Electric Vehicles and Autonomy

Independent Research, Indispensable Results A Transformative Shift Towards Electric Vehicles and Autonomy

PRESENTERS: GARRETT NELSON & ANGELO ZINO DECEMBER 17, 2019

Independent Research, Indispensable Results PAGE 1 Agenda

• About CFRA • Electric Vehicle Outlook • Autonomous Vehicle Outlook • Semiconductor Automotive Outlook • Questions

Independent Research, Indispensable Results PAGE 2 Our History

More than 90 years of innovation and growth as an independent research firm.

CFRA Legal CFRA MSCI CFRA CFRA CFRA Founded Edge Sold Acquired Acquired Acquired Is one of the world’s Launched To Risk Risk from MSCI First Bridge largest Independent Metrics Metrics Data research firms 09’ 11’ 201 2016 1927 1994 2006 2007 2009 2010 2013 2016 2019 Today

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Independent Research, Indispensable Results PAGE 3 Proprietary Methodology Engine

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Independent Research, Indispensable Results PAGE 4 Independence

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CFRA does NOT manage money or make trades

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Independent Research, Indispensable Results PAGE 5 Electric Vehicle Outlook Garrett Nelson, Senior Equity Analyst

Independent Research, Indispensable Results PAGE 6 Electric Vehicles

Independent Research, Indispensable Results PAGE 7

Sources: CFRA, Pxhere.com. A History of Electric Vehicles (EVs)

• Late 1820’s / Early 1830’s – Anyos Jedlik (Hungary) Invents First Small Scale EV, Robert Anderson (Scotland) Develops First Crude EV

• 1889 – William Morrison Creates First Successful EV in U.S.

• 1900 – EVs Account For Roughly 33% of All Vehicles on the Road in U.S.

• 1901 – Ferdinand Porsche Invents First Electric Hybrid Car

• 1908 – Ford Introduces the Gas-Powered, Mass Market Model T

• 1913 – Ford Introduces First Conveyor Belt-Based Assembly Line, Significantly Reducing Costs

• 1910’s / 1920’s – Discovery of Cheap Texas Crude Oil Makes EVs Nearly Obsolete By 1935

• 1970’s – Clean Air Act is Passed, Oil Prices Soar, Reviving Interest In Alternative Fuel Vehicles

Independent Research, Indispensable Results PAGE 8

Sources: CFRA, U.S. Department of Energy. A History of Electric Vehicles (EVs)

• 1990’s – New Government Regulations Renew Interest in EVs

• 1996 – GM Releases EV1 Which Quickly Gains A Cult Following But is Unprofitable

• 1997 – Toyota Introduces The First Mass-Produced Hybrid (The Prius)

• 2000’s – Oil Prices Soar, Again Reviving Interest In Alternative Fuel Vehicles

• 2003 – Silicon Valley Startup Tesla Motors Founded With Goal of Producing EVs

• 2008 – Tesla Introduces Roadster EV

• 2010 – Nissan Releases First EV (Nissan Leaf), GM Releases First Plug-In Hybrid (Chevy Bolt)

• 2010’s – Battery Costs Drop By 50% Due to Innovation and Investments By DOE

Independent Research, Indispensable Results PAGE 9

Sources: CFRA, U.S. Department of Energy. Global EV Sales Being Driven by Battery EVs

Global EV Sales Volume Global EV Stock (units in thousands) (units in thousands) 2,500 6,000

1,975 2,000 5,000

4,000 1,500 1,174 3,000 1,000 752 2,000 546 500 1,000 119 8 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Battery Electric Vehicles Plug-In Hybrids Battery Electric Vehicles Plug-In Hybrids

• In 2018, global EV sales totaled 1.98M units (1.35M BEV and 630K PHEV), a 68% yr/yr jump, which increased total global EV stock to 5.12M units – 78% growth for BEVs (Tesla Model 3 introduced in late 2017) and 50% for PHEVs

Independent Research, Indispensable Results PAGE 10

Sources: CFRA, EVAdoption.com. Consumer Reports Survey Results

• 36% of Prospective Car Buyers said they Would Consider Buying (31%) or Would Definitely Buy (5%) a Plug-in EV within the next two years • Interest in owning an EV is highest among consumers with an annual income of $100,000+ • $100,000 or more - 39% (Would Consider Buying 34%, 5% Would Definitely Buy) • $50,000-$100,000 - 38% (Would Consider Buying 33%, 5% Would Definitely Buy) • Less than $50,000 - 32% (Would Consider Buying 28%, 4% Would Definitely Buy) • Top factors that would make an EV purchase more likely: • Lower purchase price - 59% • Longer driving range - 51% • Lower operating costs - 39% • Shorter charging time - 36% • 75% said that incentives and tax rebates for EVs should be available to all buyers; 63% said their state should make it easier for consumers to purchase EVs

