Electric Vehicle (EV) Industry Overview

January 2019 Table of Contents

I. Investment Thesis and Risks II. Industry Overview A. Introduction to Electric Vehicle (EV) B. Trends in EV Design III. Global EV Market A. EV Adoption B. EV vs. ICE C. Commercial and Heavy Duty EVs IV. Regional Overview A. US Market Overview B. Tesla: A Major Disruptor in the Market C. Europe Market Overview D. China – The Major Player in Asian Market V. Battery Technologies A. Battery Swapping B. Solid-state Battery C. Other Battery Technologies D. Battery Recycling E. Autonomous Vehicle (AV) F. Connected Vehicle G. Robo-taxi H. Funding Landscape I. Market Dynamics

I. Investment Thesis and Risks Palette RGB EVs are Poised to Disrupt the Automotive Ecosystem values 0 72 122 These are going to create a significant impact on the automotive ecosystem 100 135 190 Impact of EVs on the automotive ecosystem

255 204 0 • Automobile manufacturers are making huge investments in electric car divisions as they realize that EVs are disrupting the industry 228 114 0 • Significant internal changes will take place as teams fight for their share of budgets in R&D activities and existing powertrain heavyweights will refuse to move to electric 1 107 33 70 1 divisions • Many new supply chain partnerships will have to be created • The focus will move to new technologies as the automobile becomes a true computer 204 215 234 Automakers on wheels

0 112 60 • Dealers will have to unlearn and learn to sell both EVs and conventional vehicles • Dealers should equip their personnel with a diversified skillset to sell EVs 175 175 175 2 • The automotive business model is expected to transform with the emergence of EVs 5 2 • Profitability from service operations is expected to come down as EVs will require less Government maintenance 0 137 134 Dealers Regulations • Suppliers will be significantly affected as automobile manufacturers switch to the electric 120 178 87 Impact of EVs powertrain 3 • Only suppliers that take appropriate initiatives will survive and succeed; e.g., Bosch, 212 0 47 which has a separate division to focus on batteries

169 176 137 • Incentives and subsidies will turn the tide in favor of EVs • The rapidly growing charging stations network, combined with supercharging facilities, End will make the adoption of EVs easier for end customers 94 110 102 Suppliers 4 Customers • Superior driving experience with packed innovative features will make it difficult for customers to resist the experience of owning an EV. Once they drive an electric vehicle, 202 140 184 they will find it difficult to go back 4 3 • Governments will take the Electric Vehicles Initiative (EVI) seriously as the adoption of 102 102 153 EVs can reduce the carbon footprint • Governments will play a key role in resolving subsidy-related issues to promote and 35 31 32 5 make EVs affordable • Governments will have to consider providing special privileges such as the removal of tolls on expressways and providing priority parking spots to encourage the adoption of EVs Source: Electric Vehicle – Disruptor of the Automotive Ecosystem by Infosys 1 Palette RGB Disruptive to Industries Beyond Automotive values 0 72 122 Many auto-affiliated industries are likely to feel the disruption in the long term 100 135 190 Impact of EVs on different industries

255 204 0 • EVs are likely to have a widespread impact on multiple industries; disruption will be felt the most in the automotive sector, although the impact will vary from automakers to auto suppliers 228 114 0 • In the long term, oil and gas producers and refiners will feel the disruption, but general energy savings will likely offset demand upside from EVs for power utilities 107 33 70 • EVs can be a boost for metals and mining companies with exposure to cobalt, lithium, or copper

204 215 234 Oil and Gas Regulated Utilities 0 112 60 • Over the next decade, the growth in oil demand is likely to continue on • With load from EVs contributing about 1–4% to the total projected load the back of growth in commercial transport and chemicals over the next 15 years, general energy efficiency savings are likely to 175 175 175 offset EV-related consumption • However, in the long term (beyond 2030), the shift of light vehicle transport to EVs is more critical and could • EV revenue growth for regulated utilities is likely to be two pronged, 0 137 134 contribute to declining demand for oil products resulting from an increase in electricity demand as well as from higher capital investment in electric vehicle supply • The long lead time until EVs take over should allow major 120 178 87 equipment (EVSE) or EV charging infrastructure oil companies to look for alternative growth routes, with more focus on gas and renewables 212 0 47 Industries • EV batteries are predominantly lithium-ion batteries, which • In EVs, the electric component that matters the most is the 169 176 137 use lithium, cobalt, nickel, and graphite battery • In addition, electric motors include a group of 17 rare earth • With the adoption of electricity as a power source, 94 110 102 elements that are available in only small amounts increased safety and handling requirements of applied dispersed on the Earth’s crust batteries must be cost-efficiently integrated into logistics processes 202 140 184 • The introduction of EVs will result in higher demand for certain commodities such as cobalt, lithium, copper, and nickel • Also, the aftermarket sales of batteries will create logistics challenges as a system, and a plan will be required for the distribution and 102 102 153 installation of millions of used batteries coming back from customers

35 31 32 Metals and Mining Logistics

Source: S&P Report on Tech Disruption and Press Articles 2 Palette RGB EVs Changes the Value Chain values 0 72 122 A market dominated by BEVs poses serious consequences for all parties 100 135 190 Changes due to EVs

255 204 0 A change from ICE to BEV will lead to disruptions in a Less labor required for BEV powertrain $217bn powertrain segment as it will be swapped by BEV production 228 114 0 components • BEVs are less dependent on labor as electric motors 107 33 70 ICE powertrain BEV powertrain are smaller and less complex than ICEs • It is possible to set up a highly automated production Total $217bn 204 215 234 process for battery packs and electric motors • Also, data from various ICE and BEV car 1,400 components 200 components manufacturing plants shows that the number of 0 112 60 electric engines/ motors produced per employee is Engine Exhaust Electric motor significantly higher than for ICEs, and this is likely to 175 175 175 (+ power electronics) rise further as BEV volumes increase $100bn $39bn

0 137 134 Estimated average components per employee per year

120 178 87 ICE engine 350

212 0 47 ICE transmission 350

169 176 137 BEV motor 1,600

94 110 102 Transmission / drivetrain Battery pack 202 140 184 $71bn Require more raw materials • While a BEV does not carry a significant number of 102 102 153 A BEV powertrain differs considerably from an ICE powertrain. Exhausts, transmissions, (moving) parts, it does require additional raw and engine components are exchanged for electric motors, battery packs, and power materials, mainly for its batteries electronics (to control electric power) 35 31 32 It is estimated a BEV powertrain has around 200 components, while an ICE carries 1,400 • Besides lithium, materials used include nickel, cobalt, components. Almost a third of the value of the automotive supply chain is powertrain- graphite, manganese, and aluminum related, and it is threatened by a potential shift to electric powertrains

Source: ING Report 3 II. Industry Overview Introduction to Electric Vehicle (EV) Palette RGB EV Classification and Models values 0 72 122 EVs are broadly classified into HEVs, FCEVs, and PEVs 100 135 190 Classification of EVs

255 204 0 Electric vehicles (EVs) use electric motors instead of an internal combustion engine (ICE) to propel a vehicle. The electric power is derived from a battery of one of the several chemistries, including lead acid, nickel metal hydride (NiMH), and lithium-ion (Li-ion) 228 114 0 • The first commercial EV hit the US streets in 1897, and, in the early 1900s, EVs accounted for one-third of all vehicle sales • Concerns about battery range, coupled with the cheap availability of gasoline, led the ICE vehicle to dominate the market throughout the 20th 107 33 70 century • However, EVs could once again become the vehicles of choice 204 215 234 Plug-in Hybrid Electric Vehicle Hybrid Electric Vehicle (HEV) Fuel Cell Electric Vehicle (FCEV) Plug-in Electric Vehicle (PEV) (PHEV) 0 112 60 • Combines the benefits of • Operates by using hydrogen or • Like the hybrid, have both an • Combines a gasoline or diesel gasoline engines and electric another fuel to create ICE and electric motor, except engine with an electric motor 175 175 175 motors electricity and power an it uses a larger battery store to and a large rechargeable electric motor enable a portion of its energy battery 0 137 134 • Uses a petrol or diesel engine to come directly from the to generate electricity, which • Is a cleaner alternative to electricity grid, returning to • Can be plugged-in and then powers the electric drive conventional light-duty vehicles petrol or diesel energy when recharged from an outlet, 120 178 87 motor and battery electric vehicles, the battery charge is depleted allowing these cars to be due to high energy efficiency, to a certain level driven to longer distances 212 0 47 • Can be configured to meet and lower life cycle carbon using just electricity different objectives such as emissions than ICEs • The amount of electricity a improved fuel economy, PHEV can store in its battery 169 176 137 Battery Electric Vehicle (BEV) increased power, or additional can significantly reduce the auxiliary power for electronic vehicle’s petroleum 94 110 102 devices and power tools consumption • Uses chemical energy stored in rechargeable battery packs, Toyota Prius Honda Clarity Chevrolet Volt 202 140 184 and derives all power from battery packs and thus have no ICE, fuel cell, or fuel tank 102 102 153

• Include motorcycles, bicycles, 35 31 32 scooters, skateboards, rail cars, watercraft, forklifts, buses, trucks, and cars

Source: Press Articles 6 Palette RGB Types of Charging Infrastructure values 0 72 122 Level 1 & 2 are likely to remain the foremost sources of charging energy demand 100 135 190 Characteristics of different charging infrastructure

255 204 0 . EVs can be connected to the electricity grid and recharged through charging infrastructure – sometimes referred to as electric vehicle supply equipment (EVSE) 228 114 0 . The types or levels of charging infrastructure are commonly defined as Level 1, Level 2, and Level 3 (direct current fast chargers)

107 33 70 . As battery technology improves, vehicles will be able to go farther on a single charge Alternate-current (AC) charging Estimated charging time to Installation cost Typical Vehicle Charging level Voltage 204 215 234 Also known as Level 1 or Level 2. In this system, an in- provide 80 per unit locations restrictions car inverter converts AC to direct current (DC), which miles of range then charges the battery at either level 1 (equivalent to 0 112 60 All vehicles can Level 1 120 V 16 hours $0–3,000 Home a US household outlet) or level 2 (240 volts). It use operates at powers of up to roughly 20 kilowatts 240 V 175 175 175 Home, DC charging, also known as level 3 or direct- (residential) All vehicles can Level 2 3.5 hours $600–12,700 workplace, and current fast charging (DCFC) 208 V use public 0 137 134 Also known as level 1 or level 2. In this system, an in- (commercial) car inverter converts AC to direct current (DC), which PHEVs cannot then charges the battery at either level 1 (equivalent to typically use; 120 178 87 DCFC 480 V 30 minutes $4,000–51,000 Public a US household outlet) or level 2 (240 volts). It charging operates at powers of up to roughly 20 kilowatts connectors vary 212 0 47 Installed, owned, Wireless charging Tesla Only Tesla can 480 V 15 minutes and operated by Public This system uses electromagnetic waves to charge supercharger use Tesla 169 176 137 batteries. There is usually a charging pad connected to a wall socket and a plate attached to the vehicle. • All commercially available EVs can generally use the same Level 1 and Level 2 charging Current technologies align with level 2 chargers and 94 110 102 equipment can provide power of up to 11 kilowatts • Tesla has a proprietary plug and DC fast charger called the Supercharger, which can only 202 140 184 Energy demand by charging technology, % of KWh be used by Tesla’s vehicles US EU China • Extreme fast chargers, operated at 800 volts, have also been proposed, though these are not yet 6 9 20 102 102 153 22 commercially available 32 44 56 58 • Adding these chargers could add a host of challenges to those already complicating the PEV

68 65 35 31 32 61 market 54 35 36 7 2 11 12 • For example, extreme fast chargers would need to be compatible with existing BEVs, and 2020 2030 2020 2030 2020 2030 the high rate of energy transfer between charger and grid would require heavy cables and Level 1 Level 2 DCFC additional cybersecurity measures Source: McKinsey; (1) Home-centered scenario 7 Trends in EV Design Palette RGB Design Approaches to Powertrain and BTM1 values 0 72 122 There’s no convergence yet on core EV powertrain design 100 135 190 EV manufacturers’ powertrain and battery thermal management

255 204 0 Battery

Charge DC–DC AC–DC Motor Gearbox Cooling Liquid Resistive 228 114 0 module converter converter heating heating

BMW i3 2 107 33 70 While plugged in

204 215 234 Chevrolet Spark 3 None 0 112 60

Chevrolet Bolt/Opel 175 175 175 Ampera-e 3 While plugged in 0 137 134 Tesla S 60 4 120 178 87 None

VW e-up! 212 0 47 None None 169 176 137 VW e-Golf

94 110 102 None None

202 140 184 Nissan Leaf (2017) While plugged None in or on 102 102 153 battery Nissan Leaf (2011) While plugged 35 31 32 None in or on battery Active (water glycol) Passive battery cooling5 Active (R134a) Active (oil) Thermal-management interconnections Source: McKinsey; (1) Battery Thermal Management, (2) Combined heating/cooling with AC, (3) Stand-alone battery heating/cooling, (4) Combined heating/cooling with powertrain, (5) Natural air cooling 9 Palette RGB Design Approaches to Powertrain and BTM values 0 72 122 OEMs follow varying powertrain and battery supply chain strategies 100 135 190 OEMs powertrain and supply chain strategies

255 204 0 Battery Power Battery cell Battery pack management Motor Transmission2 electronics1 BYD E6 228 114 0 system

NA 107 33 70 Tesla S 60

204 215 234 Panasonic Borg-Warner4

0 112 60 BMW i3 Samsung Preh 175 175 175 VW e-Golf

0 137 134 Panasonic Panasonic3 Bosch

120 178 87 Chevrolet Spark A123 A123 NA 212 0 47 VW e-up!

