THE MARCH TOWARD VEHICLE ELECTRIFICATION

Dr. Ossama Hassanein Entrepreneur, Mentor, Venture Capitalist

8 May 2019 TOPICS

• STATE OF THE ART IN EV • PROGRESS OVER THE LAST 10 YEARS AND PROPECTS IN THE NEXT 10 • LATEST INNOVATIONS IN BATTERIES • IMPACT OF EV ON SMART CITIES • TESLA’S CURRENT STATE OF AFFAIRS

2 Electric vehicles (EVs) have been around since the earliest days of the .

Source: Google Images, 2019 3 THE DECADE GOT OFF TO A ROUGH START BANKRUPTCY

$1.4 $675 $612 Billion $458 Million Million Million

FISKER BETTER PLACE CODA A123 SYSTEMS Bankruptcy Bankruptcy Bankruptcy Bankruptcy November 2013 October 2012 May 2013 October 2013

Source: Electrek, Industry Articles, 2019 4 CUSTOMER CONCERNS WITH BATTERY EV

Driving Range 31% 31% 35% 4% 26% 25% 14% 18% 10% 24%

Cost/Price Premium 28% 32% 22% 19% 24% 9% 14% 31% 22% 26%

Lack of EV Charging Infrastructure 20% 16% 20% 44% 22% 18% 25% 23% 34% 22%

Time Required to Charge 9% 11% 11% 18% 13% 12% 11% 11% 17% 10%

Safety Concerns with Battery Technology 5% 4% 5% 7% 6% 22% 22% 9% 11% 8%

An All Battery Electric Powertrain Is Not Offered 2% 3% 3% 4% 3% 11% 7% 3% 4% 5% In the Type of Vehicle I Want (e.g. SUV, Truck)

The Brand I Want Doesn’t Offer Electrified Vehicles 3% 2% 2% 3% 4% 3% 7% 3% 1% 3%

% = Largest Concern Each Market

Source: Deloitte Global Automation Consumer Survey, 2018 5 • Mainstream automakers also are reacting in part to pressure from regulators in Europe and California to slash carbon emissions from GLOBAL fossil fuels. • They are under pressure as well from Tesla’s success in creating CARMAKERS electric sedans and SUVs. • The largest single investment is coming from Volkswagen, which TO INVEST AT plans to spend $40 billion by 2030 to build electrified versions of its 300-plus global models. LEAST $90 • has outlined plans to introduce 20 new battery and fuel cell electric vehicles by 2023, most of them built on a new BILLION IN dedicated, modular platform that will be introduced in 2021. • Daimler has said it will spend at least $11.7 billion to introduce 10 ELECTRIC pure electric and 40 hybrid models, and that it intends to electrify its full range of vehicles. VEHICLES • “We’re all in,” Ford Motor Executive Chairman Bill Ford Jr said of the company’s $11 billion EV investment.

Source: Reuters, 2018 6 MANUFACTURERS BOOSTING EV PRODUCTION

AUDI HYUNDAI VOLKSWAGEN PORSCHE

The VW Group is planning to Porsche is committed to bring Audi is apparently planning to Hyundai is investing heavily in launch almost 70 new electric several new plug-in vehicles increase capacity at the electrifying its future models. models in the next ten years to market next year. Brussels plant in 2020 due to The company plans to instead of the 50 that were high demand for their e-Tron. introduce 44 electrified previously planned. Instead of the 20,000 units Audi says it has over 20,000 models by 2025, with sales of previously planned, Porsche reservations for e-tron electric those projected to total As a result, the projected wants to produce 40,000 EV SUVs. 1.7 million annually. number of vehicles to be built Taycans per year and invest on the automaker’s MEB 675 million to build electric The 2019 E-Tron is just the By that year, Hyundai says it electric platform in the next Macan. beginning of Audi's electric plans to be one of the world's decade will increase from 15 ambitions. By 2025, the top three EV manufacturers. million to 22 million. Porsche has next-gen automaker intends to offer 12 batteries for longer-range all-electric cars. Plans to invest $3 billion in EV electric vehicles coming next R&D over the next 5 years. year, says CEO.