Independent Research, Indispensable Results PAGE 11

Sources: Consumer Reports and Union of Concerned Scientists survey of 1,659 U.S. adults conducted between 4/8/18-4/19/19. Margin of error = 2.4% . EVs: What The Experts Are Saying

• Former Fiat Chrysler Chairman & CEO Sergio Marchionne – “I hope you don’t buy it (the Fiat 500e) because every time I sell one it costs me $14,000.” -May 21, 2014 – “I don’t know of a company that is making money selling electric vehicles unless you are selling them at the very, very high end of the spectrum.” -January 15, 2018

• Tesla CEO Elon Musk – “You have to match the convenience of the gasoline car in order for people to buy an electric car.” -June 28, 2017

• Ford Chairman Bill Ford Jr. – “Electrification is here to stay. History will show whether it was smart or not (to talk about plans) but it’s important to signal where we’re going.” -January 15, 2018

Independent Research, Indispensable Results PAGE 12 Expiring Tax Credits: Winners & Losers

• Internal Revenue Code Section 30D provides a federal tax credit for Qualified Plug-in Electric Vehicles – EV purchases are eligible for a $7,500 federal tax credit until the manufacturer has sold a total of 200,000 eligible EVs on a cumulative basis for sales beginning January 1, 2010 • The credit begins to phase out over a 12-month period at the beginning of the second calendar quarter after the manufacturer has sold 200,000 vehicles, as announced by the IRS – The credit declines to 50% of the original amount ($3,750) over the first six months and to 25% of the original amount ($1,875) over the following six months • Companies which have sold 200,000 EVs and phase out period dates: – Tesla: January 1, 2019 – December 31, 2019 – General Motors: April 1, 2019 – March 31, 2020 • Other automakers’ cumulative EV sales in U.S. (through 6/30/19): – Nissan: 135,550 Ford: 116,926 Toyota: 104,375 BMW: 93,696

Independent Research, Indispensable Results PAGE 13

Sources: CFRA, IRS.gov, EVAdoption.com. The Long List of Failed EV Start-Ups

• Fisker • AMP

• Coda • Aptera

• Spyker Cars • Better Place

• Detroit Electric • Li-ion Motors

• Corbin • HumanCar

• Bright Automotive • LeEco

• Key Takeaway: The global auto industry is a highly competitive, cyclical, high fixed-cost, and low-margin industry. The failure rate for new entrants is high.

Independent Research, Indispensable Results PAGE 14

Source: CFRA. …And Discontinued Models

Discontinue BEV/ Manufacturer Brand Model Date PHEV Type General Motors Chevy Volt 2019 PHEV Hatchback Volkswagen Audi A3 Sportback e-tron 2019 PHEV Sedan General Motors Cadillac CT6 2019 PHEV Sedan Ford Ford Focus Electric 2019 BEV Hatchback Ford Ford C-Max 2018 PHEV Hatchback General Motors Cadillac ELR 2017 PHEV Coupe Daimler Mercedes-Benz B250e 2017 BEV Hatchback Renault-Nissan-Mitsubishi Mitsubishi iMiEV 2017 BEV Subcompact General Motors Chevy Spark 2016 BEV Subcompact Toyota Toyota Prius PHV 2016 PHEV Hatchback Honda Honda Accord 2015 PHEV Sedan Honda Honda Fit 2014 BEV Subcompact Toyota Toyota RAV4 EV 2014 BEV SUV Coda Coda Coda 2013 BEV Sedan Fisker Fisker Karma 2012 PHEV Sports car Tesla Tesla Roadster 2012 BEV Sports car Toyota Toyota RAV4 EV 2003 BEV SUV Ford Ford Ranger 2002 BEV Pickup General Motors General Motors EV1 1999 BEV Coupe General Motors Chevy S-10 Electric 1998 BEV Pickup Note: BEV = Battery Electric Vehicle, PHEV = Plug-In Hybrid Electric Vehicle Independent Research, Indispensable Results PAGE 15