3 169 176 137 Panasonic Panasonic Bosch

Nissan Leaf (2011) 94 110 102 Calsonic AESC AESC Calsonic Kansei Aichi Kansei/Denso

202 140 184 Nissan Leaf (2017) Calsonic AESC AESC Calsonic Kansei Aichi Kansei/Denso 102 102 153 Chevrolet Bolt/Opel Ampera-e 35 31 32 LG LG LG LG LG LG

Make Buy

Source: McKinsey; (1) DC–DC converter and AC–DC inverter, (2) Only speed transmission, (3) Formerly Ficosa, now owned by Panasonic, (4) Formerly Eaton, now owned by BorgWarner 10 Palette RGB Design-to-costs Efforts values 0 72 122 The OEMs are focusing on component integration and use of materials 100 135 190 Design-to-costs efforts on component integration and material use

255 204 0 . OEMs have begun consistently using the design-to-cost (DTC) technique, in particular, for the EV’s powertrain & body-in-white design . This trend has notably emerged in second-generation EVs; DTC focuses mostly on component integration in the powertrain area and 228 114 0 smarter usage of lightweight materials in structural parts

107 33 70 Nissan LEAF vehicle-weight evolution 1 Some of the second-generation mass-market Kilograms per vehicle Category 1 EVs use aluminum equal to only 5–10% of the 204 215 234 5 Other weight gain total vehicle’s weight on these components,

20 Category 1 19 close to the average ICE (~5%) 0 112 60 Additional body weight gain

175 175 175 • In luxury EVs, aluminum accounts for about 40% of the vehicle’s weight, mainly to boost acceleration 0 137 134 and dynamic performance. Mass-market EVs will continue to converge toward the lower ICE mass- 120 178 87 market share of lightweight vehicles for three

Category 1 Category 2 Powertrain net Body weight reasons 2 212 0 47 weight gain • Generational leaps in powertrain technology 1 reduction yield significant weight reductions, which 169 176 137 are then directly reinvested into lower-cost structural materials 94 110 102 • At today’s manufacturing cost, batteries – not lightweight materials – are the key to 202 140 184 longer ranges • EVs lack external incentives for (expensive) Nissan LEAF Nissan LEAF 102 102 153 1st Generation 2nd Generation weight-reduction measures, which is (2011) (2017) different from ICEs with their carbon dioxide 35 31 32 Nissan LEAF vehicle-range targets and penalties

117 evolution, Kilometers 172

Source: McKinsey; (1) Powertrain is motor, transmission system, and related electronics. Weight reduced through integration of powertrain components (inverter, converter, charger, and motor; (2) Body weight gain from material change on doors from aluminum and steel 11 III. Global EV Market Palette RGB Global EV Market values 0 72 122 Electric cars’ stock is expanding rapidly, crossing 3 million in 2017 100 135 190 Stock of EV

255 204 0 Electric Car Stock by Car Type (in thousands)

228 114 0 3,109.1 Globally, the total number of electric cars on road surpassed 3 107 33 70 3,000 million in 2017, increasing over 50% from 2016 2,500 204 215 234 Battery electric vehicles (BEVs) accounted for two-thirds of the 1,982.0 2,000 world’s electric car fleet in 2017 1,500 1,239.5 0 112 60 1,000 703.7 381.3 175 175 175 500 179.0 1.9 2.2 2.7 5.2 7.5 14.3 61.3 0 0 137 134 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1 2 PHEV BEV 120 178 87 Electric Cars’ Stock Breakdown by Country (2017) 212 0 47 Of the total 3 million electric passenger cars on road globally, around 40% 50.0% 169 176 137 1,400.0 1,227.8 were in China, where the number of electric cars on road surpassed 1 39.2% million in 2017, while the EU and the US each accounted for about a 1,200.0

quarter of the global market’s total 25.0% 94 110 102 1,000.0 762.1 6.3% 800.0 2.2% 1.2% 1.0% 1.7% 2.7% 1.7% 1.6% 1.1% 0.0% 202 140 184 600.0

400.0 -25.0% Stockshare 102 102 153 205.4 176.3 133.7 119.3 118.8 109.6 160.6 200.0 49.7 46.0

35 31 32 Electric carstock (millions) 0.0 -50.0% China US Japan Norway UK Netherlands France Germany Sweden Canada Others PHEV BEV Share of electric cars3

Source: International Energy Agency (IEA); (1) Plug-in hybrid electric car/vehicle (PHEV), (2) Battery electric car/vehicle, (3) Represents share out of the country’s total car market 13 Palette RGB Global EV Market values 0 72 122 New electric car sales surpassed the 1 million mark in 2017 100 135 190 New electric car sales

255 204 0 New Electric Car Sales (in thousands) New Electric Cars Sales Breakdown by Country (2017)

228 114 0 579.0 600.0

1,148.7 1,200.0 PHEV BEV PHEV BEV 107 33 70 1,000.0 BEV accounted for ~65% of 500.0 744.2 800.0 the new car sales in 2017 540.7 400.0 204 215 234 600.0 322.7 400.0 202.8 300.0 198.4 117.8 200.0 7.5 47.3 0 112 60 0.0 200.0 2010 2011 2012 2013 2014 2015 2016 2017 100.0 62.3 54.6 54.1 47.3 66.7 175 175 175 Sales as a % share of all vehicles 1.3% 34.8 20.4 16.7 14.7 0.8% (millions)stockcarElectric 0.6% 0.0 0.2% 0.3% 0.4% 0 137 134 0.0% 0.1% 2010 2011 2012 2013 2014 2015 2016 2017 120 178 87 Global Publicly Accessible Chargers (both slow and fast) 212 0 47 2%1% 9% (In ‘000) Breakdown of Chargers by Country (2017) Fast Slow 3% 430.2 169 176 137 In terms of charger type, China US publicly accessible slow 4% 94 110 102 chargers accounted for ~74% 313.6 of the market in 2017 Netherlands Japan 202 140 184 5% 183.8 50% Germany France 102 102 153 107.6 7% UK Norway 49.0 33.0 35 31 32 0.4 0.4 0.4 4.1 12.7 Canada Others 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 8% 11% Source: International Energy Agency (IEA) and McKinsey 14 Palette RGB Global EV Market values 0 72 122 Energy demand for EV charging is set to soar over the next decade 100 135 190 Energy demand for EV charging

255 204 0 Energy demand for EV charging (Megawatt-Hours) 228 114 0 Japan Europe China North America Global 208.0

107 33 70 • There will be as many as 40 million charging points globally by 2030

204 215 234 • Falling prices and government mandates are set to boost sales of EVs globally, making owning and operating charging infrastructure an attractive area for investment 78.7 68.3 0 112 60 27.2 34.2 175 175 175 0.5 1.9 3.4 3.3 10.0 0.9 5.1 9.6 10.0 10.2

0 137 134 2017 2020 2030

120 178 87 EV Charging Infrastructure Market

Other • The number of vehicle-to-grid (V2G) systems is expected to increase in the 212 0 47 Services, 3% coming years

169 176 137 Slow Charging • In essence, V2G turns the batteries in electric cars into energy storage Public EVSE, units that utility companies can access to provide voltage and frequency 13% stabilization to the grid, as well as draw power during periods of high 94 110 102 $18.6 bn demand 202 140 184 • Using advanced digital control systems, system administrators will know Estimated Market when a particular car needs to be charged and when it can contribute Size by 2030 Installation some energy back to the grid 102 102 153 Fast Charging Services, 42% Public EVSE, • In order to enable explosive growth in this industry, utilities – along with 21% manufacturers, oil & gas giants, and sector-specific specialists – have 35 31 32 begun testing and investing in new business models Residential EVSE, 21% ► Volta Charging has raised over $60mm so far to fund its ad-supported network of free chargers Source: Bloomberg, Wood Mackenzie, and Press Articles 15 Palette RGB Global EV Sales by City values 0 72 122 Shanghai is the EV sales capital of the world 100 135 190 Nearly half of the world’s electric vehicles are sold in 25 cities

255 204 0 Cumulative electric vehicle sales and 2017 passenger vehicle sales in top global electric vehicle cities

228 114 0 Kyoto Ningbo Weifang Xi'an 50% EVs in top 25 cities accounted for 44% of the world’s Seattle cumulative EV sales through 2017, however, these Chongqing 107 33 70 Jining Xiamen accounted for just 12% of the world’s passenger Paris Amsterdam Nanchang

vehicle sales 40% Detroit 204 215 234 Wuhan Inland Empire New York Stockholm Zhengzhou San Jose San Diego Guangzhou London 0 112 60 30% Tianjin Qindao Changsha Tokyo Bergen San Francisco China leads the market Hangzhou 175 175 175 20% Oslo Major cities such as Beijing and Shanghai stand Shenzhen apart by implementing strong policies – not found Los Angeles outside China – including large incentives, and 0 137 134 electric electric vehicle sales 10% Beijing licensing and registration privileges for electric vehicles, to simultaneously tackle congestion and

120 178 87 Shanghai air quality Percentage Percentage ofcumulative global 0% 0% 2% 4% 6% 8% 10% 12% 14% 16% 212 0 47 Percentage of 2017 global passenger vehicle sales

169 176 137 EV Sales in Top 10 Cities (2017)1 160,000 94 110 102 120,000

202 140 184 80,000

102 102 153 40,000

35 31 32 0 Shanghai Beijing Los Angeles Shenzhen Oslo Hangzhou San Francisco Tianjin Tokyo San Jose Plug-in hybrid electric vehicle Battery electric vehicle Source: International Council of Clean Transportation; (1) Graph has been scaled to approximate values 16 Palette RGB Electric Vehicle Index (EVI) Development values 0 72 122 China’s positive market performance helped it achieve strong EVI rankings 100 135 190 EVI development of top countries1

255 204 0 Norway outperformed China in the EVI market score in 2017; however, China rapidly overshadowed the US and Germany in combined EVI scores In the market EVI scoring, China improved through higher EV sales, significant monetary and nonmonetary incentives, a greater variety of models, 228 114 0 and the investment intensity of charging infrastructure. China also excelled upon industry scoring, significantly increasing its EV production and component shares 107 33 70 5 Market EVI rank 204 215 234 1. Norway 2. China 3. Switzerland 0 112 60 Norway 4. Sweden 4 5. Netherlands 175 175 175 6. US 7. France 0 137 134 8. UK 9. Austria 3 10. Belgium 120 178 87 China 11. South Korea Switzerland 12. Germany 212 0 47 Netherlands 13. Japan 14. Italy Sweden 15. India 169 176 137 2 France US UK Germany 94 110 102 Score MarketEVI Belgium Industry EVI rank 1. China Austria South Korea 2. Japan 202 140 184 1 Japan 3. Germany Italy 4. US 102 102 153 5. South Korea India 6. France 35 31 32 7. India 0 8. Italy 0 1 2 3 4 5 Industry EVI Score

Source: McKinsey; (1) Based on McKinsey’s research, Market EVI Score represents the demand side and Industry EVI Score represents the supply side 17 Palette RGB EV Market Attractiveness1 values 0 72 122 US and China are among the most attractive markets from investors’ perspectives 100 135 190 EV market attractiveness result matrix2

255 204 0 As per a study conducted by Accenture to examine the market attractiveness, the US and China have already reached attractive sales volumes; however, markets such as Germany, UK, South Korea, and Japan have high growth potentials as their respective governments have plans to invest 228 114 0 significant amounts in the future High 107 33 70 High Potentials Best-in-Class

204 215 234 High potentials have China high growth prospects but currently low EV 0 112 60 market sizes. In these Best-in-Class markets provide Netherlands markets, their both high EV market growth and UK governments usually EV market size. Markets in this 175 175 175 cluster are most attractive for South have plans to invest US France significant amounts to automotive OEMs. Typically, Korea high government support for 0 137 134 Sweden make EVs more EVs has already established a Japan attractive, but their Germany policies have not yet well-developed charging 120 178 87 Brazil been fully implemented infrastructure Canada

212 0 47 Russia

India Small markets with expected Pensioners are among the 169 176 137 EV Market GrowthEV low growth rate are defined as leaders in terms of EV market ‘hesitators’. Typically, public size. Typically, monetary charging infrastructure is not subsidies for buying EVs are no 94 110 102 available, and low fuel prices longer provided. The market is make EVs economically highly saturated and expected 202 140 184 unattractive growth is low

102 102 153

35 31 32 Hesitators Pensioners Low Small EV Market Size Large Source: Accenture Report on Electric Vehicle Market Attractiveness 2015; (1) Degree to which the purchase of an EV instead of a conventional vehicle is a more attractive option from a customer’s perspective, (2) The size of each bubble indicates the size of that overall passenger vehicle market, thereby showing its future market potential until 2020 18 Palette RGB ICE1 Vehicle Ban by National Governments values 0 72 122 Several governments have intentions to end sales of new ICE vehicles

100 135 190 Announced bans on ICE vehicles’ sales Announced access restriction mandates in local jurisdictions

255 204 0 Jurisdiction 2024 2025 2030 2035 2040 Country 2025 2030 2032 2040 2045 Athens 228 114 0 Auckland France 107 33 70 Balearic Islands

Barcelona 204 215 234 Ireland Cape Town

0 112 60 Chinese Taipei Netherlands Copenhagen 175 175 175 Norway London 0 137 134 Los Angeles Madrid 120 178 87 Slovenia Mexico City

212 0 47 Milan Sri Lanka Oxford 169 176 137 Paris Sweden 94 110 102 Quito Rome Scotland 202 140 184 Seattle Stockholm 102 102 153 UK Vancouver

35 31 32 ICE sales ban or 100% Diesel access restrictions ICE access restrictions ZEV2 sales target Fleet without ICEs Fossil fuel-free streets ICE sales ban declaration Source: International Energy Agency (IEA); (1) Internal Combustion Engine, (2) Zero-emissions vehicle 19 EV Adoption Palette RGB Factors Affecting EV Adoption values 0 72 122 Operational efficiency over ICEVs & bolstering charging setup aiding EV adoption 100 135 190 Supply- and demand-side factors impacting EV adoption

255 204 0 Supply-side factors Electricity/oil prices 228 114 0 Demand-side factors

107 33 70 Improving ICE efficiency 204 215 234 Government quotas Competitiveness with EV cost of 0 112 60 ICEVs EV model availability manufacturing

175 175 175 OEM commitments Government subsidies 0 137 134 EV adoption 120 178 87 On-going running costs 212 0 47 Availability of charging

169 176 137 Public sharing Consumer attitudes Range anxiety infrastructure toward EVs 94 110 102 Speed of charging Awareness 202 140 184 Adoption of new mobility trends 102 102 153 Ride sharing Competitiveness with 35 31 32 other low-emission technologies Autonomous vehicles

Source: L.E.K. Insights 21 Palette RGB EV Technology Future Milestones values 0 72 122 Increasing number of countries are encouraging EV adoption 100 135 190 EV technology future milestones – policy makers and car manufacturers

255 204 0 UK and France California Iceland Scotland Ban sale of new 1 million zero-emission Replace oil with Netherlands Ban sale of new ICE ICE vehicles by 228 114 0 vehicles on the road electricity in all 50% of all new car vehicles by 2032 2040 by 2020 sales are EVs new vehicles 107 33 70 Germany Paris 1 million EVs on Ban ICE (petrol & 204 215 234 the road diesel) vehicles Norway Sells EVs only Japan 0 112 60 California Next-gen vehicles 5 million zero- Policy makers emission to account for 50– 175 175 175 vehicles target 70% of new vehicle sales

