eMobility in Europe: Status and outlook

1. Fachtagung "e-mobil in niederösterreich" S. Pölten, March 4, 2015 Contents

A. Drivers for Powertrain Electrification 3

B. Status eMobility (eMobility Index Q3/14) 9

C. Trends 2020..2025 19

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© Roland Berger Strategy Consultants Status-eMobility-2015-03-04.pptx 2 A. Drivers for powertrain electrification

Status-eMobility-2015-03-04.pptx 3 A Drivers for Powertrain Electrification eMobility is driven by customer "Pull" and regulatory "Push"

Importance of xEVs 2020 and 2025

high Driven by Customer pull Need for xEVs Regulatory push low ~2020 ~2025

Source: Roland Berger Status-eMobility-2015-03-04.pptx 4 5

A Drivers for Powertrain Electrification Europe will drive the global powertrain electrification – Long term cost competitiveness of xEVs generates additional market pull Regional powertrain trends (illustrative) 2015 2020 2025

Importance 75 g/km (73 94 g/km (58 PHEV platforms mpg) mpg) Flexible powertrain Next gen. Li-Ion Cost architectures 48V batteries competitive next xEV

Importance 17 km/l (40 20 km/l (48 mpg) mpg) 2025 standards Cost innovation xEV not yet defined xEV city driving Cost competitive xEV

Importance 41 mpg 54 mpg

Cost competitive xEV

Importance 13 th 5-Year-Plan

High efficient ICE xEV Customer pull Technology innovation Milestones framework

Page 5 Source: Roland Berger Status-eMobility-2015-03-04.pptx 5 A Drivers for Powertrain Electrification Regulatory requirements push improvements in most regions – In Europe, NA and Japan, there is also a strong customer pull

Assessment CO2 emission/fuel consumption regulation and customer pull

2) 4) . Corporate CO2 emission target . Fuel efficiency targets [km/l] . CAFE [mpg or g/mi] . Potential corporate CO2 emission [g/km] . Additional ZEV regulation CARB targets [g/km] ≙ 15.1 ≙ 20.3 ≙ 286 ≙ 213 ≙ 163 . Additional potential fleet xEV target km/l km/l g/mi g/mi g/mi share

-26% 178 169 154 -43% -44% 127 -41% 132 114 116 941) 101 95 755)

t.d.b.

2013 >2021 2025 2013 2020 2025 2013 2020 2025 2013 2020 2025

Customer pull

Customer will only buy cars with most efficient/lowest Customer do not consider CO2 emissions/consumption CO2 emission technology (medium term) in purchase decision (medium term)

1) Average weight depended CO2 emission target 2) EPA & NHTSA estimates of g/mi for passenger cars and light trucks combined, driving cycle compensated 3) End customer pull for low CO2 emission/low fuel consumption powertrain and/or alternative powertrains 4) No decision made yet 5) 68-78 g/km under discussion Source: FAW; EPA, EU; Inovar; Roland Berger Status-eMobility-2015-03-04.pptx 6 A Drivers for Powertrain Electrification We expect costs of typical PHEV cells to be in a range of 130..150 USD/kWh in 2020

Impact of material improvements on cell prices1) – Typical 96 Wh PHEV cell [USD/cell]

~250 130..150 USD/kWh USD/kWh • Gen 2a: NCM111 …523, -18% -22% Anode 100% Graphite 23.3 • GEN 2b: Ni NCM622 … 811, Anode 100%Graphite/HC • GEN 3a: Ni NCM622 .. 811 Anode Graphite + 5..10% Silicon • GEN 3b: HE-NCM, high voltage spinel silicon anode

GEN 2A New materials, GEN 2B Increased GEN 3a cell cost scale effects energy density 2015

1) Cost for Auto. customers 2) Based on a high-density 50-50 mixture of NCM 111 and LiNiO2

Source: Roland Berger LiB Market Model Q1/14 Status-eMobility-2015-03-04.pptx 7 A Drivers for Powertrain Electrification Costs of TESLA's 18650 cell manufactured in the announced "Giga- factory" could be already at 120$/kWh, but higher integration costs