Sources: CFRA, EVAdoption.com. 25 New EV Models To Debut in U.S. in 2020

Availability Model BEV/ Range Estimated Manufacturer Brand Model Date Year PHEV Type (miles) MSRP Aston Martin Aston Martin RapidE 2020 2020 BEV Sedan 200+ $250,000 BMW BMW iX3 2020 2021 BEV SUV 210 $50,000 BMW BMW X5 2020 2021 PHEV SUV 40 $62,000 BMW Mini Cooper S E 2020 2020 BEV Hatchback 114 $37,500 Bollinger Bollinger B1 2020 2020 BEV Pickup/Worktruck 200 $60,000 Daimler Mercedes-Benz EQC 2020 2020 BEV SUV 225 $75,000 Fiat Chrysler Jeep Renegade PHEV 2020 2020 PHEV SUV 25 $28,000 Fiat Chrysler Jeep Wrangler PHEV 2020 2021 PHEV SUV 25 $35,000 Fiat Chrysler Maserati Levante 2020 2021 PHEV SUV 25 $90,000 Ford Ford TBD 2020 2021 BEV SUV 300 $45,000-$48,000 Ford Ford Escape 2020 2020 PHEV SUV 30 $35,000 Geely Volvo XC40 2020 2021 BEV SUV 222 $58,000 Geely Polestar Polestar 1 2020 2020 PHEV Sport coupe 65 $155,000 Geely Polestar Polestar 2 2020 2021 BEV Sedan 275 $63,000 Hyundai Kia Soul 2020 2020 BEV CUV 243 $36,000 Hyundai Kia Stonic 2020 2020 BEV SUV 190 $26,000 Renault-Nissan-Mitsubishi Mitsubishi Outlander 2020 2020 PHEV SUV 38 $36,000 Rivian Rivian R1T 2020 2021 BEV Pickup 230-400 $70,000-$100,000 Tesla Tesla Model Y 2020 2020 BEV CUV 300 $48,000 Toyota Toyota RAV4 2020 2020 PHEV SUV 30 $32,000 Volkswagen Audi Sportback e-tron 2020 2020 BEV Sport coupe 275 $90,000 Volkswagen Audi e-tron GT 2020 2020 BEV Sedan 248 $90,000 Volkswagen Bentley Bentayga Hybrid 2020 2020 PHEV SUV 31 $190,000 Volkswagen Porsche Taycan 2020 2020 BEV Sports car 250 $80,000 Volkswagen Volkswagen I.D. 4 2020 2020 BEV CUV 260 $45,000 Note: BEV = Battery Electric Vehicle, PHEV = Plug-In Hybrid Electric Vehicle Independent Research, Indispensable Results PAGE 16

Sources: CFRA, EVAdoption.com. The Next Decade: Estimated 2030 EV Sales

2030E U.S. 2030E U.S. EVs as % of Manufacturer Vehicle Sales EV Sales U.S. Vehicle Sales BMW 360,000 72,000 20% Fiat Chrysler 2,100,000 105,000 5% Ford 2,600,000 130,000 5% General Motors 3,000,000 72,000 2% Honda 1,650,000 247,500 15% Hyundai-Kia 1,300,000 65,000 5% Mercedes-Benz 380,000 95,000 25% Nissan 1,600,000 320,000 20% Tesla 850,000 850,000 100% Toyota 2,450,000 220,500 9% Volkswagen 630,000 157,500 25% Volvo 80,000 40,000 50% Total 17,000,000 2,374,500 14% • In the U.S., EV market share is expected to increase from 2.5% of overall vehicle sales to roughly 14% by 2030 – Tesla and Volvo (Geely) likely to have the greatest EV exposure – Germany’s “Big Three” automakers expected to make major EV push Independent Research, Indispensable Results PAGE 17

Sources: CFRA, Edison Electric Institute (EEI). EVs: Concluding Thoughts

• EV sales will surge in the coming years as prices drop closer to parity with gas- powered vehicles and charging times improve – $225 billion will be spent to develop more than 200 new plug-in vehicles through 2023, a figure that doesn’t include hybrids

• We predict that most vehicles will flop, while others will fare better from a sales perspective – Price and range will be the two most important factors in determining success; tax credits also important

• We think a diversified approach to EVs makes the most sense and don’t expect EVs to be a profit driver for most automakers

• We think future oil prices and global GDP growth are the two biggest factors that will affect future EV development

Independent Research, Indispensable Results PAGE 18

Sources: CFRA, Alix Partners. Autonomous Vehicle Outlook Garrett Nelson, Senior Equity Analyst

Independent Research, Indispensable Results PAGE 19 Autonomous Vehicles

Independent Research, Indispensable Results PAGE 20

Sources: CFRA, Pxhere.com. The Five Levels of Automation

Where we are today: Somewhere between Levels 2 & 3

Independent Research, Indispensable Results PAGE 21

Sources: CFRA, Society of Automotive Engineers (SAE). The Case For Autonomous Vehicles (AVs)

• Safety – 36,560 people died and many more were seriously injured in U.S. motor vehicle crashes in 2018 – 94% of serious motor vehicle crashes are caused by human error • Economic & Societal Benefits – Motor vehicle crashes cost $242 billion in economic activity (including $57.6 billion in lost workplace productivity) and $594 billion due to loss and decreased quality of life due to injury, according to a 2010 study – Drivers could be working or doing something more productive • Efficiency & Convenience – Americans spend about 54 hours per year stuck in traffic, on average – Lower fuel costs and vehicle emissions • Mobility – Currently 49 million Americans age 65+ and 53 million with some form of disability

