Heading Goes Here

2021 AUTOMOTIVE OUTLOOK TODAY’S PRESENTERS

TOM JEFF ALONGI SCHUSTER National Manufacturing & 11-11:10 Automotive Leader President, Americas Operation 11:10-11:55 Managing Director and Global Vehicle Forecast UHY Advisors LMC Automotive [email protected] [email protected]

PAUL DAN EICHENBERG BRUCE

Managing Director Senior Manager Paul Eichenberg Strategy Consulting 11:55-12:30 Strategic Consulting UHY Consulting 12:30-1:00

[email protected] [email protected] AUTOMOTIVE REALITY

Electrification

Sharing

Connectivity

Autonomy END OF THE ICE AGE? ELECTRICFICATION TIPPING POINT?

UNITED KINGDOM, 2030 NORWAY, 2025

SWEDEN, 2030 ICELAND, 2030 IRELAND, 2030 THE NETHERLANDS, 2030 FRANCE, 2040 SLOVANIA, 2030

CALIFORNIA, SPAIN, 2040 U.S., 2035

ISRAEL, 2030

SINGAPORE, 2040 COSTA RICA, 2050 SRI LANKA , 2040 Electrification Impacts the Entire Value Chain Case Study: General Motors

GM plans to invest $27B on all-electric & autonomous vehicles through 2025  35% increase over prior plan

Strategic commitment to electrification is driving changes throughout the entire automotive value chain

Reconfigured Vehicle Assembly – Factory ZERO (Hamtramck) • $2.2B investment in tooling/upgrades – largest in GM history • 5G fixed mobile network - first in the U.S. • Stop-Station assembly – lean & versatile solution for design changes

Purchasing & Value Design & Manufacturing Marketing & Aftermarket & Production Engineering & Assembly Sales Service Chain Planning

New Products & Release Schedules Dealership Upgrades Required by 2022 (Cadillac) • Moved up release of 12 EVs, including • $200K investment in tools, training, equipment, pickups for Chevrolet and GMC brands forklifts for moving batteries, & charging stations • “Ultium” battery cells - $2.3B JV with LG • Service focus changes from primarily mechanical to technical – less components in EVs

Sources: General Motors, Motor Trend, Bloomberg, Detroit Free Press, Auto News AUTOMOTIVE SUPPLIER PREDICTIONS

HIGHTENDED FOCUS ON STRATEGY IS CRITICAL TO SUSTAINABILITY!

New components & vehicle architecture - EVs have Product Innovation ~80% fewer moving parts than ICE vehicles

New entrants such as Rivian, Lordstown Motors, New Customers Lucid, Bollinger, Nikola, Byton, & more

Especially among suppliers producing components Consolidation expected to be phased out by EVs

Material New component (electrical steels) and lightweight Innovation (AHSS, carbon fiber) materials & manufacturing

Capability Increase in technology, software, & data capabilities Expansion Impact

Global Automotive Path Forward

Analysis developed by the team at Paul Eichenberg Strategic Consulting

January 11, 2021

Purpose and confidentiality statement: This document is prepared for potential clients of Eichenberg Consulting, LLC. The contents of this document are for informational purposes only and shall not be considered consulting advice. The recipient of this document shall not disclose to anyone outside of his/her company without the consent of Eichenberg Consulting, LLC. Megatrends Shaping Auto

Vehicle Electrification Connected Cars Autonomous Vehicles Shared Mobility

12-18 Months 3-5 Years 8-12 Years

Operational Planning Business Planning Strategic Planning

Description Planning focused on short-term Focuses on a three-to-five-year Long-term vision for the company operational budgets used to guide growth agenda for the enterprise is focused on investment and the activities of the day-to-day used to highlight significant capital growth, aligning resources around operations and functions of the investments required and other “big bets” or higher growth organization. financial needs of the enterprise. transformative opportunities.

Activities • Annual sales plan - targets • 3-5 years sales/revenue plan • Vision & Mission • Operational budgets • Financial Planning • Strategic Plan • Department budgets • Capital Planning • Portfolio Analysis • Detailed tasks to get done next • HR Planning • Future Needs/Gap Analysis year • Valuation Analysis

Micro HEV Mid HEV Full HEV Plug-In Hybrid Battery Electric (Stop/Start) (MHEV) (FHEV) Electric Vehicle Vehicle (PHEV) (BEV)

Source: Expert Interviews, OEM websites

Mechanical – Today Electrical – Tomorrow

Internal Combustion Electric Battery Engine

Transmission Electric Drive Motor

Fuel/Air/Exhaust Electric Charger System

Forecast

Impact

Strategies

CopyrightCopyright ©2020 ©2020, Paul, Paul Eichenberg Eichenberg and/or and/or its affiliates. its affiliates. All rights All rights reserved. reserved | 7 Industry Global Propulsion Roadmap is Understated

