumer of EVs leading ahead of US and Norway. Meanwhile in Europe, the Parliament has established new CO2 emission standards for cars and LCVs with incentives for Zero Emission Vehicles (ZEVs). Source: WEF, Energy.gov, Business Insider, and other secondary sources 5 NEWSLETTER: INDUSTRIALS – ELECTRIC VEHICLES www.globalma.com Introduction Evolution - Electric Vehicle Introduction 1820’s 1830’s 1901 1910’s 1960’s First small First crude Ferdinand Porsche Affordable Spike in gas price scale EV EV invented first gas-powered car reignited interest Hybrid electric car started fading EVs in EV 1990’s 1997 2006 2009 2010 New regulations created First mass-produced Tesla announced Charging station First Commercially interest in OEMs to hybrid vehicle Prius, luxury electric infrastructures Available Plug-In Hybrid modify introduced by sports car with begin to for Sale EVs Toyota range of roll out 200+ miles 2010’s 2011 2013 2017 2019 Development of models First fast charger Battery prices Increased • with longer driving range in Norway dropped by 50% adoption of fast Heavy investments in EV in 4 years chargers • More than 160 models of EVs in existence • EVs with increased driving range Comparison – BEV, PHEV,HEV, ICE Introduction Battery Electric Vehicle Plug-in Hybrid Hybrid Gas-powered Vehicle (BEV) Electric Vehicle (PHEV) Electric Vehicle (HEV) A traditional internal Electric motor only. Plug Electric motor plus Electric motor plus combustion engine in to charge combustion engine. Plug combustion engine. Does powered by fossil fuels in to charge not plug in Power source Plug-in Battery Gasoline Fuel Efficiency Measured by miles per gallon equivalent (MPGe) & miles per gallon (MPG) Dollars per mile The cost of every trip is lower overall in EVs Emissions Lifetime emissions from EVs will continue to decrease Source: Interesting Engineering, TOI, Popular Mechanics, and other secondary sources 6 NEWSLETTER: INDUSTRIALS – ELECTRIC VEHICLES www.globalma.com Introduction Impact of EV on the Automotive Stakeholders Emergence of Electric Vehicles has lead to disruption in the automotive industry. As it is expected, automakers will provide both conventional and Electric Vehicles significantly impacting the participants of automotive ecosystem End Government Automakers Dealers Suppliers Customers Regulations Automakers are The dealer business Powertrain-related Customers prefer Government may realizing that the surge model will undergo suppliers will need to vehicles that are fun bank on electric is arriving sooner than changes as electric reinvent themselves to drive and packed vehicles to meet expected paving the vehicle maintenance to be relevant in the with the latest their climate change way for new internal costs are expected to future technology goals power centers and be lower than those and features external partnerships of conventional cars • Huge investments in advanced technologies is observed through Automakers to avoid being outplayed by disruptive electric cars. Automakers will now have to enter in new supply chain partnerships to procure the raw materials utilized for manufacturing of Electric Vehicle. • An analysis by Reuters of 29 global automakers in 2019, found that automakers are investing at least USD 300bn in electric vehicles over the next five to ten years, with more than 45% of that earmarked for China • Dealers and suppliers are switching their existing business to accommodate the EV technology related demands to persist in the market. • Government and other regional authorities are encouraging the usage of EV to reduce the carbon footprints and meet other climate control goals Source: BCG, McKinsey, Reuters and other secondary sources 7 NEWSLETTER: INDUSTRIALS – ELECTRIC VEHICLES www.globalma.com Electric Vehicles Global EV Status and Forecast 8 NEWSLETTER: INDUSTRIALS – –ELECTRICELECTRIC VEHICLES VEHICLES www.globalma.com Global EV Forecast Status of Electric Mobility: Developing at a Rapid Pace Electric Cars Europe followed with 1.8 million electric cars The global electric car Norway remained the and United States global leader in terms of fleet exceeded remained the China with 1.4 million on the electric car market share 7.4 million in 2019, world’s largest road by the end of 2019 up by 2.3 million since at 56% of its new and market growth of 2018, a 45% increase in electric car market electric car sales in 579,000 and 329,000 the electric car fleet on with nearly 1.2 million 2019, more than double electric cars, the road by the end of electric cars sold in 2019 the second-largest respectively, from 2018 2018 and with a total electric market share in car stock of 3.5 million Iceland at 25% units, accounted for almost half of the global electric car stock Global Electric Car Sales and Market Share, 2017 – 2019 Global Electric Car Sales Per Year in Respective Regions (thousand units) China European Union United States CAGR: +25% CAGR: +37% CAGR: +28% 1,256 1,206 777 579 407 361 307 329 200 2017 2018 2019 2017 2018 2019 2017 2018 2019 Electric Car Market Share among Overall Car Sales Per Year in Respective Regions (%) 4.7% 4.9% 3.8% 2.8% 2.7% 2.0% 2.1% 2.0% 1.2% 2017 2018 2019 2017 2018 2019 2017 2018 2019 Source: IEA analysis based on country submissions, CleanTechnica 9 NEWSLETTER: INDUSTRIALS – ELECTRIC VEHICLES www.globalma.com Global EV Forecast Forecast: A Rising Tide of Electric Vehicles The forecast for the Electric Vehicle market is positive according to scenarios put forth both by International Energy Agency (IEA) and Electric Vehicle Initiative (EVI), which is a multi-governmental policy forum established in 2009 under the Clean Energy Ministerial. The EV forecast according to these scenarios is discussed below: New Policies Scenario (NPS) EV30@30 Scenario It is the central scenario of the IEA World Energy It is in line with the ambitions of the Electric Vehicle Outlook. The scenario incorporates the policies and Initiative (EVI) signatories of the EV30@30 Campaign measures that governments around the world have Declaration, which is to achieve by 2030 a 30% market already put in place, and the likely effects of share for EVs in all modes (except for two-wheelers, announced policies that are expressed in official where this goal has been exceeded). targets or plans. • EV sales and stock are expected to nearly double by • In 2030, global EV sales are expected to reach 23 2030, with sales reaching 43 million and the stock million and the stock exceeds 130 million vehicles larger than 250 million (excluding two/ three-wheelers) • China leads with the highest level of EV uptake, • EVs make up 70% of all vehicle sales in China in with share of EVs in new vehicle sales reaching 57% 2030 (42% excluding two/three-wheelers) • Followed by Europe, where the EV sales share • Almost half of all vehicles sold in 2030 in Europe are reaches 26% in 2030, and Japan at 21% share. In EVs, 37% in Japan, more than 30% in Canada and North America, Canada would lead with a 26% EV United States, 29% in India and 22% in other share of sales.