Independent Research, Indispensable Results PAGE 22 Vehicle Safety Still Improving Absent AVs

Annual U.S. Motor Vehicle Fatality Rate Annual U.S. Motor Vehicle Fatalities (fatalities per 100 million vehicle miles traveled; 1921-2018) (1921-2018)

25 60,000 24.09 (1921) 50,000 20

40,000 15 30,000

10 20,000 1.13 5 (2018) 10,000 1.08 (2014)

0 0

1921 1925 1933 1937 1941 1949 1953 1957 1961 1965 1969 1977 1981 1985 1993 1997 2005 2009 2013 1929 1945 1973 1989 2001 2017

1921 1925 1933 1937 1941 1949 1953 1957 1961 1965 1969 1977 1981 1985 1993 1997 2005 2009 2013 1929 1945 1973 1989 2001 2017 • The number of U.S. fatalities per 100 million vehicle miles traveled has also fallen steadily from the peak of 24.09 in 1921 (the first year of statistics) to 1.13 in 2018 • Motor vehicle fatalities have also fallen steadily since peaking at 54,589 in 1972 to 36,560 in 2018 due to new safety technology (ABS, airbags,etc.) Independent Research, Indispensable Results PAGE 23

Sources: CFRA, National Highway Traffic Safety Administration. The Case Against Autonomous Vehicles

• Safety – Humans are extremely good drivers and vehicles are safer than ever • Right now, humans are involved in fatal collision once every 100 million miles traveled (a 99.999999% safety rate) • AVs won’t be accepted until they’re as safe as human drivers • Vehicle safety has improved dramatically • Economic & Societal Costs – Technological development costs are incredibly expensive • November 2018 - Volkswagen announces plans to spend $50 billion by 2023 on new plants, electric cars, autonomous driving and mobility services • October 2019 - Hyundai announces plans to invest $35 billion into “future mobility technology” by 2025 • Cybersecurity – The more “connected” a cars is, the more easily it can be hacked

Independent Research, Indispensable Results PAGE 24 A Level 5 Automated Vehicle

Infiniti QX Inspiration Concept Vehicle

Independent Research, Indispensable Results PAGE 25

Sources: Garrett Nelson, CFRA, North American International Auto Show (NAIAS) 2019. The Global Auto Market: A Snapshot

TOTAL VEHICLE SALES BY REGION (for the year ended, in millions of vehicles)

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 U.S. 11.772 13.041 14.786 15.883 16.843 17.846 17.866 17.551 17.701 17.277 16.966 North America 12.859 14.204 15.598 17.527 18.765 19.910 21.175 21.497 21.120 20.613 20.242 South America 5.516 5.980 6.144 6.265 5.565 4.514 4.052 4.334 4.604 4.655 4.525 Europe 18.809 19.740 18.663 18.343 18.588 19.036 20.135 20.755 20.698 19.870 19.175 China 18.062 18.505 19.306 21.984 23.499 24.662 28.028 28.879 28.081 25.273 24.464 Japan 4.956 4.210 5.370 5.376 5.563 5.047 4.970 5.234 5.272 5.193 5.141 Asia, Oceania & Middle East 35.192 35.405 38.226 40.579 42.557 43.411 46.858 48.315 47.410 43.523 42.522 Africa 1.251 1.447 1.569 1.654 1.718 1.550 1.314 1.137 1.236 1.211 1.189 Total 74.972 78.170 82.129 85.606 88.338 89.685 93.856 95.661 95.056 89.871 87.652 % Change U.S. 10.8% 13.4% 7.4% 6.0% 5.9% 0.1% -1.8% 0.9% -2.4% -1.8% North America 10.5% 9.8% 12.4% 7.1% 6.1% 6.4% 1.5% -0.4% -2.4% -1.8% South America 8.4% 2.7% 2.0% -11.2% -18.9% -10.2% 6.9% 7.7% 1.1% -2.8% Europe 5.0% -5.5% -1.7% 1.3% 2.4% 5.8% 3.1% -0.4% -4.0% -3.5% China 2.5% 4.3% 13.9% 6.9% 4.9% 13.7% 3.0% -2.8% -10.0% -3.2% Japan -15.1% 27.5% 0.1% 3.5% -9.3% -1.5% 5.3% 0.7% -1.5% -1.0% Asia, Oceania & Middle East 0.6% 8.0% 6.2% 4.9% 2.0% 7.9% 3.1% -0.9% -8.2% -2.3% Africa 15.6% 8.5% 5.4% 3.9% -9.8% -15.2% -13.5% -2.4% -2.0% -1.8% Total 4.3% 5.1% 4.2% 3.2% 1.5% 4.7% 1.9% -0.6% -5.5% -2.5% Global Market Share % U.S. 15.7% 16.7% 18.0% 18.6% 19.1% 19.9% 19.0% 18.3% 18.6% 19.2% 19.4% North America 17.2% 18.2% 19.0% 20.5% 21.2% 22.2% 22.6% 22.5% 22.2% 22.9% 23.1% South America 7.4% 7.7% 7.5% 7.3% 6.3% 5.0% 4.3% 4.5% 4.8% 5.2% 5.2% Europe 25.1% 25.3% 22.7% 21.4% 21.0% 21.2% 21.5% 21.7% 21.8% 22.1% 21.9% China 24.1% 23.7% 23.5% 25.7% 26.6% 27.5% 29.9% 30.2% 29.5% 28.1% 27.9% Japan 6.6% 5.4% 6.5% 6.3% 6.3% 5.6% 5.3% 5.5% 5.5% 5.8% 5.9% Asia, Oceania & Middle East 46.9% 45.3% 46.5% 47.4% 48.2% 48.4% 49.9% 50.5% 49.9% 48.4% 48.5% Africa 1.7% 1.9% 1.9% 1.9% 1.9% 1.7% 1.4% 1.2% 1.3% 1.3% 1.4% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Source: International Organization of Motor Vehicle Manufacturers; CFRA estimates for 2019-2020 Independent Research, Indispensable Results PAGE 26

