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Battery Technology The Key to an Electric Vehicle Future Research Reinvented At Smartkarma, We Do Things Differently We leverage the online economy, applying this innovative mindset to capital markets. For a single subscription, Smartkarma users can consume all the research they need, just like Netflix enables viewers to watch unlimited hours of content on its platform. At the same time, we address a growing need for a modern approach to corporate access. In 2019, we launched Corporate Solutions, which allows company executives and investor relations personnel to connect seamlessly to investors and analysts, all within a single network. In this effort, we work closely with global exchanges such as Singapore Exchange, which became our investor, to provide such services to listed companies worldwide. Our model ensures that the research on our platform is objective and unbiased, independent and free from conflicts of interest. The platform determines appropriate pricing according to the quality and value of each research piece. This helps independent Insight Providers monetise their research and incentivises them to produce truly quality, differentiated work that stands out from the rest of the market. A commitment to quality is also why we carefully vet and select our Insight Providers. Less than 10 percent of the independent analysts who apply are approved as Insight Providers on Smartkarma. We currently have over 100 such curated Insight Providers publishing on the platform, ranging from one-person operations to teams of multiple members around the world. In the following pages, you will be able to see for yourself the result of our efforts. In the meantime, we will be busy bringing you more exciting Smartkarma is a global developments over the course of the year! investment research network that brings together independent Insight Providers, institutional investors, and corporate investor relations professionals and management. Cover photo by chuttersnap on Unsplash 2 Battery Technology- The Key To An Electric Vehicle Future Thematic (Sector/Industry) Battery Technology- The Key To An Electric Vehicle Future Aqila Ali By Aqila Ali | 06 Apr 2019 Equity Analyst EXECUTIVE SUMMARY This Insight has been produced jointly by William Keating at Ingenuity and Mio Kato, CFA and Aqila Ali at LightStream Research. The Insight is structured as follows: • A. Key Conclusions • B. Report Highlights • C.History of Electric Vehicles • E. History of Rechargeable Battery Technologies And An In-Depth Analysis on Li-ion Batteries • F. Batteries Beyond Li-ion • G. Supply Constraints for Key Raw Materials • H. The Competitive Landscape A. Key Conclusions Global sales of EV's reached 2m units in 2018. As a base case scenario, we expect a combination of improving EV battery cost-effectiveness, increasingly challenging emissions standards and ongoing incentives by various governments to propel unit sales to 8m units annually by 2025. Against this, we consider battery material price increases, a reduction of EV incentives in the US and China and political and environmental risks from the mining of metals used in batteries as downside risks which could delay the growth of the EV market. Surprisingly, the EV battery technology that will drive us towards that 8m unit goal is still very much a work in progress. While Lithium Ion is the by far the dominant technology, there are striking differences between variants of the technology, battery pack design, battery management systems and manufacturing scale between the leading contenders. Furthermore, while there's nothing on the horizon to completely displace Lithium Ion within the Aqila Ali 3 Battery Technology- The Key To An Electric Vehicle Future next decade, it remains unclear whether the technology will be the one to achieve the $100/kWh price target that would make the EV cost-neutral compared to its internal combustion predecessors. Quite apart from the technology, the EV battery segment faces other significant challenges including increasing ostsc for core materials such as Cobalt, increasing safety concerns as the mix of that very same cobalt is reduced in the cathode, the growing risk of litigation amidst a fiercely competitive environment and last but not least, the appetite of various governments to maintain a favourable subsidy framework. DETAIL B. Report Highlights - Introduction Although widely considered a recent phenomenon, largely thanks to Tesla's arrival on the scene, the first EV's made their appearance well over a century ago. According to this US Department Of Energy (DOE) report, EVs quickly became a popular alternative to their gasoline-powered competition, particularly in New York City: By 1900, electric cars were at their heyday, accounting for around a third of all vehicles on the road. During the next 10 years, they continued to show strong sales. Over the next few years, electric vehicles from different automakers began popping up across the U.S. New York City even had a fleet of more than 60 electric