0 137 134 2020 2025 2030 2035 2040

120 178 87 Nissan, BMW Toyota VW Group Renault, and 15–20% car sales All Toyota and Offer electric and 212 0 47 Mitsubishi – will be electric and Lexus vehicles will hybrid versions of Car manufacturers A new alliance plug-in vehicles be EV-only or will 300 models by 169 176 137 to launce 12 have electrified 2030 new EV Ford options models by 13 EV models by 94 110 102 2022 2023 BYD Aims to generate GM Daimler CNY 1tn from sales 202 140 184 At least 20 EV Volvo Electrify the by 2025 models by 2023 Phase out ICE entire portfolio vehicles by 2030 102 102 153 and add 50 BJEV new electric Plans to sell and hybrid 35 31 32 500,000 new EVs models by 2022

Source: L.E.K. Insights 22 Palette RGB OEMs’ Announcements Related to Electric Cars (1/2) values 0 72 122 Nearly all major OEMs have expressed their ambitions… 100 135 190 Plans related to the development of electric cars

255 204 0 OEM 2018 2019 2020 2021 2022 2023 2024 2025 2030

228 114 0 BMW 0.14 15–25% 25 107 33 70

BAIC 0.8 204 215 234

0 112 60 BYD 0.6

175 175 175 Dongfeng 30%

0 137 134 Ford 40 120 178 87

Geely 1 212 0 47

169 176 137 GM 2 20

94 110 102 Honda 15%

202 140 184 Hyundai-Kia 12 102 102 153

Mahindra & Mahindra 0.036 35 31 32 Number of sales % of electric Number of new Share of models with an (millions) vehicle sales EV models electric version

Source: International Energy Agency (IEA) 23 Palette RGB OEMs’ Announcements Related to Electric Cars (2/2) values 0 72 122 ...or plans related to the development of electric cars 100 135 190 Plans related to the development of electric cars

255 204 0 OEM 2018 2019 2020 2021 2022 2023 2024 2025 2030

228 114 0 Maruti Suzuki 1 107 33 70

Mazda 1 204 215 234

0 112 60 Mercedes-Benz 15–25% 10

175 175 175 PSA 0.9 27

0 137 134 Renault-Nissan 1 12 20% 120 178 87

Tesla 100% 1 1 1 212 0 47

169 176 137 Toyota 10 1

94 110 102 Volkswagen 0.4 25% 80 2.5

202 140 184 Volvo 1 5 102 102 153

35 31 32 Number of sales % of electric Number of new Share of models with an (millions) vehicle sales EV models electric version

Source: International Energy Agency (IEA) 24 EV vs. ICE Palette RGB EV vs. ICE values 0 72 122 EVs cost less in terms of both fuel & maintenance than ICEVs 100 135 190 Cost comparison between EV and ICE1

255 204 0 EV ICE Battery costs ($/kWh) 228 114 0 600 EV ICE

107 33 70 500 1,200 400 1,000 204 215 234 300 800 0 112 60 600 200 400 175 175 175 100 200 0 137 134 0 Fuel cost per 100 Annual maintenance CO2 emissions 0 gallons ($) cost ($) grams (CO2e/mile) 2010 2011 2012 2013 2014 2015 2016 120 178 87

212 0 47 • EVs have various advantages over ICE vehicles, including cheaper fuel, lower maintenance costs, and lesser air pollution • Although EVs remain costlier than ICEs, industry experts believe that this will change over the next 10 years as battery costs continue to 169 176 137 decline

► In three-year period over 2014–2016, battery costs fell over 50% on the back of process improvements and scale effects, bringing parity in 94 110 102 the costs of EVs and ICE

► As battery performance continues to improve and charging networks expand, fear among consumers that a battery cannot take them as 202 140 184 far as a gas tank does is likely to eventually abate over time

► Over the last six years, the median range for EVs has extended 56%, and certain models can now drive well over 300 miles on a single 102 102 153 charge

35 31 32 ► For instance, Tesla, with its partner Panasonic, has further driven down battery costs, compared with others, at its state-of-the-art Gigafactory

► Tesla's cars have the longest EV range, and its Model S outsells its ICE competitors in the large luxury sedan sector

Source: US Department of Energy, McKinsey, and Global X Analysis; (1) Graphs have been scaled to approximation 26 Palette RGB EV vs. ICE values 0 72 122 EVs won’t match the price of fossil-fueled vehicles until 2025 100 135 190 Cost comparison between EV and ICE1

255 204 0 $’000 EV ICE 228 114 0 50 In the US, BEVs and ICEs in all segments will cost the same around 2026 107 33 70 40

204 215 234 30

0 112 60 20

175 175 175 10

0 137 134 0 2016 2018 2020 2022 2024 2026 2028 2030 120 178 87

• Prices of EVs, even with state and federal incentives in the US, have 212 0 47 Year of price Year of price remained higher than their gasoline and diesel-engine counterparts in the Segment same vehicle segments 169 176 137 parity, US parity, Europe ► However, based on the projection of current average vehicle prices in Small 2027 2029 relevant segments and battery costs dropping by an additional 77% 94 110 102 between 2016 and 2030, it is predicted that EVs will become cheaper to buy than comparable gas engine models by 2025 202 140 184 Medium 2026 2025 ► Costs such as motors, inverters, and electronics are also expected to drop ~20–25% by 2030, mainly due to volume manufacturing 102 102 153 Large 2026 2026 ► Base vehicle costs, such as body and chassis, are expected to drop for BEVs due to simpler design and easier manufacturing; whereas, for SUV 2026 2028 35 31 32 ICEVs, these costs shall increase as a result of additional light-weighting and other measures to meet CO2 emissions and fuel economy requirements

Source: Bloomberg New Energy Finance (BNEF); (1) Graph has been scaled to approximation 27 Palette RGB EV vs. ICE values 0 72 122 At current rates, cost of battery pack accounts for ~50% of the total BEV cost 100 135 190 Cost structure of ICE and EV

255 204 0 4–8% 7–9% Others Others 5–15% Others Others 4–6% 228 114 0 15–20% On-Board Charger Exhaust Chassis 4–9% 8–11% 8–10% Transmission System 7–19% 107 33 70 Chassis 9–12% Vehicle Body Auxiliary 18–22% Vehicle Body 11–20% Units Drivetrain 8–20% 204 215 234 33–43% Electric Motor

0 112 60 Equipment 11–27% Drivetrain 22–24% 20–27% Transmission

175 175 175

0 137 134 39–47% Inverter Equipment 30–37% 35–40% Engine Battery Pack 35–50%

120 178 87

212 0 47 Cost structure of an ICEV Cost structure of a BEV

169 176 137 • The portion of costs of a drivetrain in comparison to the costs of the entire vehicle is at least 4% lower for BEVs than for conventional ones with

94 110 102 ICE due to the lower number of parts in the electric drivetrain • The most expensive component of an EV is currently the battery, which contributes toward ~50% of the total vehicle cost 202 140 184 ► However, with reducing battery costs, the overall cost is expected to decline in the next few years, which will eventually reduce the current price difference between an ICEV and EV; it is expected that battery will contribute 18–23% toward the total EV cost by 2030 102 102 153 ► In the future, large manufacturing capacity additions and technology improvements are expected to sustain falling costs

35 31 32 ► Average battery energy density is also expected to double by 2030 to over 200Wh/kg on the back of continuous improvements in battery chemistries, higher material efficiencies, and better engineering

Source: BNEF and Press Articles 28 Commercial and Heavy Duty EVs Palette RGB Electric Trucks (eTrucks) Market Overview values 0 72 122 eTrucks fleet in the US is expected to grow at a steady pace over the next few years 100 135 190 US eTruck market

255 204 0 Number of commercial electric light trucks in the US ('000)

228 114 0 10.4

107 33 70 8.2 6.3 204 215 234 4.4 0 112 60 2.6 0.8 175 175 175

0 137 134 2020 2022 2024 2026 2028 2030

120 178 87 • In the US, 97% of over three million heavy-duty tractors and trucks are US eTrucks market share (2018) diesel powered1; therefore, replacing diesel-powered tractors and 1.6% 3.4% 212 0 47 2.8% trucks with eTrucks and making a recognizable impact in the fleet Workhorse owing pattern will likely take many years

169 176 137 4.6% • However, growing awareness regarding carbon emissions, operating & Chanje maintenance costs, and battery prices, along with government

94 110 102 subsidies to encourage the use of EVs, is expected to drive growth of Mitsubishi Fuso the eTrucks market 19.9% • Unlike the passenger vehicle market, uptake of electric commercial 202 140 184 Orange EV vehicles is predominantly driven by the total cost of ownership (TCO) ► Although the up-front cost of eTrucks is greater than diesel 102 102 153 67.7% BYD equivalents, savings in operational cost – due to lower prices of electricity and lesser maintenance – enable the overall cost to 35 31 32 Others break even during the lifetime of the vehicle ownership, depending on several factors such as duty cycle, electricity and diesel prices, efficiency of ICE, and residual value Source: Mordor Intelligence Report and Press Articles; (1) IHS Markit Data 30 Palette RGB eTrucks Market Overview values 0 72 122 LDT1 for regional hub-and-spoke delivery reached TCO parity in 2017 100 135 190 Typical use cases which could spark the electrification of trucks

255 204 0 Application Segment Segment Perspective Example Use Cases 228 114 0

107 33 70 Regional LDT The first truck segment to reach TCO Regional grocery delivery to shops and hub-and-spoke delivery parity – the lowest entry barrier for BEVs restaurants 204 215 234

0 112 60 Urban LDT The second truck segment to reach TCO Urban last-mile distribution with central 175 175 175 stop-and-go delivery parity due to lower share of battery cost hubs and many stops

0 137 134 2 The third segment to reach TCO parity Regional MDT Grocery store chain with a logistics center 120 178 87 due to balanced capital and operating hub-and-spoke for several branches delivery expenditure 212 0 47 In China and the US, buses reach TCO 169 176 137 Urban heavy- parity earlier than trucks due to lower Typical city bus or school bus with dozens duty city bus share of battery cost in the total capital of shops 94 110 102 expenditure

202 140 184 Parity for average users around 2030, due 102 102 153 to large battery need, but up to 7 years International or continental freight logistics earlier in beneficial use cases 35 31 32 Long-haul HDT3 point-to-point

Source: McKinsey; (1) Light Duty Truck, (2) Medium Duty Truck, (3) Heavy Duty Truck 31 Palette RGB eTrucks Market Overview values 0 72 122 Majority eTruck segments to attain cost parity vis-a-vis diesel over the next decade 100 135 190 Timing of average cost parity between battery electric vs. diesel trucks

255 204 0 2017 2020 2025 2030

228 114 0 US

107 33 70 Long haul Europe (500km) 204 215 234

0 112 60 China

175 175 175

0 137 134 US Regional 120 178 87 haul Europe (200km) 212 0 47 China

169 176 137

94 110 102 US

202 140 184 Urban haul Europe 102 102 153 (100km)

35 31 32 China

LDT MDT HDT City bus

Source: McKinsey 32 IV. Regional Overview US Market Overview Palette RGB US EV Market values 0 72 122 EV’s proportion as a % of total auto sales is estimated to cross 20% by 2025 100 135 190 EV sales in the US

255 204 0 3,500.0

228 114 0 2,500.0 1,800.0 107 33 70 1,250.0 875.0 600.0 325.0 450.0 204 215 234 17.4 52.6 97.5 122.4 116.1 158.6 199.8

0 112 60 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 21.9% 11.3% 15.6% 175 175 175 0.1% 0.4% 0.6% 0.7% 0.7% 0.9% 1.2% 1.9% 2.7% 3.8% 5.5% 7.8%

0 137 134 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Estimated EV sales in the US ('000) EV sales as a % of total auto sales 120 178 87

212 0 47 • EV adoption is primarily linked with the government’s incentives such as subsidies, grants, tax rebates, improving charging infrastructure, and reducing EV battery cost, resulting in fall in the effective EV cost

169 176 137 ► In the US, major metropolitan areas with the highest EV sales are providing consumer incentives typically worth $2,000–5,000, which are likely to expand the EV market’s growth in the upcoming years

94 110 102 ► The demand for EV is anticipated to rise due to increasing environmental concerns and rising greenhouse gas emissions

► However, the present charging infrastructure in the US is insufficient for the mass adoption of EVs in the region 202 140 184 • California accounts for the highest revenue share and provides immense growth potential for the EV market’s growth

► EV sales in the state contributed 5.3% to the total car sales in 2017 102 102 153 ► Earlier in 2018, California Governor signed an executive order setting a goal of 5 million EVs on the state’s roads by 2030

35 31 32 ► This $2.5bn initiative is estimated to bring 250,000 vehicle charging stations and 200 hydrogen fueling stations to the state by 2025 • Tesla, BMW, Nissan, Ford, and Chevrolet are the major players operating in the US EV market

Source: Goldstein Research, EVAdoption, The Fuse, and Press Articles 35 Palette RGB US EV Market values 0 72 122 Americans usually prefer SUVs and crossovers over sedans 100 135 190 EV sales by vehicle type (2016)

255 204 0 BEV sales by vehicle type (2016) PHEV sales by vehicle type (2016) 228 114 0 3.0%1.0% 3.0% 2.0% Large car 4.0% 107 33 70 Compact 5.0% Standard SUV Midsized car 14.0% 204 215 234 Midsized car 35.0% 12.0% Subcompact 41.0% 0 112 60 Compact Standard SUV Minicompact 175 175 175 Subcompact 17.0% Station wagon 0 137 134 40.0% Two seater Large car 23.0% 120 178 87 86,731 vehicles sold 72,885 vehicles sold

212 0 47 • Large cars (35%) had the highest share in BEV sales in 2016, followed by standard SUV (23%); PHEV sales were dominated by compact (41%) and

169 176 137 midsized cars (40%) • American auto consumers generally prefer pickups, SUVs, and crossovers that are affordable and meet their needs

94 110 102  The spaciousness, better access to cargo, ease of getting in and out, and the feeling of riding higher and being safe all together make SUVs and crossovers better-functioning vehicles and more attractive than sedans for a growing percentage of US consumers

202 140 184  Except for people in the upper income brackets, no SUV/crossover options exist for US auto buyers  While the traditional form factor of the sedan is clearly not dead, a decade from now, they may comprise less than 20% of the new car sales 102 102 153  The two key factors that have kept sedan sales alive are their lower cost and better gas mileage  But electrification removes the gas mileage factor, and as the volume of SUVs and crossovers continues to soar, there will be less price disparity 35 31 32 between the model types • While there clearly exists demand for small and midsized electric sedans, an auto company would need to start producing attractive and reasonably affordable SUVs and crossovers, if it has to gain market share in the US

Source: US Department of Energy and Press Articles 36 Palette RGB US EV Market values 0 72 122 Tesla sold three of the country's five best-selling EVs in the first 7 months of 2018 100 135 190 Top automakers and their EV plans