1 2 3

Accelerating global The cost differential New OEM strategies legislation to ban gas- between EV/ICE and diesel-vehicles powertrain is disappearing

Source: Paul Eichenberg global research, ICCT, Expert Interviews

Europe Japan China USA

178 -32% 169 -46% 154 -44%

130 -47% 2 132 122 1173 95 953 97 81 59

TBD 2012 2020 2025 2030 2013 2020 2025 2013 2020 2025 2013 2020 2025

• Corporate CO2 emissions • Fuel efficiency target (km/l) • Corporate CO2 emissions • CAFÉ (mpg) target (g/km) target (g/km) • GHG (g/mi) • Potential for fleet ZEV credits • CARB (ZEV Credits) like CARB

Notes: 1. Proposed level to be incorporated between 2025-30 2. Japan meets this level today 3. Stated target for major cities, not nationwide Source: Paul Eichenberg global research, ICCT, Expert Interviews

Europe Japan China USA

Trump Proposal of August 2018 -26% 178 169 -32% -44% 154 149 149 130 17 -47% 1222 3 117 52 95 953 81 59 132 97

TBD 2012 2020 2025 2030 2013 2020 2025 2013 2020 2025 2013 2020 2025

Copyright ©2020, Paul Eichenberg and/or its affiliates. All rights reserved 10 1 Zero Emission Vehicle (ZEV) mandates Many governments are mandating ZEV at the national-level, state-level, & city-level

New ZEV sales mandate (%) Timeline Fleet ZEV mandate (%) Timeline ‘25 ‘30 ‘35 ‘40 ‘50 ‘30

Japan 33% Tokyo, Japan 100% Asia S. Korea 33% Seoul, S. Korea 100%

Asia India 30% Amsterdam, Netherlands 100%

China 50% London, UK 100%

Si ngapore 100% Oslo, Norway 100%

Norway 100% Paris, France 100%

Denmark 100% Copenhagen, Denmark 100% Europe National Netherlands 100% Berlin, Germany 100% level Sw eden 100% Milan, Italy 100% City Europe UK 100% Warsaw, Poland 100% level France 100% Moscow, Russia 100%

Portugal 100% Barcelona, Spain 100%

Spain 100% Vancouver, Canada 100%

Germany 100% Mexico City, Mexico 100%

N. America Canada 100% Austin (U.S.) 100% N. America Hainan 100% Honolulu (U.S.) 100% Province/ California 100% Los Angeles (U.S.) 100% State level New Jersey 85% Seattle (U.S.) 100% British Columbia 100% S. America Rio De Janeiro, Brazil 100%

ICE Cost Forecast $1,400 54 2021 EU Target $1,200 MPG $1,000

$800 67 2025 EU Target $600 MPG

$400

$200 92 2030 EU Target MPG $0 150 140 130 120 110 100 90 80 70

Co2 g/km

1. ICCT 2020-30 CO2 Standards for Cars and LCVs in Europe, Nov. 2016 Source: ICCT, Expert Interviews

EU Potential Cost Parity US/China Potential Cost Parity Including fuel savings Including fuel savings $20,000

BEV 300-$17,700 $15,000

BEV 200-$11,200 $10,000

BEV 150-$7200

$5,000

ICE $5200 ICE $6700 BEV 300-$500 $0 2015 2020 2025 2030

Source: ICCT November 2016 Battery Technology Forecast - 2015 $270 USD, 2030 $110 USD per kWh – battery pack Bloomberg News Energy Finance estimates $270 kwh battery pack = $74 per pack and $196 per cell (Tesla acknowledges at $190 pack and GM at $145 cell price today).

These 5 improvement areas collectively boost range by 54%, reduce battery costs by 56%, and reduce investment costs by 69%, making this an industry-changing breakthrough

Battery breakthrough improvements (%) – TOTAL • Anode & cell design are top 69% contributors to a 54% improvement in range & energy 56% 54% density 34% 5 Factory simplification 14% 18% • Factory simplification, cell design, and cathode material are top 7% 8% 4 Cell vehicle integration 20% 5% contributors to the 56% 4% 3 Anode material improvement in cost 12% 4% 16% 2 Cathode material Tesla 4680 • Factory simplification & cathode battery cell 16% 14% 7% 1 Cell design design are top contributors to the Range Cost $ Investment $ 69% improvement in investment increase reduction reduction costs