Sources: CFRA estimates for 2019-2020, OICA. How Long Will it Take to Get to Level 5?

Forecasted Annual Global Sales of Level 5 Autonomous Vehicles (millions of units) 70 68

50 50

40 32 30

20 13 10 4 1 0 2025 2030 2035 2040 2045 2050 • LMC Automotive forecasts that global sales of Level 5 AVs will total 1M in 2025 and increase to 68M in 2050 Independent Research, Indispensable Results PAGE 27

Sources: CFRA, LMC Automotive. AVs: What The Experts Are Saying – Prior to 2019

• Tesla CEO Elon Musk – “Self-driving technology is almost at a point when owners will be able to fall asleep in their cars and wake up at their destination. I think that’s about two years (away).” - October 10, 2014 • Argo AI CEO Bryan Salesky – “We’re still very much in the early days of making self-driving cars a reality.” -October 16, 2017 • Waymo CEO John Krafcik – “Fully self-driving cars are here…It’s not happening in 2020, it’s happening today.” - November 7, 2017 – “Autonomy always will have some constraints.” -November 13, 2018 • General Motors Chairman & CEO Mary Barra – “We’ve taken the steering wheel and pedals from the AV because we believe we’ll be able to deploy this in 2019 safely.” -January 16, 2018

Independent Research, Indispensable Results PAGE 28 AVs: What The Experts Are Saying – 2019

• May Mobility CEO Edwin Olson – “Because self-driving cars are only about 0.01% as good as human drivers today, robotaxis are likely to be a fantasy until 2035.” -February 27, 2019 • Ford CEO Jim Hackett – “We overestimated the arrival of autonomous vehicles.” -April 9, 2019 • Tesla CEO Elon Musk – “Next year, for sure, we’ll have over 1 million robotaxis on the road.” -April 22, 2019 • Nissan technology expert Tetsuro Ueda – “To develop the more advanced Level 3 hands-free automated driving technology, Nissan will need at least until the late 2020s.” -June 16, 2019

Independent Research, Indispensable Results PAGE 29 AVs: What The Experts Are Saying – 2019

• Waymo Chief External Officer Tekedra Mawakana – “I think the change that I’ve observed over the past year is we’ve gone from a lot of hype that was sort of unmanageable honestly…A lot of hype was so mismatched to what’s happening in the real world…Now I think the focus is still very enthusiastic, but also more grounded.” - October 22, 2019 – “This is probably the greatest technological challenge of our generation.” -October 22, 2019 • Zoox Co-founder & CTO Jesse Levinson – “Tesla vehicles are not going to be able to drive themselves in 2020 (as promised by Elon Musk). The vehicles don’t have enough sensors or computers to do that given any remotely known technology that exists that humans have ever created.” -October 22, 2019 – “Elon would need to come up with 4 or 5 orders of magnitude more performance out of systems…Somehow he would need to make 50 years more progress. It’s not happening.” - October 22, 2019 • Apple Co-founder Steve Wozniak – “I stepped way back on this idea of Level 5. I’ve really given up. I don’t even know if that will happen in my lifetime.” -October 23, 2019

Independent Research, Indispensable Results PAGE 30 Autonomy: Significant Obstacles Remain

• Technological – Bad weather – Uneven terrain – Difficulty identifying and anticipating movement of moving objects • Legal / Regulatory – No federal standards to replace state laws/voluntary guidelines – Insurance liability • Public Perception – Consumer distrust – Cybersecurity fears

Independent Research, Indispensable Results PAGE 31 Autonomy: Differing Views on Technology