255 204 0 Top 10 EV model sales in the US (Jan–Jul 2018) • As automakers are increasingly required to meet tougher greenhouse-gas limits and major countries such as China are 228 114 0 pushing hard for electrics and to win back customers drawn away by Tesla’s EVs, automakers are finally rolling out a slew of 107 33 70 all-electric models • At the end of 2017, Toyota revealed that it would be marketing 204 215 234 Tesla Model 3 and selling over 10 all-electric vehicle models globally by early- 2020 0 112 60 Toyota Prius Prime  The company said that it would invest ~$13bn into the Tesla Model S development of battery technology through 2030 175 175 175 21.8% • VW expects to produce 50 fully electric models by 2025 and 25.0% Tesla Model X expects selling ~2–3 million EVs a year by 2025, with these cars 0 137 134 accounting for 20–25% of the company’s sales Chevrolet Volt  To this end, the company intends to invest ~$40bn into EV 120 178 87 2.6% technology, mainly batteries, by 2022 3.1% Chevrolet Bolt 212 0 47 • Hyundai and Kia announced that they aim to bring 38 “green car” 5.1% 10.5% Honda Clarity PHEV models to the market over the next 8 years, with 7 of them

169 176 137 planned for the next 5 years Nissan LEAF 5.2% • In Jan 2018, the company made an announcement that it 7.8% intended to sell 40 electrified models by 2025 94 110 102 5.9% Ford Fusion Energi 6.0% 7.0% • Ford’s investment in electrified models is supposed to 202 140 184 BMW i3 reach $11bn by 2022, which is a notable increase from the $4.5bn by 2020 that it pledged in 2015 102 102 153 Others • The Renault–Nissan–Mitsubishi alliance plans to release 12 new pure EVs by 2022 and forecasts to see a 30% decrease in 35 31 32 battery cost from 2016 to 2022 • The alliance is targeting sales of ~3 million EV sales by 2025

Source: InsideEVs and Press Articles 37 Palette RGB US EV Market values 0 72 122 Across all US states, the private fleet market share of PEVs1 was less than 0.75% 100 135 190 Market share of PEV by state (2013–2017)

255 204 0

228 114 0 1.9% 0.5% 0.2% 0.1% 1.1% 107 33 70 0.4% 0.4% 1.8% 0.7% 204 215 234 0.5% 0.6% 0.8%0.5% 0.3% 0.1% 0.5% 0 112 60 0.1% 0.3% 0.6% 0.2% 0.3% 175 175 175 0.5% 0.2% 0.6% 0.5% 0.4% 0.3% 0.7% 0.1% 0.5% 0 137 134 0.9% 3.5% 0.3% 0.3% 0.2% 120 178 87 0.3% Washington, 0.3% D.C. 0.6% 0.1% 0.2% 1.0% 212 0 47 0.3% 0.1% 1.2% 0.1% 0.1% 169 176 137

0.3% 0.1% 94 110 102 0.3% 0.4% 202 140 184

102 102 153 1.7%

35 31 32

Above 1.0% 0.7–1.0% 0.4–0.6% 0.1–0.3%

Source: Alliance of Automobile Manufacturers; (1) Plug-in Electric Vehicles 38 Palette RGB US EV Market values 0 72 122 The number of charging sites in the US grew 18% in 2017 as compared with 2016 100 135 190 Charging points for EVs in the US

255 204 0 Number of public and workplace charging points for EVs in the US

228 114 0 47,117 40,075 107 33 70 31,003 26,077 204 215 234 19,460 12,000 0 112 60 3,410 430 465 814 175 175 175 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 0 137 134

Public EV charging stations by type (2017) Public EV charging sites by charging network (2017) 120 178 87 4.2% 2.6% ChargePoint 212 0 47 5.4% 4.8% Level 2 1 Unaffiliated 169 176 137 Supplies 240V, and provides 14.9% about 70 miles of range per 8.5% hour of charging Tesla 94 110 102 39.3% DC Fast Charging Blink Network 202 140 184 Refers to Tesla’s Supercharger. It provides up 18.9% to 40 miles of range for every SemaConnect Network 102 102 153 10 minutes of charging 79.7% Level 1 Evgo 35 31 32 Provides charging through a 120V, and provides ~4.5 miles 21.7% of range per hour of charging Others

Source: BNEF and Alternative Fuels Data Center (AFDC); (1) Locations in the AFDC database that are not identified with any specific network 39 Palette RGB US EV Market values 0 72 122 For widespread adoption of EVs, a robust network of charging stations is needed 100 135 190 Density of charging stations across the US

255 204 0

228 114 0

107 33 70

204 215 234

0 112 60

175 175 175

0 137 134

120 178 87

212 0 47

169 176 137

94 110 102

202 140 184

102 102 153 Square miles per charging station 35 31 32 0.7–40.5 61–147 169–491 581–1,423 1,676–95,107

Source: Department of Energy 40 Palette RGB US EV Market values 0 72 122 Most cities are unprepared for the estimated influx of EVs in the future 100 135 190 EV in selected US cities vis-à-vis charging infra by 2030

255 204 0 Current number of Estimated number of plugs needed by 2030, by type 228 114 0 plugs in the Estimated city 107 33 70 City number of EVs Level 2 (L2) by 2030 L2 plugs in Public fast Total L2 and Total L2 and plugs in 204 215 234 public places charger plugs DCFC plugs DCFC plugs workplaces needed (DCFC) needed needed currently 0 112 60 needed

175 175 175 Austin, TX 29,000 650 405 45 1,100 495

0 137 134 Cleveland, OH 9,000 202 126 14 342 18

120 178 87 Denver, CO 36,000 807 502 56 1,365 161

212 0 47 Hartford, CT 4,000 90 56 7 153 52

169 176 137 Jersey City, NJ 5,000 112 70 8 190 20

94 110 102 Los Angeles, CA 348,000 6,312 3,730 201 10,243 1,456

202 140 184 Miami, FL 14,000 314 196 22 532 50

102 102 153 Philadelphia, PA 34,000 869 579 44 1,492 96

35 31 32 San Diego, CA 139,000 2,341 1,405 141 3,887 776

Seattle, WA 47,000 744 447 75 1,266 401

Source: Alliance of Automobile Manufacturers 41 Palette RGB US EV Market values 0 72 122 California’s stricter emissions standards have been adopted by D.C. and 13 states 100 135 190 Effectiveness of state-level PEV policies

255 204 0 Average market share Market share States with no States with policy 228 114 0 Policy States with States with affected policy (including (including no policy policy California) California) 107 33 70 ZEV mandate PEV market 0.42% 0.79% 0.42% 1.06% 204 215 234 Charging infrastructure rebates, tax credits, and grants PEV market 0.41% 0.67% 0.41% 0.84%

0 112 60 Vehicle rebates and tax credits PEV market 0.43% 0.64% 0.43% 0.85% Free HOV lane access Retail PEV market 0.50% 0.89% 0.50% 1.18% 175 175 175 Government fleet Fleet acquisition requirement (PEV/ZEV) 0.52% 0.85% 0.52% 1.40% PEV market 0 137 134 Government fleet Fleet acquisition requirement (broad definition) 0.50% 0.61% 0.50% 0.74% PEV market 120 178 87 Decreased licensing fees on PEVs Retail PEV market 0.54% 0.88% 0.61% 0.88% 212 0 47 Increased licensing fees on BEVs Retail BEV market 0.28% 0.33% 0.33% 0.33%

169 176 137 Emissions testing exemptions Retail PEV market 0.54% 0.64% 0.63% 0.64%

• The ZEV-mandate states had significantly higher market shares of PEVs than non-ZEV-mandate states, collectively accounting for 3.65% of 94 110 102 new vehicle sales in December 2017

► 202 140 184 When excluding California, ZEV mandate is the best policy for increasing market share in a given state • Financial incentives for PEVs in the form of rebates and tax credits are effective at increasing PEV market share, irrespective of California 102 102 153 being included in the analysis or not ► This analysis shows that financial incentives alone are linked to significantly higher market shares of PEVs, although each state with tax 35 31 32 credits or rebates has enacted a variety of other laws that could help bolster its PEV market as well • While the HOV lane access policy is effective at enhancing PEVs’ market share, it has been found to be the most effective in California

Source: Center for American Progress 42 Palette RGB US EV Market values 0 72 122 EV sales took a plunge in Georgia after the state legislature removed tax credit 100 135 190 Financial incentives for vehicles – Georgia example

255 204 0 BEV sales in Georgia (2013–2017)1 228 114 0 1,500

107 33 70 1,200 BEV sales in Georgia fell dramatically when tax 204 215 234 900 credits were removed on July 1, 2015

0 112 60 600

175 175 175 300

0 137 134 0

120 178 87

212 0 47 • Financial incentives in the form of rebates and tax credits are linked to significantly higher market shares of PEVs; therefore, it is 169 176 137 important for the government to avoid prematurely removing financial incentives

94 110 102 • Several states have set variable incentives based on the battery capacity of a vehicle in order to accurately reflect its environmental benefits 202 140 184 • The case of Georgia’s halted tax credit is a reminder that the PEV market is still nascent and sensitive to both positive and negative changes 102 102 153 ► In 1997, the Georgia Legislature approved a $5,000 tax credit for BEVs, which led to a rise in BEV sales in the state

35 31 32 ► However, when the state legislature removed the tax credit in July 2015, sales promptly plummeted and have not returned to their former levels

Source: Alliance of Automobile Manufacturers; (1) Graph has been scaled to approximation 43 Palette RGB US EV Market values 0 72 122 Tesla’s Model 3 accounts for ~33% of the small & midsized luxury car market 100 135 190 How is Tesla changing the US car market?

255 204 0 Small & midsized luxury car sales in the US (Sep 2018) Best-selling sedans in the US (Q3 2018)1

228 114 0 Tesla Model 3 24,040 Toyota Corolla 85,306

107 33 70 Mercedes C/CLA/CLS/E-Class 11,131 Toyota Camry 84,082 BMW 2 + 3 + 4 + 5 Series 10,889 Honda Civic 78,776 204 215 234 Lexus ES + GS + IS + RC 7,713 Honda Accord 77,143

0 112 60 Audi A3 + A4 + A5 + A6 7,578 Tesla Model 3 55,918 Infiniti Q50 + Q60 + Q70 3,284 Nissan Sentra 49,388 175 175 175 Tesla’s mass-market Lincoln Continental + MKZ 2,543 model outsells the Hyundai Elantra 48,980 Tesla’s Model 3 0 137 134 Acura RLX + TLX 2,228 entire lineup of every Nissan Altima 43,265 featured among the comparably sized car ‘Best-selling Sedans Volvo 60 + 90 1,715 Ford Fusion 37,959 120 178 87 from Mercedes, BMW, of Q3 2018’, and, Genesis G80 1,201 Lexus, and other Chevrolet Cruze 31,837 notably, it is the only luxury car brands EV in the ranking 212 0 47

169 176 137 • Tesla's business model is based on a three-pronged approach to selling, servicing, and charging its EVs

 Direct sales: Unlike other car manufacturers that sell through franchised dealerships, Tesla uses direct sales. It has created an international 94 110 102 network of self-owned showrooms and galleries, mostly in prominent urban centers around the world. By owning the sales channel, Tesla believes that it can gain an advantage in the speed of its product development and create better buying experiences for customers 202 140 184  Service: Tesla has combined many sales centers with service centers. It believes that opening a service center in a new area corresponds with increased customers’ demand. Customers can charge or service their vehicles at these service centers or Service Plus locations. Also, in 102 102 153 certain areas, Tesla employs, what it calls, Tesla Rangers – mobile technicians, who can service vehicles at customers’ homes

 Supercharger network: Tesla has created its own network of supercharger stations, where drivers can fully charge their Tesla vehicles in 35 31 32 about 30 minutes for free. The premise behind building and owning these stations is to speed up the rate of adoption for electric cars

Source: InsideEVs, Bloomberg, Investopedia, and Press Articles; (1) Graph has been scaled to approximation 44 Palette RGB US EV Market – Consumer Segment values 0 72 122 Automakers will have to offer more-tailored EVs and deploy new business models 100 135 190 EV segments along the three horizons

255 204 0 125 Status and luxury Near-term buyers enthusiasts 228 114 0

Current EV owners

Urban families 107 33 70 Risk-averse greens Long-term buyers / 100 High-tech status new business seekers models 204 215 234 Feature-focused Low-cost buyers performance 0 112 60 Mass premium seekers 75

175 175 175 Trendy families Household income($’000)Household Mainstream 0 137 134 mobility seekers Bubble size indicates the 50 relative market size 120 178 87 Low High Level of BEV consideration 212 0 47 Based on the analysis of common demographics and preferences, nine EV segments have been identified along the three horizons:

169 176 137 • Early adopters (current owners) ► Status and luxury enthusiasts: High-end buyers who expect luxury trim, differentiated design cues, and performance ► Risk-averse greens: Early adopters of green technology who care about the environment but won’t pay a large premium 94 110 102 • Near-term buyers ► Mainstream mobility seekers: In-town commuters who need a basic affordable mobility solution with low operating costs 202 140 184 ► Mass premium seekers: Young buyers who want an entry point into a premium brand with a performance/handling edge ► Low-cost performance: Budget buyers looking for affordable performance to add more fun to daily commute 102 102 153 • Long-term buyers requiring new business models ► Urban families: Families who need a practical transport option 35 31 32 ► Trendy families: Young families who want a larger vehicle with AWD capability and modern style ► High-tech status seekers: Buyers who expect excellent performance, new technology, and cutting-edge styling ► Feature-focused buyers: Buyers who want an all-round/well-equipped vehicle with options at a low price Source: McKinsey Report 45 Palette RGB US EV Market – Consumer Segment values 0 72 122 Near-term buyers look for affordable EVs and have lower range expectations 100 135 190 Near-term buyers

255 204 0 Average Importance of… 228 114 0 daily Segment Living area Potential EV offering commute Branding / (miles) Range Technology Performance 107 33 70 Design

204 215 234

Low-cost small EV with Mainstream 0 112 60 reduced performance and mobility Urban areas 25 Medium Medium Low Medium fewer advanced technology seekers 175 175 175 features as standard

0 137 134

120 178 87 An entry-level EV model from a premium brand with Mass premium 212 0 47 Urban areas 30 Low High High High good performance and style, seekers used primarily for short 169 176 137 commutes

94 110 102

202 140 184 “No frills” mass market brand Low-cost Suburban / EV with good driving 35 Medium Medium Low High 102 102 153 performance Urban performance at an affordable price 35 31 32

Source: McKinsey Report 46 Palette RGB US EV Market – Consumer Segment values 0 72 122 Long-term buyers have higher expectations for EV range, performance, & features 100 135 190 Long-term buyers

255 204 0 Average Household Importance of … 228 114 0 Living daily Segment income Potential EV offering area commute ($’000) Branding / (miles) Range Technology Performance 107 33 70 Design

204 215 234 Larger, low-cost EV with Urban Urban more cabin space, longer 50–125 35 Medium Medium Medium Medium 0 112 60 families areas range, and some advanced tech features 175 175 175