Source: Industry Articles, 2018-19 7 MASSIVE, DISRUPTIVE AND PERMANENT CHANGE IS UNDERWAY IN THE AUTOMOTIVE INDUSTRY

• By 2040, 55% of all new car sales and 33% of the global fleet will be electric. • China is and will continue to be the largest EV market in the world through 2040. • Electric Vehicles may be cheaper than petroleum-fueled cars in two years if the cost of lithium-ion batteries continues to fall. • Electrified vehicles will displace a combined 7.3 million barrels per day of transportation fuel in 2040. • In 2040, some 60 million EVs are projected to be sold, equivalent to 55% of the global light-duty vehicle market. 0

Source: Bloomberg, Industry Articles, 2019 8 EV TECH FINANCING HAS HIT $5.5 BILLION IN OVER 300 DEALS SINCE 2010

Amount of Funding ($M)

5,513 5,171

FUNDING TO MANUFACTURERS 2,291

1,000 302 66

2013 2014 2015 2016 2017 2018

• Startups looking to improve battery technology and build out a charging infrastructure for public and residential use have also seen notable attention from investors and automakers.

• BMW and Daimler, for example, have invested in charging infrastructure startup ‘ChargePoint’ to build out charging networks to support their EVs. Volvo also invested in charging startup Freewire.

Source: CB Insights, 2018 9 AMAZON LEADS INVESTMENT ROUND OF $700 MILLION IN ELECTRIC VEHICLE STARTUP

• The move helps elevate Amazon into a player in the transitioning auto ecosystem and elevates ‘Rivian’ from mere threat in the EV marketplace to a company that has the financial wherewithal to compete with any electric vehicle maker, including Tesla. Rivian plans to roll out its R1S sport utility • Amazon has invested over a billion dollars in companies that can put them in a position to compete in the EV market. vehicle and R1T pickup truck in 2020 • In addition to the increased competition from big auto manufacturers, there are also now many venture-backed startups that are now kicking tires within the electric vehicle industry. • Startups Future, NextEV, and Atieva have raised hundreds of millions from prominent venture capitalists in a bold effort to emulate the success of Tesla. • Building an electric car company from the ground up is a daunting task, and many imitators have already failed spectacularly.

Source: Forbes, Rivian Inc., 2019 10 • Lithium-ion battery prices have tumbled. The average battery pack prices were $1,000/kWh in 2010. Fast forward to the end of 2018 and average prices hit a low of $209/kWh, a 79% drop in seven years. Average energy density of EV batteries is also improving at around 5-7% per year. • Policy support. Governments around the world have offered generous EV purchase incentives to help get the market rolling. • Rising commitments from automakers. VW, Daimler, , Volvo, Hyundai and other global automakers have all made aggressive plans to electrify their vehicles over the next 10 years. The number of EV models available is set to jump to 289 by 2022. • It’s cool to be green. The majority of Generation Y, the Millennials, believe it’s important for brands to be ecologically conscious (69%) and are willing to pay more THERE ARE SEVERAL FACTORS DRIVING for companies that are (73%). THE EV MARKET FORWARD

Source: Battery Electric Vehicles, 2018 11 NO OTHER COUNTRY ON EARTH HAS BET AS BIG ON EV AS NORWAY

• Norway is the world’s biggest per-capita market for electric vehicles. • Norwegians are either fully electric or hybrid, making the country of 5.3 million the biggest per-capita market for EVs. • 57% of all new cars sold are electric [or hybrid]. The percentage of plug-ins is 12%, and battery electric is more than 45%. • Norway offers extremely generous incentives to EV buyers, and it punishes people who continue to use gas or diesel cars. Oslo has made extraordinary efforts to promote EVs, including toll-free roads, HOV-lane access, free parking, and free charging.