TESLA Gigafactory process flow (until cell) and estimated costs per kWh [$]

Other materials (Al, Cu, steel, ..): Depreciation & interest 25-32$ (5 bn$, 7yrs, 10-15%): 35-42$

Raw Steel/ Aluminum

Cathode Manufacturing Cathode Can & Cap Precursor: Electrode

35 GWh 12-15$ Aluminum Foil per year (cells)

Separator Separator Winding Cell Manufacturing Costs to Polymers Ass- etc.: 5-7$ emby OEM:

Raw Materials Raw Anode 120$..130$ Manufacturing Anode Electrode Electrolyte Precursor: Copper Foil Manufacturing 3-5$

Employees (total: ~6500, there-of Energy: LiPF6 etc.: EBT of operators assumed for pack: 500, 70-90k$ p.a.): 120..140 kWh 8-10$ (8-10%): 12-15$ (0,03$): ~4$ 10$

Source: TESLA, Roland Berger LiB market modell Q1/2014; Roland Berger Status-eMobility-2015-03-04.pptx 8 B. Status eMobility (eMobility Index Q3/14)

Status-eMobility-2015-03-04.pptx 9 B Status eMobility Technology levels are relatively stable and few new models are being launched (except in China)

Value for money of market-ready BEVs and PHEVs

EV value for money Country > Stable model policy with tried-and-tested Low Good vehicle models China > Very good value for money France > Increased technical revisions of existing Japan models (esp. battery) > High-priced vehicles very important > Continuing trend toward electrification Moderate (PHEVs) in upper segments Korea > Increasing number of expensive vehicle models > Great volatility in model range

Avg. sale price sale [EUR] Avg. > Slight improvement on technological level, esp. due to joint ventures USA Poor Germany > Renault Twizy continues to lose importance High in model mix > Renault Zoe Z.E. is dominant model 0 100 200 300 400 500 > Soul and still the only Korean Avg. technology level [points] EV models Note: Italian OEMs have no mass-produced EV/PHEV models

Source: fka; Roland Berger Status-eMobility-2015-03-04.pptx 10 B Status eMobility R&D subsidies are declining strongly in most automotive nations

State R&D funding for e-mobility [EUR m], [% of GDP] Country [EUR m] [% of GDP]1)

7,684 0.114

47 0.000

1,025 0.041

925 0.046

105 0.012

0 0.000

171 0.004

1) Subsidies expressed as a share of current GDP (2013??)

Source: fka; Roland Berger Status-eMobility-2015-03-04.pptx 11 B Status eMobility The US leads the way in vehicle production – Almost all markets have seen increased volume numbers

Projected production of EVs and PHEVs through 2017 Country Domestic production of EVs/PHEVs ['000 units] Top 3 models in each country

441 Mitsubishi Outlander PHEV, Nissan Leaf EV, Toyota Prius PHEV

545 Nissan Leaf, Tesla Model S, Chevrolet Volt PHEV

292 BMW i3, VW Passat PHEV, Porsche Panamera PHEV

307 BYD Qin, Kandi KD, Chery QQEV

250 Renault ZOE Z.E., smart fortwo ED, Renault Kangoo Z.E.

11 EV, Kia Ray EV, Chevrolet Spark EV

Note: No significant EV/PHEV production is expected in Italy

Source: fka; Roland Berger Status-eMobility-2015-03-04.pptx 12 B Status eMobility in LiB, Japan remains in pole position and China moves into third place – Samsung has made strong gains with European OEMs

Cell manufacturers and production, by country, through 2017 Projected global market share, 20171) Domestic cell production, 2013-2017 [MWh]

Total: USD 4.4 bn

2) > Leading cell producer 26% 19.200 > Panasonic is the leader in consumer cells

> Primarily LG Chem and Samsung 22% 8.900 > SK Innovation counted as part of Korean footprint