0 137 134 Stylish electrified utility Trendy Urban with a longer range; a 50–150 35 High High High Medium 120 178 87 families areas family vehicle from a premium brand

212 0 47

A high-tech performance 169 176 137 High-tech Suburban EV with longer range, but status 50–250 40 High High High High areas priced lower than seekers 94 110 102 existing models

202 140 184

Feature- Loaded all-around EV 102 102 153 Suburban focused 50–125 40 High Medium Medium High offered at a reasonable areas buyers price with a longer range 35 31 32

Source: McKinsey Report 47 Tesla: A Major Disruptor in the Market Palette RGB Domino Effect by Tesla values 0 72 122 Tesla is positioned for growth in the energy storage and autonomous car segment 100 135 190 Tesla’s potential business model

255 204 0 Tesla is likely to disrupt not only the automotive industry, but also transportation in general • Tesla is uniquely positioned to drive disruptive innovation in several markets, including motor vehicles, electric grid, solar, production automation, and artificial 228 114 0 intelligence • It envisions an entire new transportation ecosystem, the one that incorporates vehicle autonomy, ride sharing, and distributed renewable energy 107 33 70

Tesla is working on building a 100% captive ecosystem, which will enable it to begin serving the electric power generation and distribution market 204 215 234 • Efforts of Tesla Motors and its founder 0 112 60 Elon Musk to introduce EVs in the TESLA – POTENTIAL BUSINESS MODEL mass consumer market, along with the transition from being an automaker to 175 175 175 an energy company, has opened new areas of potential market opportunities 0 137 134 • Tesla Motors and Solar City merged in 2016 to create Tesla, a vertically 120 178 87 integrated company that incorporates AUTOS BATTERY renewable energy and production of 212 0 47 EVs and batteries, along with electronics and IT 169 176 137 • Recognizing the opportunity for commercializing battery packs, Tesla 94 110 102 has launched a planned gigafactory • It is also set to launch its first, fully 202 140 184 AUTONOMOUS self-driving car in the next two years ELECTRIC UTILITY • It is aiming for level 5 VEHICLE $1.5tn addressable market 102 102 153 $5.4tn global savings autonomy, the highest level, which allows the “driver” to sleep in the car 35 31 32

Potential Opportunities

Source: Press Articles 49 Palette RGB Domino Effect by Tesla values 0 72 122 With its innovative strategies and products, Tesla is changing the auto industry 100 135 190 Tesla’s market cap and sales vs. key OEMs

255 204 0 Tesla has surpassed Ford Motors to become the second most valuable US automaker

In $bn In $bn 2017 Sales Market Capitalization 228 114 0 $164.97 $61.11 • The US auto industry is majorly dominated by three $145.65 $59.02 major US carmakers: General Motors, Ford, and $136.96 107 33 70 Chrysler; however, Tesla has a market cap of $59bn $43.83 versus $61bn for GM, the latter is recognized as the 204 215 234 $37.73 second automaker in the US by Wall Street • In comparison with GM and Ford, Tesla hasn't 0 112 60 shipped as many cars and generated a fraction of their revenues, and isn’t expected to report profit for the next few years, but is still highly valued because 175 175 175 $10.76 of its future potential

0 137 134 GM Ford Fiat Chrysler Tesla GM Ford Fiat Chrysler Tesla

120 178 87 Key strategies of Tesla

Tesla deploys three major strategies to differentiate its products and services from the rest of the industry 212 0 47

169 176 137 Marketing of Vision Leadership in Technology An Unparalleled Customer Experience

94 110 102 • Tesla has marketed its mission “to • Tesla has figured out how to • While most automakers sell their cars through accelerate the world’s transition to manufacture 60–100 kWh battery packs dealerships after the warehousing process, Tesla sustainable energy” in such a way that at an affordable price point for a mass sells its cars through its own branded stores 202 140 184 its technology, vision, and everything it market • It also provides customers with a ‘My Tesla account’, stands for has earned it a cult-like • Tesla Supercharger has become the which allows them to track the car’s progress that 102 102 153 following benchmark for home charger design they have ordered • Also, Tesla’s EVs have garnered plenty and technology • This gives Tesla a more direct relationship with its of media attention – enough to make 35 31 32 • It’s Model S and X are the first mass customers, allowing it to create an unparalleled people line up days before any new market cars to have semi-autonomous customer experience model releases driving systems

Source: Business Insider and Press Articles; 50 Palette RGB Domino Effect by Tesla values 0 72 122 With Tesla's Model 3 launch, change in the auto industry is gaining momentum 100 135 190 Tesla Model 3

255 204 0 In July 2017, Tesla launched Model 3 – its first ever mass market car • The car is priced at an affordable $35,000 as compared with its luxurious models that are priced at $100,000 and above 228 114 0 • It was first unveiled in 2016, and mass production began in mid-2017; deliveries were expected by mid-2018

107 33 70 • More than 300,000 people have already pre-ordered the car for a $1,000 down payment PERFORMANCE ELECTRIFICATION Includes autopilot feature 204 215 234 Expected to accelerate from 0–60 mph in 5.1–5.6 sec 0 112 60 SUPER CHARGING RANGE Includes support for Tesla's high-speed 175 175 175 Expected to go more than 220 supercharging network miles on a single charge

0 137 134

120 178 87 Tesla Model 3 compared with its competitions Top Speed Acceleration Car Cost Range (miles) Horsepower • In terms of baseline 212 0 47 (MPH) (0–60 MPH) specifications, Tesla’s Model 3 is a winner as Ford Focus Electric $29,120 100 143 85 9.9 sec 169 176 137 compared with other major players in the EV segment Hyundai Ioniq $29,500 124 118 90 8 sec 94 110 102 • It starts at $35,000 and is VW e-Golf $28,995 126 134 85 9.3 sec ahead of most of the 202 140 184 competition when it comes Kia Soul EV $32,350 93 109 90 9.2 sec to range, power, and speed • The Chevy Bolt is the only 102 102 153 Nissan Leaf SL $36,790 107 107 100 10.2 sec caveat, edging out the Model 3's range by 18 35 31 32 Chevy Bolt $37,495 238 200 91 6.5 sec miles, but it isn’t likely to match on performance as Tesla Model 3 $35,000 220 N/A 130 5.6 sec per analysts

Source: Business Insider and Press Articles 51 Europe Market Overview Palette RGB Europe EV Market values 0 72 122 EV car sales totaled over 300,000 in Europe in 2017, up 39% YoY from 2016 100 135 190 EV car sales in Europe by key country

255 204 0 BEV car sales by country (‘000)

228 114 0 35.0 • In 2017, Norway remained the largest single-country market for EVs in Europe 30.0 107 33 70  The market share held by EVs and hybrids rose to 52% in 25.0 2017 in Norway, up from 40% in 2016  Norway offers numerous tax exemptions, free parking/tolls, 204 215 234 20.0 ferry use, etc., to buyers of EVs; currently, there aren’t any 15.0 countries in the EU that offer incentives as broad as these 0 112 60 10.0

175 175 175 5.0 0.0 0 137 134 Norway France Germany UK Netherlands Sweden Portugal Finland

120 178 87 2011 2012 2013 2014 2015 2016 2017

212 0 47 PHEV car sales by country (‘000) 45.0 • The UK was the largest single-country market of PHEV in Europe in 2017 169 176 137 40.0 • Both BEV and PHEV sales in Germany more than doubled in 2017 35.0 94 110 102 30.0 25.0 202 140 184 20.0 15.0 102 102 153 10.0 5.0 35 31 32 0.0 UK Germany Norway Sweden France Finland Netherlands Portugal

Source: IEA 53 Palette RGB Europe EV Market values 0 72 122 German automakers are teaming up to take on Tesla’s EV plug monopoly in Europe 100 135 190 EV sales in Europe by key OEMs (Q1–Q3 2018)

255 204 0 • EVs are disrupting the automotive industry, and this BMW Group 53,731 26% has compelled various luxury OEMs to focus on 228 114 0 expanding their EV product portfolios Volkswagen 34,196 35% 107 33 70 • To compete with Tesla’s Supercharger network, Daimler, BMW, Volkswagen, and Ford formed a JV Nissan 31,377 68% to create a new EV charging network company, Ionity 204 215 234 Renault 30,695 12%  Ionity announced plans to install 400 high- 0 112 60 power (350 kW) charging stations along major Hyundai-Kia 28,546 156% European transportation routes by the end of 175 175 175 2020 Daimler 23,714 5%  The average distance between charging 0 137 134 stations will be 75 miles Tesla 21,147 9%  Each charging point will use an existing 120 178 87 Volvo Cars 19,483 110% European standard, the Combined Charging System (CCS), to lower charging times than the 212 0 47 Mitsubishi 14,016 -1% existing systems • EV sales in Europe reached 94%  Ionity opened its first station on April 17, 2018, 169 176 137 Porsche 8,467 291,000 units at the end of at a rest stop off the A61 highway near the Q3 2018, a 35% growth from PSA 7,037 38% small town of Niederzissen, 30 miles south of 94 110 102 Q3 2017 Bonn in western Germany -27% Audi 6,816 • The European Council is  Ionity has agreements for some 300 sites, 202 140 184 pushing for a 35% reduction working with fueling station and rest stop DHL (Streetscooter) 3,663 34% in CO2 emissions from new landlords 102 102 153 cars by 2030 Jaguar Land Rover 3,018 - • VW also announced its plan to convert three of its 35 31 32 German plants from internal combustion to battery Toyota 1,791 - car production as it pivots away from diesel vehicles Represents YoY growth rate to increase electric models from 6 to over 50 by 2025

Source: IEA, Reuters, and Press Articles 54 China – The Major Player in Asian Market Palette RGB China EV Market values 0 72 122 China will likely lead the EV transition accounting for 50% global EV sales by 2025 100 135 190 EV sales in China

255 204 0 Estimated EV sales in China (in million) 5.5 228 114 0 China sees three domestic benefits in EV expansion: Economic opportunity, energy security, and cleaner air China surpassed the US as the world’s largest oil importer in 4.9 4.1 107 33 70 2017, which is why electrifying transportation can improve energy security 3.5

204 215 234 2.8 2.1 1.6 0 112 60 0.9 0.6 0.2 0.3 175 175 175

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0 137 134

• In June 2018, China’s National Development and Reform Commission announced a $47bn fund designed to support the development of EV 120 178 87 technologies

212 0 47 • China now has a whopping 487 EV manufacturers ► This surge in EV companies in the country is primarily due to a slew of subsidies available through the Chinese government's "Made in 169 176 137 China 2025" (MIC2025) plan • This opportunity has piqued the interest of several international carmakers, including Tesla, which plans to start manufacturing cars in China 94 110 102 within the next five years

► General Motors is also planning to launch 10 EVs in China by 2020 202 140 184 ► Volkswagen said that it will offer 30 electric models by 2025, but the first of those won’t hit the market until 2020

► However, the MIC2025 blueprint calls for domestic companies to control at least 70% of the fully electric car market by 2020 102 102 153 • Although the demand for EVs will increase in the country as it looks to ban fossil fuel cars from its roads, high costs and an end to subsidies 35 31 32 mean a large portion of the industry won't realize significant returns on investments in the Chinese EV space • The Chinese EV market is expected to consolidate around a handful of domestic players, due to changing policies and the high cost of EV’s R&D

Source: Forbes, IHS Markit, Wall Street Journal, and Press Articles 56 Palette RGB China EV Market values 0 72 122 China’s EV push has led automakers to form new alliances 100 135 190 EV sales in China by OEM (Jan–Oct 2018)

255 204 0 • To help reduce reliance on fuel imports and curb BAIC EC-Series 68,025 emissions, China has been rolling out various incentives 228 114 0 BYD Qin PHEV 38,859 to help speed up the adoption of EVs • As the country targets a massive shift over the next two 107 33 70 JAC iEV S/E 35,261 decades away from cars with combustion engines BYD e5 32,406 toward battery-powered cars, new alliances are being 204 215 234 formed: BYD Song PHEV 31,699  Daimler took a nearly 4% stake in BAIC Group’s 0 112 60 Chery eQ 30,650 subsidiary Beijing Electric Vehicle (BJEV) in SAIC Roewe Ei6 PHEV 29,185 March 2018 to further develop EVs 175 175 175  Canada-based automotive components supplier Hawtai EV160 27,068 Magna International announced the founding of 0 137 134 BAIC EX-Series 24,805 two new JVs with BJEV for the development and production of EVs Geely Emgrand EV 24,110 120 178 87 • BAIC Group, a state-  In November 2017, Ford announced that it was BYD Tang PHEV 23,934 owned enterprise, plans teaming up with Zoyte to produce a China-only EV 212 0 47 JMC E200 23,532 to phase out the brand. The two companies plan to invest over production of non- $800mm in a JV to provide a range of small EVs BAIC EU-Series 21,841 169 176 137 electric or hybrid cars to the Chinese market SAIC Roewe Ei5 EV 21,564 and go all-electric by  Similarly, VW is joining forces with Chinese 2025 automotive firm JAC to create an entirely new 94 110 102 BYD Yuan EV 21,490 • Backed by Warren range of cars under a specially created brand. The SAIC Roewe eRX5 PHEV 21,115 two companies plan to invest $726mm and 202 140 184 Buffett, BYD has set an pooling their R&D and production capabilities in a SAIC Baojun E100 16,041 ambitious sales target JV to build Chinese cars that meet current 102 102 153 of $151bn by 2025, Zotye E200 14,668 which is ~10x its 2016 European reliability and quality standards Zhidou D2 EV 13,198 revenue  In January 2018, BMW and China’s Great Wall 35 31 32 Motor Company announced that they have signed Hawtai xEV 12,641 a letter of intent to jointly produce electric Mini Different colors represent different companies vehicles in China Source: Forbes, Financial Times, and Press Articles 57 Palette RGB China EV Market values 0 72 122 Lithium-ion mega-factories in China are expected to grow capacity 6x by 2020 100 135 190 EV battery production capacity

255 204 0 Lithium-ion battery production capacity by GWh Battery cell plant by capacity (Feb 2018)1 country (2020) 228 114 0 3% Chinese company American company South Korean company 13% 107 33 70 Tesla Reno Plant II 204 215 234

CATL Huxi Planned 0 112 60 22% 62% Guoxuan High-tech Nanjing 175 175 175

0 137 134 BYD Kengzi Plant III China US South Korea Poland 120 178 87 Tianjin Lishen Hangzhou Plant II China’s pipeline of planned battery plants is about be triple 212 0 47 the size of the Rest of the World (RoW) combined LG Chem Nanjing Plant II

169 176 137 Microvast Huzhou Plant III China’s largest EV battery maker, CATL, is building a China 24 GWh factory in its 94 110 102 LG Chem Ochang II 130.4GWh headquarter city Ningde; when completed in 2020, it 202 140 184 CATL Liyang will boost the company’s total production capacity to 102 102 153 RoW 88 GWh a year Optimum Battery Weinan II 42.4GWh 35 31 32 0 10 20 30