Source: LifeScience, 2019 12 IN 2018, MORE EVs WERE SOLD IN CHINA THAN IN THE REST OF THE WORLD COMBINED

• The Chinese government has spent nearly $60 billion in the last decade to create an industry that builds EV, while also reducing the number of licenses available for gasoline-powered cars to increase demand for electric cars.

• The country is now applying what it learned with two- wheelers to accelerate the electrification of four- wheelers. China has 99% of the world’s 250 million electric two-wheelers.

• Electric two-wheelers are so common in China that they account for 80% of all the greenhouse-gas emissions avoided by the use of electric vehicles—in the entire world.

• China now has more than 100 electric-car makers, along with hundreds of additional companies that supply components for electric cars.

• China wants EVs to account for 40 per cent of the country’s auto sales by 2025.

Source: Interesting Engineering, Industry Articles, 2018-19 13 CHINA CONTROLS A MASSIVE PROPORTION OF THE WORLD’S COBALT; A KEY INCREDIENT IN EV BATTERIES

• An essential ingredient in lithium-ion batteries that power millions of smartphones as well as plug-in electric cars, cobalt is in heavy demand. Over the past two years, cobalt has emerged as one of the hottest commodities of the electric-vehicle revolution. • The cathodes in lithium-ion batteries typically used in EVs are made of metal oxides that contain a combination of cobalt and other elements. Cobalt helps the cathodes concentrate a lot of power in a confined space. Without the element’s energy density, batteries without cobalt tend to perform worse. • The silvery-blue metal has more than doubled in price, making carmakers and tech giants fret about securing their future needs. • While there’s little cobalt mining in China itself (1 percent of the world’s total output in 2018), Chinese companies have snapped up cobalt mines abroad in recent years, particularly in the Democratic Republic of Congo, the largest source of the metal. More than two-thirds of cobalt mined in 2018 came from the Congo. • Eight of the 14 largest cobalt miners in Congo are now Chinese-owned, accounting for almost half of the country’s output.

Source: LA Times, 2019 14 LATEST INNOVATIONS IN BATTERIES

15 MOST EV BATTERIES ARE LITHIUM BASED

• Assorted forecasters peg the 2025 market for electric car batteries as ranging from $36B to $125B a year. • Most electric vehicle batteries are lithium based and rely on a mix of cobalt, manganese, nickel, and graphite and other primary components. • Li-ion batteries have traditionally comprised about 1/3 of the cost for an average electric vehicle, and have long hamstrung the dream of affordable, long-range EVs. • However, improved chemistry, manufacturing techniques, and economies of scale have driven down costs dramatically. • Li-ion batteries are also growing in popularity for military, battery electric vehicle and aerospace applications.

16 THE MARKET WILL SOON REACH A TIPPING POINT WHEN THE COST OF OWNERSHIP OF AN EV IS ON PAR WITH ITS INTERNAL COMPUSION COUNTERPARTS

EVs are forecast to cost the same or less than a comparable gasoline-powered vehicle when the price of battery packs falls to between $125 and $150 per kWh.

Analysts have forecast that this price parity can be achieved as soon as 2020, while other studies have forecast the price of a lithium-ion battery pack to drop to as little as $73 per kWh by 2030.

Source: Union of Scientists, 2018 AUTOMAKERS AND VENTURE CAPITAL FIRMS INVESTED $1.3B+ IN ENERGY STORAGE TECHOLOGIES LAST YEAR

• Solid Power, funded by investors such as Hyundai and Samsung, claims its technology provides "substantially higher energy than conventional lithium-ion" while also reducing the system-level costs of safety precautions. • QuantumScape landed a $100M funding round last year for its solid-state battery that eliminates the liquid electrolyte typical of today's batteries. • Ionic Materials plastic-like polymer serves as an electrolyte, and can work with active battery materials like lithium, zinc and aluminum. • Sion Power has been working on advanced batteries for decades and claims that its lithium-sulfur materials system has the highest theoretical gravimetric and volumetric energy densities of any battery system. • Prieto Battery is developing a three-dimensional lithium-ion structure to increase energy density and cycle life with funding from Stanley Ventures and Intel. • Sila Nanotechnologies offers higher energy density batteries for smaller, lighter, longer- lasting wearables & portable electronics, mass adoption of electric vehicles, and practical use of renewable energy. • US/Chinese lithium-ion battery developer and manufacturer Farasis received a $790M investment last year. China's Skio Matrix raised $159M for lithium-ion battery and EV development.