> Primarily BYD and other "local for local" players 18% 4.700

> Still primarily A123 and Japanese manufacturers 17% 4.600 with local production (AESC)

6% 100 > Primarily LiTec

5% 0 > No significant cell production

1% 0 > No significant cell production

1) 2017 market value in USD calculated as follows: USD 490/kWh for PHEVs and USD 350/kWh for EVs 2) Including Primearth's market share

Source: Roland Berger LiB market model as of Q1 2015 Status-eMobility-2015-03-04.pptx 13 B Status eMobility China has doubled its sales of EVs compared to the last period

Sales figures and market share of EVs/PHEVs, Q1 2014 to Q4 2014 Country Sales of EVs/PHEVs [units] EV/PHEV share of total sales [%]

119,710 0.73

33,185 0.71

52,944 0.23

16,207 0.90

13,049 0.43

856 0.05

1,648 0.12

Source: fka; Roland Berger Status-eMobility-2015-03-04.pptx 14 C. Trends 2020..2025

Status-eMobility-2015-03-04.pptx 15 16 C Trends 2020..2025 – EU27 BACKUP

Until 2021, OEMs need to reduce their CO2 emissions by 25-30% – major driver for electrification

1) 2)

-30% -29% -27% -29% -29% -29% 143 132 138 138 129 133 94 101 98 100 92 95

2012 2020 2012 2020 2012 2020 2012 2020 2012 2020 2012 2020

3)

-30% -30% -24% -25% -25% -27% 133 131 122 124 121 120 93 92 93 93 91 88

2012 2020 2012 2020 2012 2020 2012 2020 2012 2020 2012 2020

1) Incl. Mini, Rolls-Royce 2) Incl. Smart 3) Incl. Alfa Romeo, Lancia

Source: Roland Berger Status-eMobility-2015-03-04.pptx 16 1 C Trends 2020..2025 – EU27 7 In Europe, xEV will remain niche until 2020 – Stronger electrification will be required to meet 75 g targets in 2025 Summary push/pull factors xEVs and xEV share [%] – EU

Today (2013) Mid-term (2020) Long-term (2025)

Push 130 g CO2 emission 95 g CO2 emission regulation 75 g CO2 emission factors regulation for entire fleet 2015 in 2021 – requires some regulation2) – requires xEVs for compliance reasons significant xEV share for compliance Pull . TCO disadvantage . TCO disadvantage . TCO advantage, but factors . Very few first adopters . Lack of significant subsidies dependent on infrastructure . Lack of subsidies and other or benefits development benefits . Subsidies and benefits will become possible to accelerate xEVs

EV+PHEV xEV xEV share1) <1% 9% xEV 31% 69% 99% 94% Other Other Other xEV share driving factor

Page 17

Page 17 1) Based on sales, incl. EVs, PHEVs, PECVs and full hybrids, not considering "smart" hybrids 2) 68-78g range in discussion Source: Roland Berger Status-eMobility-2015-03-04.pptx 17 C Trends 2020..2025 – EU27 All OEMs in Europe focus on ICE optimization and road load re- duction to comply with 95 g target, but minor xEV is also required

Mid-term emission reduction level of selected OEMs Volume OEMs – Premium OEMs – Assumptions . Assessment is based on potential CO2 emission reduction [g/km] CO2 emission reduction [g/km] CO2 emission reduction in each car 129 136 model of an OEM . ICE optimization is most cost 20 26 efficient lever for CO2 emission reduction, followed by road load 8 106 7 95 2 reduction, xEV least efficient cost 1 3 92 8 98 benefit ratio . Assumed changes in fleet structure – Limited shift towards smaller 123 143 vehicle segments – No change in average vehicle 19 21 power – No active shift in fuel shares in 9 111 7 2 a model line 95 93 10 101 2 2 . Credits for low CO2 emitting vehicles are not considered 2012 ICE RL Fleet CO Gap 2021 2012 ICE RL Fleet CO Gap for 2021 2 2 . Potential of ICE almost 100% emis- for target emis- xEV1) target sion xEV1) sion leveraged by 2020– Further reduction must come from xEVs 1) Full hybrids; PHEVs/REEVs; EVs ICE = Engine and other powertrain improvement, RL = Road load reduction (weight reduction, tires, aero), Fleet – Change in vehicle segment shares Source: Roland Berger Status-eMobility-2015-03-04.pptx 18 C Trends 2020..2025 – EU27 In the long-term, PHEVs and EVs used for short-range trips will become TCO competitive in Europe as battery costs decline TCO comparison 2025 EU1) – Example C-segment car