Source: Tesla battery day presentation, Eichenberg research & analysis

Copyright ©2020, Paul Eichenberg and/or its affiliates. All rights reserved 14 3 EV vs. traditional OEM valuations EV Net Debt LTM Revenue Market Cap Enterprise LTM EBITDA $ in millions FY2019 Nov - 20 Value Nov - 20 Nov - 20 EBITDA EVITDA Nov – 20 Nov - 20 Tesla, Inc. $24,578 $418,602 $420,703 $4,019 104.7x 0.1x Toyota 291,371 200,501 351,483 30,674 11.5x 4.7x Volkswagen AG 299,860 93,970 289,346 14,103 20.5x 12.7x AUDI AG 66,089 83,193 64,546 5,168 12.5x NM Daimler AG 205,039 69,257 217,175 8,534 25.4x 15.7x BYD Company Limited 19,471 66,283 74,413 2,951 25.2x 2.4x NIO Limited 1,193 63,337 62,430 (823) (75.9x) NM General Motors Company 137,237 60,086 151,131 9,460 16.0x 8.8x BMW Group 123,691 55,780 165,857 12,133 13.7x 8.6x Honda Motor Co., Ltd. 153,164 51,118 100,544 9,607 10.5x 5.0x Volvo 50,323 47,396 57,705 3,004 19.2x 3.0x SAIC Motor Corporation Limited 128,548 46,132 47,097 3,510 13.4x NM Hyundai 95,610 34,832 97,303 4,270 22.8x 0.0x Ford Motor Company 155,900 34,811 163,903 7,049 23.3x 17.0x Fiat Chrysler Automobiles N.V. 128,412 23,599 23,381 8,310 2.8x NM

Major OEM’s Recent electrification strategy announcements 2030 global electrification goal

Vertically integrate into 4860 battery cells by 2023 20 Mill EV’s

Cadillac is GM’s lead EV brand, GMC Hummer EV 5 Mill EV’s N. American- based EV launches: Mach-E, E-Transit, electric F-150 33% EV’s

Electrification lead brands: Alfa Romeo & Maserati Not announced

“Mission T”: catchup to Tesla by 2024 40% EV’s

European- “Electric First” – 4 new large Mercedes Benz EV’s 50% electrified based EV launches: BMW 3-series & 5-series 5 Mill EV’s

Repurpose Ioniq as EV sub-brand “Most new models”

6 new EV’s for the China market 1 Mill EV’s, FCV’s Asian- based EV launches: 2 Honda EV’s on GM e-platform 66% electrified

Launching 8 EV’s by 2023, expand EREV’s Not announced

Expected electrification investments 2019-2025 ($Bill) - Global Target brands for electrification

VW 91

Daimler 42

GM 28

Hyundai 20

R/N/M 20

Changan 15

Toyota 14

Ford 11

Tesla 10

FCA 10

Great Wall 8

BMW 7

Source: Reuters; Press research; Eichenberg

2020 2021 2022 2023 2024 2025 Ʃ ’20-25

VW 10 6 10 7 5 4 42

R/N/M 10 5 15 10 3 1 44

Toyota 3 4 6 5 3 4 25

Hyundai 3 6 0 0 0 3 12

GM 2 0 5 3 3 4 17

Ford 4 1 3 2 0 2 12

Honda 2 1 3 0 0 0 6

FCA 3 2 3 0 1 2 11

PSA 5 4 3 7 5 0 24

Suzuki 1 0 0 1 1 2 5

Daimler 3 3 1 1 0 1 9

BMW 1 2 3 2 2 0 10

Geely 7 4 5 6 1 1 24

Source: IHS 2019; EIchenberg

Stated reason for layoffs Vehicle sales Announced layoffs in 20191 slow down Electrification Digitization2 Autonomy

14,700

12,500

11,100 In 2019, automotive OEM’s have 9,500 announced >65,000 layoffs citing not only a vehicle sales slow 7,000 down, but also investment in electrification 4,500

3,500

2,900

1 All announcements were made in 2019 except GM (Nov. 2018) 2 Digitization = software, infotainment, connectivity Source: Eichenberg Research, press research

Global passenger car market (Mill)1,2 EV PHEV HEV mHEV ICE

95 95 97 92 94 89 89 85 87 81 81 16 17 19 20 25 78 78 8 10 11 14 4 6 2 4 5 5 6 3 3 3 8 9 10 4 2 11 11 7 10 3 3 3 14 15 3 3 21 3 23 26 29 29 29 26 78 72 66 62 59 54 48 41 38 35 33 32 29