• Tesla CEO Elon Musk – “LiDAR (Light Detection and Ranging) is a fool’s errand. And anyone relying on LiDAR is doomed. Doomed. Expensive sensors that are unnecessary.” -April 22, 2019 • The Verge – “Practically every other company trying to bring self-driving cars to the road — including Ford, Uber, Waymo, and GM Cruise — relies on a suite of sensors comprised of LiDAR, cameras, and radar.” -April 24, 2019 • Cornell Associate Professor of Computer Science Kilian Weinberger – “The common belief is that you couldn’t make self-driving cars without LiDAR. We’ve shown, at least in principle, that it’s possible.” -April 25, 2019 • Investors Business Daily – LiDAR works in every lighting condition but suffers in scenarios like snow.” -May 24, 2019

Independent Research, Indispensable Results PAGE 32 LiDAR: Boom or Bust?

• The majority of automakers are going “all in” on high-cost LiDAR technology, which stands for Light Detection and Ranging – This technology uses laser sensors to create 3D maps of their surroundings, measuring objects’ distance via the speed of light

• Tesla is taking “the road less traveled” from a technology standpoint – Tesla technology uses two stereo cameras mounted to either side of rearview mirror to record roads

Independent Research, Indispensable Results PAGE 33 AVs: Concluding Thoughts

• Level 5 autonomous vehicles are much farther in the future than most experts thought a few years ago – Progress toward Level 5 will be gradual • We think global GDP growth is the single biggest factor that will affect future AV development – R&D costs associated with AV technology are massive and will likely be the first to be cut from budgets in the event of a downturn • AV development costs will continue to weigh on consolidated earnings for major automakers – If excluding AV losses, Ford’s EBIT would have been 14.3% higher and GM’s EBIT would have been 8.4% higher in the first nine months of 2019

Independent Research, Indispensable Results PAGE 34

Sources: CFRA, Company reports. EVs & AVs: Winners & Losers

• Winners – TSLA • First-mover advantage with attractive combination of price and range • In-house AV technology development and frequent over-the-air Autopilot software updates – European Automakers • Popularity of EVs in many European countries and companies such as Volkswagen, Volvo (Geely), BMW and Daimler expected to pick up significant market share in U.S. – Those still eligible for full $7,500 U.S. federal tax credit – EVs: Light duty trucks (SUVs/crossovers/pickups) with a compelling mix of price and range • Popularity of category - 69.2% of U.S. new vehicle sales in 2018 (up from 47.5% in 2009)! • Losers – The “Big Three” U.S. Automakers • EVs: lack of sales traction from recent models, playing “catch up” with product pipeline • AVs: Going “all in” on LiDAR technology • AV segments have become a significant drag on overall earnings – An EBIT drag of 8.4% for GM and 14.3% for F in the first three quarters of 2019

Independent Research, Indispensable Results PAGE 35

Sources CFRA, Company reports. Semiconductor Automotive Outlook Angelo Zino, Vice President

Independent Research, Indispensable Results PAGE 36 Automotive – The Next Big Tech Device

• Three Megatrends driving demand for semiconductors: – Shift to autonomous vehicles – Electrification of the car – The ongoing evolution towards a more connected vehicle • Automotive semiconductor demand to outgrow the broader industry by 2x through 2022. • Areas of Focus: Infotainment Systems, Safety, Powertrain, Battery Management, Body/Lighting Control, and Autonomous features. • Fully autonomous features years away but semi-autonomous features already driving content growth (e.g. Tesla Autopilot). • More advanced approaches (graphics processing units/GPUs) offer upside, with a fully autonomous car adding over $10K in technology software/hardware.

Independent Research, Indispensable Results PAGE 37 Semiconductor Industry Breakdown By Category

Wired, 4%

Automotive, 12%

Computing, 30% Industrial, 11%

Consumer, 12%

Wireless, 31%

Source: CFRA, IDC Independent Research, Indispensable Results PAGE 38 Semiconductor Content Growth Per Vehicle

Source: CFRA

Independent Research, Indispensable Results PAGE 39 A Bifurcated Market For Semiconductors (Content Per Vehicle)

$1,600

$1,400

$1,200

$1,000

$800

$600

$400

$200

$- 2016 2017 2018 2019 2020 2021 2022 2023

Luxury Average Standard Source: CFRA

Independent Research, Indispensable Results PAGE 40 Semiconductor Categories Inside The Vehicle

CATEGORY SENSORS THINK - CONTROLLER ACTIONS

Cellular Connectivity Wifi, BT, GNSS, NFC Connectivity Controller Smart Car Access

V2X Radar Sensor Fusion & Planning Autonomy (ADAS) Camera Controller Lidar

Motion & Pressure Powertrain & Engine, Transmission, Brake, Battery Powertrain Controller Vehicle Dynamics Speed Management, Steering, Airbag, Suspension Ultrasonic