Source: BNEF, Benchmark Mineral Intelligence, and Press Articles; (1) Graph has been scaled to approximation 58 V. Battery Technologies Battery Swapping Palette RGB Battery Swapping Technology Overview values 0 72 122 A BSS1 is an effective approach in supplying power to an EV 100 135 190 Introduction

255 204 0 • A battery swapping and charging station is an energy refueling station; it allows:

► Swapping of depleted batteries form EVs with fully charged batteries 228 114 0 ► Charging depleted swapped batteries • A strategically planned BSS can ensure fast swapping and extend the travel range 107 33 70

204 215 234 Battery swapping process

0 112 60 Customers BSS Power System

175 175 175

0 137 134 Service Transactions

120 178 87 B2G2 212 0 47 Fees

3 169 176 137 G2B

94 110 102 • As a mediator between an EV user and the microgrid, a BSS provides battery swapping service

► Once the energy stored in EV batteries gets depleted and is not sufficient for the next trip, EV users have the option to swap it with the one fully 202 140 184 charged battery at a BSS

► The empty battery is recharged at the BSS; fully charged batteries are prepared for the battery swapping service and provide reserve capacity to 102 102 153 the system • A BSS acts as a battery aggregator and can maximize its profits by providing services such as voltage support, regulation reserves, or energy 35 31 32 arbitrage to the system

Source: Press Articles; (1) Battery Swapping Station, (2) Battery-to-Grid, (3) Grid-to-Battery 61 Palette RGB BSS and its Associated Benefits values 0 72 122 The main advantage of battery swapping is that it shrinks the EV recharge time 100 135 190 Benefits of a BSS

255 204 0 EV Owner’s Perspective

228 114 0 Advantages a BSS provides to an EV owner: • Reduces the sticker price of an EV 107 33 70 • Speeds up battery charging – as fast as refueling a gasoline-powered vehicle • Allows EV owners to cover longer trip distance through fast battery swapping at a BSS 204 215 234 • Relieves the concern of a battery’s lifetime, as the BSS owner runs a healthy and advanced control strategy for battery charging to avoid sequential damages 0 112 60 • Decreases the cost of upgrading household infrastructure to high-power chargers

175 175 175 Station Owner’s Perspective

0 137 134 Things to be taken care of: • Rapid development of battery technology 120 178 87 • Battery inventory, storage, and charging in a time-scheduled manner, and keeping electricity prices in mind Benefits for station owners: 212 0 47 • Minimizes electricity cost by scheduling the battery charging process 1 169 176 137 • Maximizes its profit by participating in the electricity markets, and provides ancillary services such as demand response and spinning reserve • Offers the convenience of charging batteries due to consistent battery standards 94 110 102

202 140 184 Power System’s Perspective Benefits offered by a BSS: 102 102 153 • Offers a controlled charging strategy in terms of scheduling battery charging time • Postpones the charging of batteries to off-peak hours 35 31 32 • Controls the charging and discharging time of batteries; also monitors the potential peak demand or overloading caused due to increasing penetration of EVs, and can regulate it

Source: Press Articles; (1) An on-line reserve capacity that is synchronized to the grid system and ready to meet electric demand within 10 minutes of a dispatch instruction 62 Palette RGB Battery Swapping – Advantages and Challenges values 0 72 122 Primary issues of battery swapping are standardization and commercial viability 100 135 190 Battery Swapping Technology – Advantages and Challenges

255 204 0 • The entire premise of battery swapping is around addressing the high, initial cost of EVs owing to 228 114 0 Advantages Challenges expensive batteries; if batteries are separated from vehicles and made available on 107 33 70 lease/rent/pay-as-you-go basis, it will significantly lower the acquisition cost of EVs 204 215 234 • Battery swapping is expected to be of great advantage for fleet operators 0 112 60 • However, the battery swapping model has not fully succeeded globally due to techno- 175 175 175 commercial dynamics – the main issues being standardization, commercial viability, and 0 137 134 reliability

► Standardization of EV Lithium-Ion Battery 120 178 87 Packs: It has not happened globally because a majority of auto OEMs prefer to control 212 0 47 their design strategies for battery packs as their core technology 169 176 137 ► Commercially Viable Business Models: It is extremely important to have a very sound 94 110 102 and commercially viable business model to ensure aggressive industry participation 202 140 184 ► Reliability of Leased/Rented Battery Packs: It is of utmost importance that users 102 102 153 get a fully charged and reliable battery pack every time they swap; it is really difficult for a 35 31 32 common user to understand performance- related nuances and any potential breach that might lead to a serious disaster

Source: Press Articles; (1) Battery-to-Grid, (2) Grid-to-Battery 63 Palette RGB Case Studies values 0 72 122 Battery swapping offers a convenient, cost-effective, and scalable solution 100 135 190 Powerswap AB: Robotic Swap Gogoro: Battery Swapping for 2-wheelers

255 204 0 Background: Powerswap, a Swedish start-up, innovated a new way of Background: Gogoro, a Taiwan-based start-up, has developed a cloud- charging EVs; instead of connecting the cord or waiting on a charging powered battery swapping network called “Gogoro Energy Network; aims to 228 114 0 station, it replaces the battery with a help of robotic device within 3 minutes build an infrastructure model of power electric mobility

107 33 70 Business Model Business Model • A technical concept was created with the goal of using the already well- • A Gogoro customer who buys a vehicle gains membership access to a 204 215 234 established refueling infrastructure, petrol stations charging network; rather than parking at a charging station to plug in, a scooter owner can swing by a Gogoro station to swap the depleted • Powerswap handles the swapping of batteries and the battery is batteries with fresh ones 0 112 60 swapped faster than filling up a petrol car • Locating stations and reserving batteries are all performed through an • No time is consumed in charging batteries, and it is faster than filling a app; by keeping a tab on real-time battery demands, Gogoro can use 175 175 175 petrol car algorithms to optimize where to distribute battery inventory and when to • The car is not blocked from usage, and does not involve handling of a charge its batteries, thus taking advantage of lulls in utilities’ electricity 0 137 134 cord demand to avoid paying high energy prices and over-stressing the grid • A brand-new Gogoro battery powers a scooter for a range of 100 km on 120 178 87 Analysis full charge; over time it may only power the scooter to cover a range of • Taxi companies and courier services had problem with the long charging 80 km 212 0 47 stops, for which this quick swapping mechanism will be beneficial • Being installed at petrol stations, it will not require any additional Analysis 169 176 137 infrastructure; despite being a good innovative idea, there will be no • A battery swapping model lowers the cost of scooters; reducing number guarantees that a big financial muscle will not copy the idea, while the of batteries in circulation offers benefits that can’t be replicated by the 94 110 102 expansion will require additional funding on-demand charging network

202 140 184 Learning Learning • The stress on the battery is significantly reduced; they charge batteries • Adoption of shared vehicles or commercial vehicles 102 102 153 for suitable amount of time, which lowers the peaks in demand and stress on the grid • Innovation in integrating EVs into the energy grid; EV charging storage will become a part of the energy-internet 35 31 32 • EVs can be sold without the battery, which will reduce the price of an EV (even less than a fossil fuel car); batteries can be leased and renewed when an enhanced technology is available

Source: Press Articles 64 Solid-state Battery Palette RGB Solid-State Battery Overview values 0 72 122 Solid-state batteries may be a potential replacement for Li-ion batteries 100 135 190 Introduction

255 204 0 • Solid-state batteries replace the liquid electrolyte found in Li-ion batteries with a solid electrolyte • Solid electrolytes can perform the dual job of an electrolyte and a separator, thus the space used by separators can instead be used by more energy- 228 114 0 dense materials • In an electric car with a solid-state battery, all the cooling elements can be removed in favor of a larger battery and cover longer range, or can reduce 107 33 70 the size of the battery, while retaining the same range and cutting the cost • Solid-state batteries promise improved safety compared to liquid-type batteries used currently because they are less prone to overheating or fire 204 215 234 • Solid-state batteries offer higher energy density and faster charge times than Li-ion batteries, as well as a longer 'cycle life', up from 2 years to 10 years 0 112 60 • While major companies such as Dyson, Toyota, Nissan, and Honda, and start-ups, such as Solid Power, NEI Corp, and Ionic Materials, are working on this technology, producing these batteries at a large scale and at an attractive price point competitive with Li-ion remains the key challenge 175 175 175

0 137 134 Estimated solid-state Li-ion EV market

120 178 87 Solid-state Li-ion EV market ($bn)1 • As per Arthur D Little’s forecast, solid-state Li-ion batteries will meet the growing demand from areas such as EVs, renewable power 16 212 0 47 solutions, and consumer electronics, and dominate the market in the long term, replacing the existing battery technologies once the technology is made commercially available 169 176 137 12 • Edging closer to the required “level of practical application”, solid- 94 110 102 state batteries could bring a drastic change by the beginning of next 8 decade 202 140 184 • A few car manufactures have already announced the launch dates of EVs with solid-state batteries; for instance: 4 102 102 153 ► Toyota plans to commercialize solid-state batteries for electric cars by 2022 35 31 32 0 ► Fisker, a US-based electric car maker, plans to launch Emotion – 2015 2020 2025 an EV with a solid-state battery – in 2020

Source: Arthur D Little, Press Articles; (1) Graph has been scaled to approximation 66 Palette RGB Solid-State Battery Players’ Landscape values 0 72 122 Many companies have patented the processes of developing solid-state batteries 100 135 190 Solid-state battery: Technological status analysis

255 204 0 Seeo is focusing on developing proprietary nano-structures based on DryLyte, a solid-state polymer electrolyte 228 114 0

Flashcharge Batteries is working on proprietary, 107 33 70 solid-state batteries with solid-state super capacitors Excellatron uses LiPON electrolyte for making thin-film EMPA Institute discovered that solid-state batteries using a Boron-hydrogen type Ilika has a patented a battery technology Stereax, 204 215 234 proprietary technology compounds can be used as which uses ceramic-ion-based solid-state electrolytes solid-state electrolytes in Johnson Battery Technology has a 0 112 60 batteries; however, the origin of conductivity is yet to be studied proprietary, patented process of manufacturing solid-state batteries using ceramic electrolytes 175 175 175 Blue Solutions Bollore Group has a patented thin-film solid-state Planar Energy follows SPEED, a proprietary 0 137 134 KalpTree Energy is battery called LMP (Lithium Metal manufacturing process that uses inorganic working on introducing Polymer), with a current annual solid-state electrolytes production capacity of 300 MWh; 120 178 87 solid-state batteries in the form of wires the company is working on Prieto Battery has a patented technology increasing the capacity to 1GWh for manufacturing 3D Li-ion batteries with 212 0 47 by 2020, in order to cater the ultra-thin solid polymer electrolyte demand for EVs and for use in energy storage applications 169 176 137 Sakti3 is working on proprietary NEI Corp and solid-state battery cells 94 110 102 American Elements offer solid-state electrolytes as 202 140 184 SolidPower is developing specialty materials solid-state batteries with Li- to battery metal anode and high-ionic- manufacturers 102 102 153 conductivity separator

35 31 32 R&D Level Prototype Pilot Production Commercialization

Source: Frost & Sullivan 67 Palette RGB Investments in Battery Start-ups values 0 72 122 Investors’ interest in solid-state batteries in gaining momentum 100 135 190 Investments in battery start-ups

255 204 0 • The focus on innovation in solid-state batteries is gaining Investments in battery start-ups ($ mm)1 momentum as OEMs and investors are increasing their 228 114 0 1,600 investments in battery start-ups In H1 2018, investors pumped double the 1,400 amount that they had invested in all of 2017 ► A notable investment in solid-state batteries includes that of 107 33 70 1,200 into battery start-ups Ionic Materials, which raised $65 mm in a Series C financing round from a group of financial and strategic investors to 1,000 204 215 234 speedup the development of its solid polymer electrolyte 800 battery material • An increasing number of players getting involved in solid-state 0 112 60 600 battery development is another reason for the increased 400 momentum, as there are a variety of newly established solid-state 175 175 175 200 battery consortiums 0 • Although, presently, there is no commercially available solid-state 0 137 134 2013 2014 2015 2016 2017 Jun-18 battery, based on aggressive market forecasts, mass production of solid-state batteries is expected to begin by 2022 120 178 87 Solid Power: Start-ups claiming breakthrough in solid-state battery technology 212 0 47 • Founded in 2012, Solid Power is a US-based developer of solid-state batteries • The start-up listed a bunch of advantages that it claims its technology has over current batteries: 169 176 137 ► 2–3x higher energy than the current lithium-ion batteries ► Improved safety due to the elimination of volatile, flammable, and corrosive liquid electrolyte used in lithium-ion batteries 94 110 102 ► High manufacturability due to compatibility with automation, industry-standards, and roll-to-roll production ► Low-cost battery pack designs through elimination of pack cooling; minimization of safety features; and simplified cell, module, and pack designs 202 140 184 – an outcome of the elimination of the need for liquid containment • In Sep 2018, raised $20mm in a Series A investment round from Samsung, A123 Systems, Hyundai Cradle, and others 102 102 153 ► The amount will be used to build a small manufacturing setup in Louisville, CO, to scale-up production via a multi-MWh roll-to-roll facility, which will be fully operational in 2019 35 31 32 ► The company also has a goal of bringing down the manufacturing cost to $100/kWh – about one-third of the current price of lithium-ion batteries • The start-up has a working prototype of an all-solid-state, rechargeable, and lithium-metal battery that industry experts say could be the future of batteries used in consumer electronics and EVs

Source: Press Articles; (1) Graph has been scaled to approximation 68 Other Battery Technologies Palette RGB Other Battery Technologies (1/2) values 0 72 122 Sodium batteries can be a potential challenger to Li-ion batteries for use in EVs 100 135 190 Sodium batteries

255 204 0 • In Oct 2017, researchers at Stanford released a paper that claimed their sodium battery could compete with a Li-ion battery 228 114 0 • In the research, Stanford’s battery cathode was made of sodium and the anode was made of phosphorus, with the addition of a compound called myo-inositol, which can be derived from rice bran or corn