taxis. However, Henry Ford's mass production of the Model T, along with the invention of the electric starter motor both served to propel the internal combustion engine (ICE) to the forefront and EV's were all but confined to the scrapheap of history. Things started to turn in their favour once again as air pollution from ICE powered vehicles threatened to overwhelm major global cities, firstly in the US and more recently Asia, particularly China. After false dawn in the late eighties and early nineties in the US, EV's began staging a spectacular comeback in the early part of the present decade, reaching an important milestone in 2017 when unit sales surpassed 1m units for the first time ve er. That record growth continued unabated in 2018 with annual sales increasing some 72% to just over 2m units. Aqila Ali 4 Battery Technology- The Key To An Electric Vehicle Future By 2025, J.P. Morgan estimates that annual EV sales will reach over 8m units. We consider this forecast reasonable based on current conditions but do note that the recent period of rapid growth has been helped by strong government incentives, particularly in China. For this forecast to be achieved, governments will have to continue incentivising the development and sale of EVs. So long as that occurs, this rapidly expanding EV fleet will trigger a corresponding ramp in the manufacturing of batteries required to power them. - EV Battery Background Lead Acid batteries were used to power EVs in the early 1900's as well as the first generation of modern-era EVs such as the General Motors EV1 which launched in 1996 with a range of around 70 miles. However, in spite of their low cost and prevalence as the battery of choice for automotive starter motors and electronics for well over a century, Lead Acid batteries were ultimately deemed unsuitable as the source of power for modern-day EVs by virtue of their relatively low specific energy (40Wh/kg). Quite simply, lead- acid batteries are too heavy and bulky to achieve the range required for an electric vehicle to compete favourably with a gasoline-powered counterpart. Thus, it was that the second generation of General Motors EV1, launched in 1999, switched to a NiMH battery which improved the range considerably to 100–140 miles. The Toyota RAV4 EV, launched two years earlier, also featured a NiMH battery pack with a range of 120 miles. By the time Toyota released its second generation RAV4 EV (developed in partnership with Tesla) in 2012, the battery pack had switched to Lithium Ion (LIB). For its part, Tesla has powered its EVs with Lithium-Ion batteries from the outset. Today, EV batteries are all based on some variation of Lithium Ion technology of which there are four main variants, Lithium Manganese Oxide (LMO), Nickel Manganese Cobalt (NMC), Nickel Cobalt Aluminium (NCA) and Lithium Iron Phosphate (LFP). - Leading LIB Manufacturers For various reasons, the leading contenders in the EV battery segment have largely aligned themselves in three different groupings with regard to their LIB battery technology. #1 Tesla/Panasonic Tesla along with Panasonic, its battery producing partner of over a decade favour NCA. Their original battery cells were an off-the-shelf standard cylindrical model designated 18650 for its dimensions. Remarkably, Tesla battery packs combine thousands of these cells in varying series and parallel combinations to achieve the desired voltage and power. Coupled with an Aqila Ali 5 Battery Technology- The Key To An Electric Vehicle Future innovative BMS, Tesla has managed to largely silence the naysayers originally widely dismissive of the approach. Tesla's model 3 heralded a new generation of NCA cells, slightly larger in size and designated 21700, again an industry standard. In common with their competitors, successive generations of these NCA-based cells reduced the Cobalt content while increasing nickel content. #2 CATL Despite being a relative newcomer on the scene, China's CATL, shot to relative stardom as a leading global manufacturer of EV batteries within the space of eight years. CATL specialises in the NMC variant of LIB technology. Counting the likes of BMW, Daimler, VW, Honda and Hyundai along with a host of Chinese automakers among its customers, its technology is highly respected in the industry. Unlike Tesla, CATL customises its cells into larger "pouch" modules to its customers' specifications. Similar to what Panasonic and Tesla have been doing with NCA, CATL has also been working to reduce the Cobalt content and increase the Nickel content in successive generations of their batteries. Their original NMC cell was designated NMC522, the numbers representing the relative amounts of Nickel, Manganese, and Cobalt. Their current generation is denoted NMC622 while their future generation NMC811 will contain 80% nickel, 10% cobalt and 10% manganese. South Korea’s LG Chem and SK Innovation are also working on a similar NMC variant of LIB with all three competing fiercely to be the first to bring the next-generation cells to market.

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