Temp, Light, Humidity HVAC, Interior Lighting, Doors, Seats, Body & Comfort Body Controller Switch Panels Steering Wheel, Mirrors, Wipers, Sunroof

Radio & Audio Connected eCockpit Controller eCockpit, Amplifiers Infotainment Touch Displays Voice Recognition

Source: CFRA, NXPI Independent Research, Indispensable Results PAGE 41 Electrification of Powertrains Boost Semiconductor Volume

• A Battery Electric Vehicle (BEV) adds about $450 of semiconductor content relative to combustion engines. • Improving mix towards electric vehicles over time results in greater revenue for chipmakers. • Battery management solutions among fastest growth areas. Combustion Plug-in Range Battery Electric Engine (ICE) Mild Hybrid Full Hybrid Hybrid Extended EV Vehicle (BEV) Combustion Engine ●●●● ●●●● ●●● ●●● ●● - Main Electric Charging? No No No Yes Yes Yes Electric Traction - 10-20kW 15-60kW 40-80kW 40-80kW >80kW Added Semiconductor Value - $200 $350 $400 $425 $450 Circles dictate importance of combustion engine in vehicle. Source: CFRA, NXP Semiconductors

Independent Research, Indispensable Results PAGE 42 ADAS LEVEL DEFINITIONS AND POTENTIAL CONTENT GROWTH

Level Description Human Role Vehicle Role $ Content Increase

0 None All driver control No autonomous functions No Automation

1 Limited + Safety Almost all driver control ABS, traction control +$100

Limited , Active Lane keeping, emergency braking, adaptive cruise 2 Safety, Mostly driver control +$150 control, parking assist Convenience

Significant Driver can disengage Advanced controls in simple conditions (highway, 3 +$600 Autonomy completely at times slow-moving congention, good weather)

Driver not needed in some Full conditional autonomous capabilities, more 4 High Autonomy +$900 locations or conditions difficult conditions/locations not autonomous

Autonomous driving in all locations/conditions Complete 5 No driver needed possible, driver controls (brakes, steering wheel) +$1,200 Autonomy not necessary

Source: CFRA, LMC Automotive, NXPI Independent Research, Indispensable Results PAGE 43 Sensor Units In Autonomous Cars

• Cameras and sensors give a self-driving car “eyes” --- beneficiaries include Ambarella, NXP Semiconductors, QUALCOMM, and Analog Devices, among others. • Processing chips serve as the artificial brains --- NVIDIA and Intel look to make progress but in different ways. Level 1/2 Level 3 Level 4/5 • Radar winning the race over Lidar. Silicon Value $100 - $150 $600 $900 - $1,200 • Radar and camera sensors seen Sensor Units Units Units as generating the most volume. Radar 1 to 3 4 to 6 6 to 10 Camera 1 At least 4 6 to 8 • Vehicle-to-everything (V2X) communication to benefit from Lidar NA 0 to 1 1 to 3 5G adoption. V2X NA 0 to 1 1 to 2 Source: Strategy Analytics, NXPI

Independent Research, Indispensable Results PAGE 44 Understanding The Function of Different Sensors

Source: CFRA, Ansys Independent Research, Indispensable Results PAGE 45 Comparing “The Eyes” of Self-Driving Vehicles

RADAR LIDAR Cameras

Low Resolution Higher Resolution Highest Resolution

Provides wide angle views of close-up Works by sending out radio waves that bounce off Uses laser light pulses to scan the surroundings of surroundings and longer, narrower views of distant surfaces. the vehicles. what is ahead.

Most common uses include adaptive cruise control, Millions of laser signals per second fired - reflects Cameras are placed all around self-driving automatic emergency, braking blind-spot detection, off object surfaces and used to create a 3D model vehicles and able to read road parking aid, collision avoidance and obstacle detection. of the vehicle surroundings. signs/markings.

Strengths: Able to depict if an object is a bicycle or Strength: Can see hundreds of yards out and detect Strengths: Best option to get accurate view of motorcycle or if a pedestrian is facing forward or size/speed. surroundings backward – can better predict an object behavior.

Drawback: can't see detail; not able to detect the Drawback: most expensive option and doesn’t Drawback: Doesn’t work well in all weather identity of objects. work well in bad weather. conditions.

Source: CFRA

Independent Research, Indispensable Results PAGE 46 Vehicle-to-Everything (V2X)

• V2X – The passing of information to any entity/object that may affect the vehicle and vice versa. • Two main components: – Vehicle-to-vehicle (V2V) - vehicles to communicate with one another. – Vehicle-to-infrastructure (V2I) - vehicles communicate with external systems such as streetlights, buildings and even cyclists or pedestrians. • A complement to radar/lidar/cameras. • Resistant to interference and inclement weather. • Will help bring the concept of smart cities to reality but a very long timeframe. • 5G will help adoption of C-V2X; Qualcomm a key player.