107 33 70 • According to researchers, this chemical combination yields efficiency rates comparable with Li-ion batteries, at a much lower cost • In terms of performance, lithium-ion batteries may never be beaten 204 215 234 ► While sodium battery is cheaper right now, its creators are yet to figure out how to keep it cheaper as they try to match lithium-ion batteries’ storage capacity 0 112 60 ► The main advantage of sodium batteries is that sodium is available in much more abundance than lithium and that it costs just $150 per ton versus $15,000 for lithium 175 175 175 ► This, along with the researchers’ performance-optimization efforts, has turned their battery into a cost-effective alternative to lithium-ion batteries ► However, this might not be enough to ensure a takeoff for sodium batteries, although the drive to find alternatives to the lithium-ion concoction is bound 0 137 134 to continue • For now, it looks like lithium-ion batteries will continue to be the undisputed leader of the battery pack, which is mainly due to their performance 120 178 87 ► It’s also because the cost of lithium-ion batteries is falling and, more importantly, a lot of money is being poured into lithium mining and battery factories ► For instance, Bosch is considering a hefty investment in battery cell production; any such investment will serve to strengthen lithium-ion batteries’ hold 212 0 47 on the market Cobalt-free batteries 169 176 137 • Cobalt serves as a cathode material in many Li-ion batteries, which are widely used in electrically powered cars 94 110 102 • From a commercial standpoint, cobalt has a high cost of extraction and making the element ready for application; this has resulted in many manufacturers seeking to eradicate the material, although this has not yet been fully achieved

202 140 184 • Besides its high cost, the metal’s supply is forecasted to hit critically low levels by 2050; this will likely result in the need for finding an alternative technology ► In May 2018, Tesla’s battery cell supplier, Panasonic, announced that it was developing automotive batteries that would work without cobalt

102 102 153 ► Although little has been announced about exactly how Panasonic plans to exclude cobalt from its batteries, there a number of promising technologies that it may be pursuing – For example, both lithium-manganese spinel and lithium nickel cobalt aluminum oxide batteries use significantly less cobalt, and it may be easier to 35 31 32 alter and remove cobalt all together; other advances in chemistry, such as lithium-iron phosphate, may not require cobalt – Although the initial challenge is finding the right chemistry, other challenges – such as battery stability, safety, and lifespan – will all have to be tackled and remedied before the alternative is accepted for use in commercial vehicles Source: Press Articles 70 Palette RGB Other Battery Technologies (2/2) values 0 72 122 Sophisticated battery technologies are in development and are yet to mature 100 135 190 Other battery technologies in development

255 204 0 Aluminum-ion and lithium-ion Lithium-sulfur batteries have a lithium 228 114 0 batteries are very similar, except the anode and a sulfur-carbon cathode former has aluminum anodes 107 33 70 • These batteries promise higher • These batteries promise energy density at a lower cost

204 215 234 increased safety and faster than lithium-ion batteries; charging time at a lower cost than however, there are still issues

0 112 60 lithium-ion batteries; however, with safety and life span there are still issues with • Oxis Energy is a leading 175 175 175 cyclability and life span Lithium- developer Aluminum- • Stanford University is a leading Sulfur 0 137 134 developer Ion

120 178 87

212 0 47

169 176 137

A variety of metals can be used, 94 110 102 Metal-air batteries have a pure-metal which promises huge cost reductions anode and an ambient air cathode – Metal-Air in raw materials; however, there are 202 140 184 this significantly reduces the battery’s weight issues with cyclability and lifetime

102 102 153 MIT is a leading developer

35 31 32 As these technologies mature, leading battery suppliers might acquire and commercialize them, eventually replacing the application of lithium-ion batteries in EVs

Source: Press Articles 71 Battery Recycling Palette RGB Li-ion Battery Recycling values 0 72 122 Less than 5% Li-ion batteries are recycled presently due to poor economics 100 135 190 Li-ion battery recycling industry

255 204 0 (in million tons) Volume of Li-ion battery cells sold, by EV application1

228 114 0 Electric Cars E-buses, bikes and Scooters

3 • It is estimated that by 2025, over four million tons of spent Li-ion batteries will be discarded, of which over two million tons 107 33 70 will be the ones used in EVs • Currently, less than 5% spent Li-ion batteries are recycled due to poor economics 204 215 234 2  However, EV boom has led to a surge in lithium and cobalt prices, thereby making Li-ion battery recycling potentially profitable

0 112 60 1

175 175 175 0 0 137 134 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

120 178 87 Li-ion battery recycling market: Region-wise revenue • Li-ion batteries contain a number of toxic chemicals and heavy metals, and share (2017)1 have a lifespan of 5–10 years; to prevent environmental contamination, 212 0 47 recycling of Li-ion battery is becoming critical • Asia Pacific is the fastest growing market for lithium-ion battery recycling 11.0% 169 176 137 across the world due to presence of major developing countries such as China Asia Pacific and South Korea 94 110 102 ► New electric vehicle sales in China increased from 8,159 in 2011 to 18.0% 777,000 in 2017, which indicates the growing usage of Li-ion batteries in Europe the region 202 140 184 51.0% ► As a result, in Feb 2018, the government of China made a rule, under North America which EV manufacturers are responsible for setting up facilities to collect 102 102 153 and recycle the spent batteries; this is likely to spur the development of Li- 20.0% RoW ion battery recycling plants 35 31 32 • Other countries are expected to follow the same and introduce such battery recycling programs to offset the adverse effects of Li-ion battery wastage

Source: Bloomberg and Mordor Intelligence Report; (1) Graph has been scaled to approximation 73 Autonomous Vehicle (AV) Palette RGB Autonomous Vehicle (AV) values 0 72 122 AV (semi and full) sales penetration could reach 25% by 2035 100 135 190 Global market and penetration of AVs

255 204 0 Global market for AVs ($bn) Artificial intelligence (AI), a trending advanced technology, is expected to play a significant role 228 114 0 600 Fully autonomuos vehicles 558 in the global AV market 500 Special equipment (for high/full automation) 107 33 70 400 Apps and goods with digital and physical features 284 204 215 234 300 Mobile apps with digital features (content, software)

0 112 60 200 83 100 51 175 175 175 0 2020 2025 2030 2035 0 137 134

Percentage of new cars with autonomous (semi and fully) technology globally1 120 178 87

25.0% 212 0 47 The adoption rate of semiautonomous vehicles is expected to grow rapidly, 24.0% 24.1% 24.5% as consumers and enterprises are investing heavily on autonomous features 22.0% 20.5% 169 176 137 • Once level-4 and level-5 vehicles are fully launched, 19.6% 20.0% 17.5% the market share of semiautonomous vehicles is 16.5% 94 110 102 expected to decline 12.9% 202 140 184 9.4% 7.4% 6.0% 102 102 153 5.0% 3.4% 4.0% 1.4% 2.1% 35 31 32

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Source: AT Kearney, Press Articles, and BCG; (1) Graph has been scaled to approximation 75 Palette RGB US AV Market values 0 72 122 OEM-dominated AV value chain will evolve into a “technology stack” 100 135 190 AV – Evolution of a new value chain

255 204 0 Fully autonomous car shipments in the US (‘000) Estimated per-mile cost of vehicle services for consumers 228 114 0 The cost of LiDAR1 is expected to reduce 569 512 from ~$100,000 currently to ~$5,000 by 2025, $2.50 The per-mile operating cost of an autonomous car used 107 33 70 which will lower car prices enough to create a 426 $2.15 as part of a ride-hailing service is only $0.17, significantly vibrant market for individual car buyers lower than the $1.05 it currently costs per mile to operate 204 215 234 320 a manually driven car for a ride-hailing fleet in the US

213 $1.05 0 112 60 149 $0.57 107 $0.25 64 $0.17 175 175 175

New York UberX Shared Ride- Personal Single Rider Shared 0 137 134 2018 2019 2020 2021 2022 2023 2024 2025 City Taxi Hailing Vehicle Autonomous Autonomous

120 178 87 Value of a Car (Present) Value of a Car (Future) The technology stack for autonomous vehicles 212 0 47 Applications: Smart mobility applications such as robo-taxi service 10% and ride-sharing services 20% 169 176 137 Content and Entertainment Apps: Communication applications, commercial applications, video/music content, etc. 40% 94 110 102

Software: Autonomous driving software, safety-related software, 202 140 184 vehicle and fleet management software, etc. 40% 102 102 153 90% Hardware: Vehicle interior and exterior, human-to-machine interface, 35 31 32 driver assistance and control system, hardware-related connectivity, computing hardware, etc. Hardware Software Content

Source: Business Insider and Morgan Stanley Research; (1) Light Detection and Ranging, an image sensing technology that helps cars create a virtual image of the world around them 76 Palette RGB AV – Diffusion of Advanced Technology values 0 72 122 Autonomous technology and EVs offer strong potential 100 135 190 AVs to become more viable and competitive by 2030

255 204 0 Subject to progress on the technical, infrastructure, and regulatory • OEMs have started looking to move challenges, ~15% of all new vehicles sold by 2030 could be fully toward FA vehicles, subject to 228 114 0 autonomous (FA) regulatory and technical challenges • Fully autonomous vehicles have been High-disruption 107 33 70 High Disruption Assumptions: announced to be ready for 2020 on an . Regulatory challenges have scenario for conditional 100.0% or better autonomy average, but commercialization will take been overcome in key (L3+) much longer 204 215 234 markets High-disruption 90.0% . Safe and reliable technical Ramp up as AV availability scenario for conditional 0 112 60 solutions have been fully spreads across or full autonomy (L4) developed popular consumer 80.0% . Consumers are enthusiastic models 175 175 175 FA vehicles for and willing to pay 70.0% FA cars ready by ride sharing in 0 137 134 2020 2021

60.0% 120 178 87 Slow consumer uptake driven by low perceived 50.0% Mass market leaders value proposition 212 0 47 Commercial to introduce full or negative Fully self-driving introduction of full autonomy publicity following Low-disruption Technology ready cars on road in 40.0% autonomy by new 169 176 137 critical incidents scenario for conditional by 2018 2020 technology players or better autonomy and premium OEMs (L3+) Technical and 94 110 102 30.0% Manufacturing regulatory barriers capacity for tech. delay commercial- players to ramp-up scale introduction 202 140 184 20.0% gradually of AVs First release of Low-disruption scenario for conditional self driving Fully autonomous 102 102 153 10.0% or full autonomy (L4) vehicles in 2021 trucks by 2020

35 31 32 0.0% • Switching toward FA vehicles would 2020 2025 2030 2035 2040 help OEMs maintain their customer base

Source: McKinsey and Press articles 77 Palette RGB TaaS Disruption values 0 72 122 By 2030, 95% of all US passenger miles will be served by TaaS providers 100 135 190 Disruption of the passenger vehicle value chain

255 204 0 Transport as-a-service (TaaS) is poised to disrupt the automotive market providing passengers with higher levels of service, faster rides, and increased safety at 10 times cheaper cost than today’s individually owned (IO) vehicles 228 114 0 • By 2030, 95% US passenger miles traveled will be served by on-demand autonomous electric vehicles owned by fleets in a new business model known as TaaS 107 33 70 • Passenger miles are estimated to increase 50%, from 4tn passenger miles in 2015 to 6tn passenger miles by 2030; however, the revenues generated along the value chain are expected to decrease 70%, from ~$1.5tn in 2015 to $393bn in 2030 204 215 234 Disruption will be driven by economics:

0 112 60 • It is estimated that an average American family will save ~$5,600 per year in transportation costs – equivalent to a wage raise of 10% resulting in an extra $1 trillion in their pockets – potentially generating the largest infusion of consumer spending in history

175 175 175 TaaS disruption will be both quick and inevitable on a global basis, and the switch is expected to happen first in high- density cities, such as San Francisco and New York 0 137 134

120 178 87 Revenue distribution along the car value chain ($bn)

Platform Oil Electricity Car Insurance Maintenance Registration Fuel Tax Used Car Car Total 212 0 47 Manufacturing Fees Sales Tax Sales Rental Revenues

169 176 137

2015 94 110 102 0 291 0.03 570 228 171 59 52 111 27 1,481

202 140 184

102 102 153 2030 64 21 41 104 43 97 19 4 0 0 393

35 31 32

Source: Rethink Transportation Report 78 Palette RGB TaaS Disruption values 0 72 122 ICE car dealers will cease to exist by 2024 100 135 190 Trends in fleet size and passenger vehicle composition (mm)

255 204 0 Passenger vehicle fleet size is forecasted to drop 80% from 247mm in 2020 to 44mm 228 114 0 250 in 2030 as consumers move to TaaS

200 27 107 33 70 6 51 150 10 76 245 247 98 204 215 234 243 244 242 233 106 100 222 15 106 180 96 141 19 0 112 60 50 100 22 62 24 26 39 24 0 18 175 175 175 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Individual Ownership (IO) TaaS Stranded IO 0 137 134

120 178 87 ICE vs. TaaS: Trends in annual sales of passenger vehicles (mm)

212 0 47 18 • New ICE vehicle sales will subside by 2024 as the pre-existing vehicle stock is 16 estimated to be more than enough to meet the passenger mile requirement for 169 176 137 14 transport under individual ownership 12 • With no new IO car sales from 2024 onward, car dealers will cease to exist by 2024 as 94 110 102 TaaS vehicles will be fleet owned 10 8 202 140 184 New passenger vehicle sales are 6 estimated to drop 70% over 2020–2030 4 102 102 153 2 0 35 31 32 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

IO TaaS

Source: Rethink Transportation Report 79 Connected Vehicle Palette RGB Connected Vehicle values 0 72 122 With shift in customer preferences, cars are evolving into computers on wheels 100 135 190 Connected cars in the future

255 204 0 Industrial Design Global Connected Car Shipments Hardware (mm) 228 114 0 Drivetrain Modular bodies 83 Corner modules, and advanced user 107 33 70 advanced sensors, interfaces Electric motors, 64 etc. power electronics, and advanced 48 204 215 234 batteries 33

0 112 60

175 175 175 2017 2018 2019 2020 0 137 134 Autonomous Driving and • Market segments related to the connected 120 178 87 Operating car market include automotive System Entertainment platform infotainment and navigation technologies,

electric vehicle services, car safety 212 0 47 Advanced central Features and connectivity systems, electronic tolling, fleet operating system mirroring the home relationship management, insurance 169 176 137 with self-driving entertainment experience capability services, and fleet management

94 110 102 • Cars are expected to become computer on wheels as technology players move Apps & Services Alternative Data Analytics into the automotive sector to leverage 202 140 184 Business Models their existing capabilities Full library of Fully connected • Technology players are 102 102 153 applications from Autonomous cloud processing developing autonomous driving third parties vehicle sharing, and data feeds for systems that are likely to merge 35 31 32 new service manufacturers offerings, etc. into an operating system – the central system that runs the unit

Source: Statista and McKinsey Report 81 Palette RGB Start-ups disrupting the automotive and mobility industry values 0 72 122 Over 1,700 start-ups in the mobility and automotive space are gaining traction 100 135 190 Key start-ups

255 204 0 EV ECOSYSTEM

228 114 0 EV 2 Wheelers Battery Manufacturers Electric Charging Stations EV 4 Wheelers

107 33 70

204 215 234

0 112 60 CONNECTED CAR ECOSYSTEM

175 175 175 HMI Sensors Hardware Aftermarket Telematics Cyber-Security Blockchain OTA Updates

0 137 134

120 178 87 V2V/V2X 212 0 47 Analytics Platform

169 176 137 Driver Safety Used Car Marketplace Mapping Mobility AI Software 94 110 102

202 140 184 UBI

102 102 153

35 31 32

Source: Frost & Sullivan 82 Robo-taxi Palette RGB Robo-taxi values 0 72 122 Robo-taxis are expected to evolve in three stages on their way to full autonomy 100 135 190 Robo-taxi deployment phases

255 204 0 After the emergence of the Robo-taxi 1.0 (2020–2022) Robo-taxi 2.0 (2025–2027) Robo-taxi 3.0 (by 2030) first stage, a series of • Robotaxi 1.0 will include • Stage two will give robo-taxis • This stage will enable a robo- 228 114 0 technical improvements will geofencing the vehicle’s the freedom to maneuver in taxi to navigate through poor, boost capabilities and expand operating environment; it can dense traffic and downtown unmapped, and unclear 107 33 70 available use cases become technically feasible areas, and on faster-speed roads in all weather in the next five years roads and highways conditions, including fog, hail,

204 215 234 • Constraints include operating • The ability to drive on highways and heavy rain, and on snow- Enabling highway trips will at low speeds only in clear or will enable robo-taxis to covered roads require new data-gathering 0 112 60 mildly inclement weather accumulate significantly more capabilities, improved artificial during daytime, on roads with mileage by commuting between intelligence (AI), and rule- clear lane lines and curbs, various suburban and urban 175 175 175 based algorithms, as well as and in light traffic regions more robust sensors 0 137 134 Office Suburbs Mall Cabin 120 178 87

212 0 47

169 176 137 200 94 110 102 billion

3,500 Technically 202 140 184 billion addressable miles by 102 102 153 2030 4,900 billion

35 31 32

Source: McKinsey 84 Palette RGB Robo-taxi values 0 72 122 No single player has all the capabilities necessary to excel in the robo-taxi industry 100 135 190 How contenders measure up?