Source: Wood Mackenzie Power & Renewable, 2019 18 Silicon - Graphite & Energy Storage

SiNANOde® Materials

Silicon Nanotechnology for Lithium-ion Batteries

Transportation & Mobility Markets PAST 30 YEARS: Hexagonal Carbon Rings STORING LITHIUM

INTO GRAPHITE Stored Lithium Ions ANODES

Energy density improved 5% annually Graphene Layers for 20 years & reached maximum in the last couple of years

Graphite in Anode Electrode

Maximum Energy Stored 1 Kg of Graphite for 1 kWh battery LiC 6 60 Kg of Graphite per 60 kWh EV Battery 30 gram of Graphite per 30 Wh Tablet Battery

160,000,000 Kg = 160,000 Tons of Graphite One Lithium + One Electron used in 160 GWh Lithium Batteries in 2017 Per Six Carbon Atoms 20 SILICON NANOWIRES ON GRAPHITE PARTICLES

Silicon Nanowires on a Graphite Particle SiNANOde® Powder Anode Electrode

Si Si

Gr

Gr Si

Alloy Li15Si4 e- e- e- e- Electrons + + + Lithium ions Li Li Li Silicon Nanowire 3.75 Lithium per Silicon Atom Graphite = 10 times energy density of graphite 21 BY THE NUMBERS…FROM NANO-TO-MACRO

200 Kg of Silicon Nanowires 10+ Years 1 Nanowire Width < 1/3000 width of an Eyelash of R&D + & Pilot Production 800 Kg of Graphite 100 Billion Nanowires = about 1 milligram weight (200+ Patents) = 1 ton of SiNANOde® Powder (20% Si/Gr) ▪ Stores as much lithium as 10 milligram of graphite ▪ Charge & discharge faster ▪ Operates over larger temperature range Energy Storage = same as 3 tons of Graphite ▪ Safer and longer life than silicon oxides (3,000 kWh) Valuable

Scalable Raw Materials Already in Volume Production: 50,000 Tons of SiNANOde® @ 20% Si nanowire / Carbon (Raw Materials = $8.4 / Kg) 10,000 Tons of Commercial Silane gas SiH4 @ $10 / Kg = US$ 100 M + Using 40,000 Tons of Commercial Graphite Commercial @ $8 / Kg = US$ 320 M Equipment Sufficient for 150 GWh of Lithium-ion Batteries & Processes (for example 2.5 million EV batteries 60 kWh each) Extends Driving Range and Reduces $/Wh Cost 22 LIGHTER, LONGER LASTING LITHIUM BATTERIES, WHERE ENERGY DENSITY MATTERS

• > 40% improvement in battery energy density (kWh/Kg) is possible

• Less graphite and more silicon per kWh = lower (better) CO2 footprint

23 APPROXIMATELY 20 MAJOR CITIES WW HAVE ANNOUNCED PLANS TO BAN GASOLINE AND DIESEL CARS BY 2030 OR SOONER

• EVs and autonomous vehicles (AVs) will dictate the infrastructure and layout of cityscapes.

• In July 2018 it was announced that the UK will seek to mandate charging points for EVs in new homes, offices and residential streets in an attempt to spur public adoption of zero-emission vehicles. This means developers will need to consider their placement in both new-build and regeneration projects.

• EVs are here and growing rapidly in number. They require charging infrastructure and energy to charge, opening the way for new business models and revenue streams for utilities and others.