Independent Research, Indispensable Results PAGE 47 All About The Computing Platform

• Computing at the Edge – Data Centers with wheels. • GPUs and ASICs appear best positioned.

Graphics Processing Unit Application Specific Field Programmable Central Processing Unit (GPU) Integrated Chip (ASIC) Gate Array (FPGA) (CPU) Best computational power Flexible programming A cheaper option once in full Processing power not as and ideal for deep makes it ideal for production. great as GPUs. learning. prototyping. Unlikely to work on a GPUs likely to be the Extremely difficult to create Less powerful and more standalone basis for industry standard for AI in and high upfront costs. costly than ASICs. Level 4 and Level 5 the vehicle. vehicles. FPGA leaders include NVIDIA the dominant Tesla Xilinx, Intel and Lattice Intel player Semiconductor.

Source: CFRA Independent Research, Indispensable Results PAGE 48 How Autonomous Cars Function

• Map Building – Lidar and camera technology are best for scanning surroundings – Processors aggregate the sensor, GPS and IMU inputs to build the map • Path Planning – Find the safest and quickest route to a location – Navigate through obstacles and be able to change lanes/pass vehicles. – Essentially, like a GPS system and extremely short-range plans (seconds) are updated continuously. • Perception/Obstacle Avoidance – Processors use AI/machine learning to identify objects and predict their behavior. – Constant communication with other vehicles and adjustments will be made when issues arise.

Independent Research, Indispensable Results PAGE 49 Leading Providers of Autonomous Capabilities

• Tesla and Waymo have a first mover advantage but the field is likely to quickly catch up. • Other Technology companies (e.g. Apple) poised to enter the space over time. • Ridesharing players will likely be among the earliest adopters.

Tesla Waymo NVIDIA Utilizes real-world data to create a self- Most of the data generated via driving car (access to all vehicle GPU hardware/software supplier. simulators. movements/decisions).

Commercially sells its own ready- Utilizes only cameras and radar; no Lidar. Leverages Lidar technology. made simulator (Constellation).

Utilizes a GPU and paving the way The brain is an internally developed Will lower barriers to entry for the for more Tech companies to processor (ASIC). auto industry. participate.

Source: CFRA and NXP Semiconductors

Independent Research, Indispensable Results PAGE 50 Connected Infotainment Systems Maturing

• Infotainment market maturing but greater demand for e-cockpits and relatively low penetration rates in China provide additional room for growth. • More advanced e-cockpit systems could include gesture sensors so that passengers in the back seat can use motions to control music or the radio. $, Billions) • Increasing displays are being sold in a $4.0 vehicle (front and rear screens). $3.5 $3.0

• On the radio side, new audio $2.5

applications coming (e.g. active noise $2.0

cancellation, engine sound $1.5

enhancement, more channels and $1.0

high-end applications). $0.5

$0.0 2018 2019e 2020e 2021e

eCockpit, Headunit Radio, Audio Source: CFRA and NXP Semiconductors Independent Research, Indispensable Results PAGE 51 Top 20 Global Chipmakers –Auto Exposed Likely to Outperform

100%

80%

60%

40%

20%

Wireless Wired Industrial Consumer Computing Automotive Source: CFRA, IDC Independent Research, Indispensable Results PAGE 52 Mapping The Automotive Chip Suppliers (U.S. Coverage)

ExposurePowertrain to Category & Auto % of Autonomy Vehicle Body & Connected Ticker Company Name Sales Connectivity (ADAS) Dynamics Comfort Infotainment ADI Analog Devices, Inc. 16% X X X X X AMBA Ambarella, Inc. 20% X AVGO Broadcom Inc. 1% - 2% X CREE Cree, Inc. 5% - 10% X CY Cypress Semiconductor Corporation 38% X X DIOD Diodes Incorporated 10% X X X INTC Intel Corporation 1% - 2% X LSCC Lattice Semiconductor Corporation 15% - 20% X X MPWR Monolithic Power Systems, Inc. 14% X X X MRVL Marvell Technology Group Ltd. ≥5% X MXIM Maxim Integrated Products, Inc. 25% X X X NVDA NVIDIA Corporation 8% X X NXPI NXP Semiconductors N.V. 48% X X X X X ON ON Semiconductor Corporation 32% X X X QCOM QUALCOMM Incorporated 2% X TXN Texas Instruments Incorporated 20% X X X X CFRA, S&P Global Market Intelligence Independent Research, Indispensable Results PAGE 53 Questions

Independent Research, Indispensable Results PAGE 54 Disclosures

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Independent Research, Indispensable Results PAGE 55 Disclosures, continued.

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Independent Research, Indispensable Results PAGE 56