255 204 0 • Although companies throughout the auto ecosystem are putting billions into developing a solid robo-taxi business, the dominant player won’t be determined simply by the amount of money invested 228 114 0 ► The market will be captured by the entity that possesses the diverse capabilities needed to operate across the entire service-delivery value chain 107 33 70 ► Companies would need to excel at six distinctive capabilities (as mentioned in the table), by either developing them or attaining them through partnerships and M&As 204 215 234 Customer Price and Promotion Fleet Operations Type of Company Customer Service Vehicle Purchasing Vehicle Remarketing Acquisition Management Management 0 112 60 Ride hailing 4 4 3 1 2 0 175 175 175 Tech 3 3 1 0 1 0 0 137 134 Rental car 3 4 2 4 3 4 120 178 87 Car sharing 3 3 3 3 2 3 212 0 47 Fleet management 0 0 2 4 3 4 169 176 137 OEMs 0 0 0 1 4 3 94 110 102 Taxi/limo 3 0 2 3 2 1 202 140 184

Municipalities/Govt. 1 0 1 2 2 1 102 102 153

Vehicle dealers 1 0 2 1 2 2 35 31 32

4 Leadership capability today 3 Broad expertise 2 Basic competence 1 Some experience 0 No capability

Source: Press Articles 85 Palette RGB Robo-taxi values 0 72 122 Robo-taxis will transform personal mobility by slashing cost per mile 100 135 190 Revenue split per mile of a robo-taxi

255 204 0 Four types of firms will likely get a cut of an estimated $0.35 of per mile revenue generated: Revenue Split per Mile of a Robo-taxi 228 114 0 • Owner/Operators: $0.40 ► Owner/operators of autonomous taxis are likely to grab a lion’s share of per mile revenue 107 33 70 ► While the share of autonomous taxi revenue will be the largest for owner/operators, $0.35 $0.01 their margins could be the lowest based on the high costs they will bear in buying and 204 215 234 $0.02 maintaining vehicles ► This group includes individual auto owners, as well as fleet owners of various types, $0.30 0 112 60 including AutoNation, Tesla owners, Taxi consortia, and Municipalities $0.07 • Platform Providers: 175 175 175 $0.25 ► Mobility-as-a-Service (MaaS) platforms are anticipated to earn $.07–0.10 per mile, similar to or higher than the 20% that Uber/Lyft charges presently 0 137 134 ► MaaS platforms will own the autonomous technology built into vehicles, offering even $0.20 more value than the Uber and Lyft ridesharing platforms ► The exact share of revenue that MaaS platforms reap will depend on how much control 120 178 87 they retain over both the autonomous driving sensors and the data that the sensors $0.15 gather on road conditions, obstacles, traffic, and near-misses 212 0 47 $0.25 ► Companies that are well-positioned to become platform providers include Waymo, $0.10 Baidu, Aptiv, GM, Nissan, Tesla, and Toyota 169 176 137 • Lead Generators: ► 5% of autonomous taxi revenues, or roughly $0.02 per mile, shall go to the companies 94 110 102 $0.05 that generate leads or acquire traffic, because they either have a captive audience or a platform for attracting customers 202 140 184 $0.00 ► Potential lead generators include Lyft, Didi, Uber, and AI voice assistants owned by Revenue/mile Amazon, Tencent, Alibaba, Apple, and Alphabet • Vehicle and Component Manufacturers: 102 102 153 Owner/Operator Platform Provider ► Vehicle manufacturers shall derive similar revenue from upfront sales of or leases on Lead Generation Hardware Manufacturer autonomous taxis similar to what they get presently, which is ~$0.01 per mile 35 31 32 ► Winners in this category will include NVIDIA, Tesla, Nissan, Toyota, Magna, GM, and Panasonic

Source: ARK Investment Management Research 86 Funding Landscape Palette RGB EV – Funding Landscape values 0 72 122 VC activity in the industry ramped up in 2017 as EVs prepared to go mainstream 100 135 190 Global VC/PE funding landscape in EV industry1

255 204 0 Global Funding Trend ($bn) Total # of Funding Rounds 96 228 114 0 3 91 100 84 75 90 80 107 33 70 $2.6 70 2 54 50 50 49 60 204 215 234 50

40

1 $1.1 $1.2 30 0 112 60 $1.0 20

$0.7 $0.8 10 $0.2 $0.4 0 0 175 175 175 2010 2011 2012 2013 2014 2015 2016 2017

0 137 134 Investment by stage ($mm) Number of rounds by stage 120 178 87 92 5 11 8 10 13 90 212 0 47 375 11 12 11 67 728 474 169 176 137 731 2,200 20 18 39 45 94 110 102 632 34 44 266 710 73 452 26 202 140 184 235 29 221 350 10 12 20 29 30 37 41 34 102 102 153 7 6 8 15 13 22 32 63 2010 2011 2012 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016 2017 35 31 32 Seed Early-Stage Late-Stage Seed Early-Stage Late-Stage

Source: Tracxn Report; (1) Excludes funding information of Chinese companies 88 Market Dynamics Palette RGB EV Value Chain values 0 72 122 BEV spread is likely to change the value chain structure from vertical to horizontal 100 135 190 Structural change in value chain caused by BEV’s spread

255 204 0 • The spread of EVs may bring about a substantial structural change, from a vertical to a horizontal structure, throughout the industry’s value chain 228 114 0 • Firstly, because BEVs are manufactured with one-third the number of components needed in an ICE car, less collaboration will be required between automakers and parts suppliers in the R&D process 107 33 70 • Secondly, the manufacturing process of BEVs is also somewhat different from that of ICE cars. While expertise is still required to maintain EV quality, including its safety, the assembly process of BEVs will be simpler because of manufacturing line simplification, suggesting that the entry 204 215 234 barrier to the automotive industry will become lower • Under these circumstances, EV manufacturers are likely to break into the automotive industry, much like how BYD and Tesla Motors have 0 112 60 • It is also possible that new dealers, such as retail stores, that specialize in selling BEVs for emerging automakers will come to the fore; thus, in the BEV business value chain, industry players may work horizontally across each process 175 175 175 Conventional Vehicle – Initiated by automaker integration EV – Initiated by various players based on specialization 0 137 134

120 178 87 Independent Research Companies Development Research and and Research (e.g., Engineering Companies) 212 0 47 Affiliated Affiliated Affiliated

Supplier Supplier Supplier

169 176 137 Independent Suppliers (e.g., Battery, Motor, & Inverter Parts Suppliers)

94 110 102 Automaker Automaker Automaker A B C

202 140 184 Manufacturing Automaker Automaker Automaker Assembly A B C 102 102 153 Affiliated Affiliated Affiliated Dealer Dealer Dealer

35 31 32 Independent Multibrand Dealers Sales

Source: Press Articles 90 Palette RGB EV Suppliers values 0 72 122 In an EV-dominated world, the role of traditional auto OEMs is set to transform 100 135 190 Road ahead for component suppliers in the automotive ecosystem

255 204 0 Powertrain and pump suppliers can venture into battery and electronic 228 114 0 systems Casting and forging suppliers can Precision powertrain component 107 33 70 align their portfolio toward suspensions manufacturers can use their expertise and break systems; these players can in precision manufacturing for electric 204 215 234 also venture into motor housings powertrain components

0 112 60

175 175 175 Electrical component makers can Fuel tank suppliers can use their tank- 0 137 134 innovate using their existing skills to making skills to manufacture tanks for cater to the EV market storing cooling fluids in thermal management systems 120 178 87

212 0 47

169 176 137 Cooling system suppliers can IC engine and transmission upgrade their thermal management component manufacturers would 94 110 102 portfolios for use in EVs witness large-scale obsolescence

202 140 184

102 102 153 After-treatment system HVAC1 system suppliers can 35 31 32 manufacturers can leverage their skills introduce innovative and efficient heat in sheet metal operations and management systems, thereby electroplating improving the range of EVs

Source: NRI Consulting; (1) Heating, ventilation, and air conditioning 91 Palette RGB Important Notice values

0 72 122 This presentation and the information contained herein is confidential and has been prepared exclusively for the benefit and internal use of the Stifel client to whom it is directly addressed and delivered (including such client’s subsidiaries, the “Company”). In connection with the preparation and provision of these materials, Stifel has relied upon and assumed, without independent 100 135 190 investigation or verification, the accuracy and completeness of all financial and other information that was made available, supplied, or otherwise communicated to Stifel by or on behalf of the Company and other publicly available information, and Stifel expressly disclaims any responsibility for, or liability in connection with, such information or the Company’s use of these materials. 255 204 0 Any analyses of any potential strategic alternatives or transactions that may be available to the Company reflected in these materials (and the other contents hereof) are preliminary and are subject to the assumptions and qualifications set forth herein, as well as further review and modification by Stifel. Any valuation ranges or other estimates are solely illustrative and do not purport to be valuation advice in respect of the Company or any other entity (including any potential counterparty to any strategic alternative or transaction) and should not be relied upon as 228 114 0 such. Any such advice would only be provided pursuant to an engagement letter or other definitive written agreement entered into between the Company and Stifel. These materials are necessarily based upon economic, market, financial and other conditions as they exist on, and on the information made available to us as of, the date of these materials, and subsequent developments may affect the analyses (if any), information or other contents in these materials. These materials do not contain advice in any respect as to the legal, regulatory, tax or 107 33 70 accounting consequences of any potential strategic alternatives or transactions on the Company or the Company’s shareholders, and it is the responsibility of such parties to obtain advice on such matters from other qualified professionals. It is understood that these materials are solely for the information of, and directed to, the Company and its Board of Directors in their evaluation of potential strategic alternatives or a transaction and are not to be viewed as definitive or to be relied upon by any shareholder of the Company or any other person or entity. These 204 215 234 materials are not intended to, and do not, constitute a valuation of the Company or any other party (including, without limitation, the price or consideration that may be offered or paid in any potential transaction, or in any of the other terms thereof), a fairness opinion, or a recommendation to the Company as to how the Company, its Board of Directors or shareholders should vote or act with respect to any potential strategic alternatives or transactions, and are provided for informational purposes only. Any identification of, or discussion regarding, any third parties in 0 112 60 these materials does not purport to indicate the interest or receptiveness of any such party to a strategic alternative or transaction with the Company. Any such indication of interest, and the potential terms of any such transaction, can only be ascertained through substantive negotiations with such third parties Stifel cannot and will not guarantee the successful consummation of any potential strategic alternative or transaction referenced herein. In addition, the Company should be aware that in the ordinary course of Stifel’s business, it may have had confidential 175 175 175 discussions with financial investors or with parties in the Company’s industry group (including competitors) regarding strategic alternatives, including potential transactions. Such discussions may have focused on specific companies and/or presented illustrative data concerning possible transactions involving such companies, which may include the Company. These materials are confidential and are not to be published, quoted or referred to, in whole or in part, in any registration statement, prospectus or proxy statement, or in any other document used in connection 0 137 134 with the offering or sale of securities or to seek approval for any potential strategic alternatives or transactions, nor shall these materials be used for any other purposes, without Stifel’s express written consent. All transaction announcements included herein appear as a matter of record only. Dollar volume for securities offerings represents full credit to underwriter. Stifel is a full- service securities firm which may be engaged at various times, either directly or through its affiliates, in various activities including, without limitation, securities trading, investment 120 178 87 management, financing and brokerage activities and financial advisory services for companies, governments and individuals. In the ordinary course of these activities, which may conflict with the interests of the Company, Stifel and its affiliates from time-to-time may (i) effect transactions for its own account or the accounts of its customers and hold long or short positions in debt or equity securities or other financial instruments (or related derivative instruments) of the Company or other parties which may be the subject of any engagement or transaction involving the 212 0 47 Company; (ii) hold discussions with and provide information to clients, potential clients and other entities regarding various market and strategic matters (including potential strategic alternatives), which entities may include potential counterparties to a transaction or strategic alternative involving the Company, and which matters may have included a possible transaction with the Company; and/or (iii) perform various investment banking, financial advisory and other services for other clients and customers who may have conflicting interests with respect to the 169 176 137 Company.

94 110 102 Independence of Research Stifel prohibits its employees from directly or indirectly offering a favorable research rating or specific price target, or offering to change a rating or price target, as consideration or inducement for the receipt of business or for compensation. 202 140 184

102 102 153 Basis of Presentation

References herein to “Stifel” collectively refer to Stifel, Nicolaus & Company, Incorporated and other affiliated broker-dealer subsidiaries of Stifel Financial Corp. References herein to “Stifel 35 31 32 Financial” refer to Stifel Financial Corp. (NYSE: SF), the parent holding company of Stifel and such other affiliated broker-dealer subsidiaries. Unless otherwise indicated, information presented herein with respect to the experience of Stifel also includes transactions effected and matters conducted by companies acquired by Stifel (including pending acquisitions publicly announced by Stifel), or by Stifel personnel while at prior employers.

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