• Smart cities plan to develop the energy system in such a way that electric vehicles can be charged by locally-produced renewable energy while utilizing surplus energy stored in the car batteries.

Source: Industry Articles, 2018-19 24 THE SMART HOME POWERED BY SOLAR PANELS. ELECTRIC VEHICLE RECHARGING IN GARAGE

• A solar roofing tile is made of a glass layer, some films and then solar cells. Sun shines on the tiles, through the glass and the films, and through to the underlying solar cell, which converts the light into electricity. • Motors announced a new program with Amazon for electric vehicles. • Customers who purchase a new Kia EV can buy one of Kia’s recommended Level 2 240-volt home charging stations on Amazon. • Once they’ve selected a charger, customers can arrange installation in their homes by licensed electricians handpicked and certified by Amazon before they take delivery of their new cars.

Source: EnergySaze, Industry Articles, 2018-19 25 POWERING BUILDINGS WITH LEAF ELECTRIC VEHICLES

• Nissan launches ‘Nissan Energy’ to commercialize vehicle-to- home/building with the Leaf. • Nissan says that the goal is for owners of Nissan’s electric vehicles to be able to easily connect their cars with energy systems to charge their batteries, power homes and businesses or feed energy back to power grids. • The main goal is to reduce charging demand by shaving peak demand using Leaf battery packs, which is mainly useful to businesses, but the same technology can also be used by Leaf owners to power their home.

Source: Nissan, 2019 @ RETAILERS AND PARTNERS

• EV charging stations do more than just provide a valuable service to customers. They are also a visual indication of a retailer’s commitment to sustainability and a great way to convey a 21st century, cutting-edge image. • Some of the benefits of installing EV charging stations include: • Providing a valuable service to EV drivers • Showing consumers that you’re serious about sustainability and clean transportation • Enhancing the visual appeal of your store with high-tech charging stations • Providing a way to market to a new “eco-friendly” demographic • Helping establish a positive relationship with EV drivers

Source: SemaConnect, Industry Articles, 2018-19

27 WIRED-UP ROADS MAY SOON CHARGE YOUR ELECTRIC CAR

28 South Korean Road Wirelessly • The 12km route was first of its kind in the world. • We know from our electric toothbrushes that batteries can be Recharges On-line EV Buses recharged without plugging in a wire, and even smart phones (2013) can be charged just by being placed on top of a pad.

Source: BBC News, Industry Articles, 2013 29 AMAZON LOOKS TO DEPLOY DRONES TO RECHARGE EV

• At-home charging is often touted as a benefit for EVs over gasoline cars, but access to charging stations limits their mobility on longer trips: even the most energy-efficient EVs on the market can only go around 200 miles on a full charge, but the US has only around 16,000 public electric vehicle charging stations (compared to ~112,000 gas stations. • Amazon won approval for an invention that would allow it to use its drone fleet to deliver energy to vehicles, both at rest and while they move — just like fighter jets refuel large aircraft in flight.

Source: CB Insights, 2019 30 TESLA’S CURRENT STATE OF AFFAIRS

31 TESLA’S MISSION IS TO ACCELERATE THE WORLD’S TRANSISION TO SUSTAINABLE ENERGY THROUGH INCREASINGLY AFFORDABLE ELECTIC VEHICLES IN ADDITION TO RENEWABLE ENERGY GENERATION AND STORAGE

• No of employees – 38K • Average amount of money that Tesla burns through hourly – $480K • Annual cars built in 2018 – 350K • Production goal for 2019 – 10K cars per week • In the past two years, Tesla vehicles have accounted for all of the EV volume growth in the US • How much is Tesla worth? – $49B • Number of Tesla Superchargers Stations – 1K+ • Tesla Revenue for 2018 – $22B • With the unveiling of the $35k compact-segment Model 3, Tesla looks to fulfill its vision of becoming a mainstream EV manufacturer. • Percent of Tesla owners that would buy another Tesla – 91%

Source: Industry Articles, 2019 WORLD’S BEST SELLING PLUG-IN PASSENGER CAR MANUFACTURER IN 2018, BOTH AS A BRAND AND BY AUTOMOTIVE GROUP

• 12% market share of the plug-in segment sales. • Vehicle sales in the U.S. increased annually by 280%, and globally were up by 138% from 2017.