USD/100 mi Comments 37.7 . With decreasing battery costs, 38 210 mi (340 km) PHEVs and EVs are expected to 36 range become TCO competitive by 2025 34 . Availability of infrastructure and 32 vehicle usage behavior are potential limiting factors to larger 30 27.6 penetration of PHEVs/EVs 28 26.8 27.0 26.7 26.6 . Strong market pull expected if 30% e-drive 26 infrastructure becomes available 24 80% e-drive 90 mi (150 and customers adapt vehicle 23.7 km) range usage behavior to PHEV/EV 22 23.3 capabilities (short-range usage of EVs and long-range usage of 0 PHEVs) Gasoline Diesel Gasoline Diesel PHEV EV micro micro hybrid hybrid

1) Only considering powertrain and fuel/consumption costs; Assumptions: 150,000 km/10 years lifetime, 15,000 km mileage p.a. (11,000 km short and 20 x 200 km long, consumption

Page 19 acc. to today's NEDC, fuel cost 1.7 EUR/l, energy cost 0.25 EUR/kWh Source: Roland Berger Status-eMobility-2015-03-04.pptx 19 C Trends 2020..2025 – EU27 Additionally, as small diesel engines lose in cost-benefit ratio compared to small gasoline hybrids, Diesel will get under pressure

Example CO2 emission and cost EU B-segment vehicle (~90 hp)

CO2 [g/km] (≙ fuel consumption) Comments 105 . Increasing penetration of plug- in gasoline hybrids expected, once TCO advantage exists 100 Base EU5 and infrastructure is available

EU6/Efficiency 2015 . Gasoline hybrids are more cost competitive as mileage driven 95 by ICE is not sufficient to payback higher cost of diesel 48V hybrid engine 90 Base EU5 LNT, EGR EU6 . Gasoline hybrids offer similar driving experience as diesel Efficiency 2015 85 engines (instant torque) Efficiency 2021 Cost EU6 Efficiency 2021 80 Diesel volumes under 1,400 1,500 1,600 1,700 1,800 1,900 2,000 2,100 2,200 2,300 2,400 2,500 pressure in long-term Cost [EUR] Gasoline Diesel

Page 20

Source: Roland Berger Status-eMobility-2015-03-04.pptx 20 2 C Trends 2020..2025 – EU27 1 As a result, the xEV share in all major markets is expected to grow significantly after 2020, whereas CNG remains niche

Propulsion share 2020 and 20251) [% of sales]

100% 100% 100% 100% 100% 100% 100% 100% 2% 2% 2% 3% 2% 9% 31% 6% 10% 24% 4% 22% 42% 6% 32% 5% 7% 4% 8% 1% 2% 1% 20% 20% 25% 27% 0% 39% 1) 1% 5% 93% 89% 90% 2% 78% 64% 0% 67% 75% 58%

2020e 2025e 2020 2025e 2020 2025e 2020 2025e EV HEV/PHEV/REEV CNG Diesel/gas engines

1) Optimistic scenario: globally strict CO2 emissions/fuel consumption regulation; high energy cost; high cost reduction HV batteries; high investments in recharging infrastructure

Source: Roland Berger simulation Status-eMobility-2015-03-04.pptx 21 Contact and further information: Dr. Wolfgang Bernhart Senior Partner Telefon: +49 (160) 7447421 E-Mail: [email protected]