Source: Industry Articles, 2019 33 • Together with its partner Panasonic, Tesla has invested an estimated $5B in its massive Nevada Gigafactory, whose battery output capacity will support up to 1.5M Model 3s annually. • Nevada Gigafactory is now four to five times larger than the Pentagon and measures 70 feet tall. The factory takes around two hours to walk in its entirety. • The company has plans for up to 3 additional Gigafactories. • The Gigafactory is part of Tesla’s grand plan to make electric cars more affordable by mass producing batteries, bringing them to a wider audience. • The Shanghai Gigafactory, when complete, is reportedly expected to produce around 500,000 cars per year, even though Tesla has TESLA’S MAJOR BET ON LI-ION only made 550,000 cars in its entire history. • Tesla’s website instead claims the factory BATTERY TECH produces more batteries in terms of kilowatt- hour than all other automakers combined.

Source: Forbes, 2019 34 TESLA ENERGY – POWER EVERYTHING

• Following the acquisition of the Musk- Tesla’s solar division is affiliated SolarCity, Tesla dropped the expanding its sale presence to “Motors” from its name to reflect the 800 Home Depot stores broadening scope of its energy business. Tesla is taking over neighborhoods with solar energy • Offers a full portfolio of solar roof, residential and grid scale storage, and delivery infrastructure (with its expanding Supercharger network). • Deployed 1.04 GWh of energy storage in 2018, nearly tripling deployments in the previous years. • Delivered over 1.5 gigawatt-hours of energy in over 30 countries. Tesla is working with Amazon to deploy more energy storage at Tesla to deliver over 2 GWh of energy storage in distribution centers California project to replace 3 gas plants Source: Industry Articles, 2019 36 • Cheaper to run: The electricity to charge an EV works out around a third as much per kilometre as buying petrol for the same vehicle.

• Cheaper to maintain: A battery electric vehicle (BEV) has a lot less moving parts than a conventional petrol/diesel car. There is relatively little servicing and no expensive exhaust systems, starter motors, fuel injection systems, radiators and many other parts that are not needed in an EV

• Less pollution: By choosing to drive an EV consumers are helping to reduce harmful air pollution from exhaust emissions. An EV has zero exhaust emissions.

• Health benefits: Better air quality will lead to less health problems and costs caused by air pollution. EVs are also quieter than petrol/diesel vehicles, which means less noise pollution.

• Renewable energy: If owners use renewable energy to recharge their EV, owners can reduce their greenhouse gas emissions even further. They can recharge their EV from their solar PV system during the day instead of from the grid.

• Eco-friendly materials: The Ford Focus Electric is made up of recycled materials and the padding is made out of bio based materials. The Nissan Leaf’s interior and bodywork are partly made out of green materials such as recycled water bottles, plastic bags, old car parts and even second hand home Why are Electric Vehicles Important to appliances. • Safety improvements: EVs tend to have a lower center of gravity Society? – The Impact of Electric Vehicles that makes them less likely to roll over. They can also have a lower risk for major fires or explosions and the body construction and durability of EVs may make them safer in a collision.

Source: Get Green Now, Industry Articles, 2018-19 37 “Electric Cars are an Extraordinary Bad Idea” – Forbes, 2011

“More Like an Extraordinary Golf Cart than a Harbinger of Tomorrow’s Tech” – Los Angles Times, 2009

“Sorry, But Electric Cars are a Waste of Space” The EV REVOLUTION IS – Daily Mail, 2011 HEADING YOUR WAY

38 고마워요. THANK YOU

Dr. Ossama Hassanein [email protected] 39