‘18 ‘19 ‘20 ‘21 ‘22 ‘23 ‘24 ‘25 ‘26 ‘27 ‘28 ‘29 ‘30

EV/PHEV% 2% 3% 8% 12% 15% 17% 19% 25% 27% 29% 31% 33% 41%

Electrified% 4% 7% 15% 23% 30% 37% 46% 54% 59% 63% 65% 66% 70% (EV/PHEV/HEV/mHEV

1 All regions are passenger cars only except N.America. N.America market includes passenger cars + light trucks 2 Volume weighted averaging of the 3 major markets (China, Europe, N.America) are projected onto Japan/Korea and half the %electrification on the RoW (S.Asia, S.America, Middle East, Africa) 3 Includes engine start/stop (ESS)

Copyright ©2020, Paul Eichenberg and/or its affiliates. All rights reserved 20 EV Insider Forecast Model This EV model suggests that the 2030 EV/PHEV market size will be larger (~1.7X larger) than other forecasted data (e.g. I.H.S.); this regulatory framework-based model can provide increased certainty for aggressive electrification growth

EV’s in 2030 (Mill) & Delta PHEV’s in 2030 (Mill) & Delta I.H.S EV Model

7.4 3.2 China 1.1X 1.1X Both sources agree that China will be the largest 8.4 3.7 EV/PHEV market by 2030

3.7 2.1 Europe 1.8X 1.8X Major GHG standard drop in 2030; 2029 standards are 6.6 3.7 more aligned with I.H.S. (3.7 EV/2.1 PHEV in 2029)

1.6 1.2 N. America 2.5X 2.7X Regulatory uncertainty due to the political uncertainty 3.9 3.3 (i.e. in the U.S.) makes forecasting less precise

1.4 1.1 Japan/Korea not modeled; Japan has aggressive FE Japan/Korea 2.4% 1.8% 3.4 1.9 standards (-32% in 2016-2030). S. Korea has GHG standards 0.9 0.2 RoW 3.1X 8.9X RoW electrification increase assumed 50% of the 2.8 1.6 TOP3 region rate

I.H.S.: 15.0Mill EV’s 1.7X I.H.S.: 7.8Mill EV’s 1.8X EV Model: 25.1Mill EV’s EV Model: 14.2Mill EV’s

Bottom up, market-based forecasts may substantially understate the coming electrification shift, but for strategic planning, each approach can “book- end” market sizing scenarios

Source: Eichenberg Research, EV Insider Model methodology, IHS 2019

Overview of analysis

January 11, 2021

Purpose and confidentiality statement: This document is prepared for potential clients of Paul Eichenberg Strategic Consulting, LLC. The contents of this document are for informational purposes only and shall not be considered consulting advice. The recipient of this document shall not disclose to anyone outside of his/her company without the consent of Paul Eichenberg Strategic Consulting.

Copyright ©2020, Paul Eichenberg and/or its affiliates. All rights reserved 22 N. America – GHG/CAFE/ZEV regulations To book end scenarios, we added a 3rd scenario to capture the possibility if a pro-environment democratic president is elected in 2020; 3 candidates have ZEV policies – Buttigieg targets 100% ZEV by 2035

Democratic candidates who specify zero emission vehicles Assessed target for 2030

Elizabeth Warren “By 2030, we’ll reach 100% zero emissions for 47g/mi1) all new light-duty passenger vehicles, Each candidate broadly medium-duty trucks, and all buses.” supports the “Green New Deal” but has differing interpretation for the automotive industry Andrew Yang “The standard for all car models from 2030 on should be zero-emissions.” 47g/mi1)

Chose this scenario for Pete Buttigieg analysis as 100% ZEV by “2035 – required zero emissions for all new 107g/mi2) 2030 is unlikely to be passenger vehicles.” feasible

Joe Biden, Bernie Sanders and Amy Kloubuchar do not specific automotive regulations on their campaign websites

1) Zero emission vehicles assumes EV PC @ 0g/mi, EV LT @ 0g/mi, PHEV PC @ 79g/mi , PHEV LT 145g/mi with 2030 market share of 31%, 26%, 24%, 19%, respectively (100% total) 2) Calculated based on a linear decline from 2020 to 2035 of -9.2% CAGR achieving 47g/mi in 2035 Source: https://elizabethwarren.com/plans/climate-change; https://www.yang2020.com/policies/sustainable-transportation/; https://peteforamerica.com/policies/climate/

Copyright ©2020, Paul Eichenberg and/or its affiliates. All rights reserved 23 NAFTA – EV/PHEV model forecast In Scenario #1 (proposed – Trump), EV/PHEV will not be required through 2030 – even with ~22% HEV/mHEV in 2030, the fleet exceeds minimum regulations by ~4% Light vehicle production in NAFTA – PC+LT combined (Mill) 1 Proposed (Trump) EV 15.8 15.6 15.8 15.8 16.0 16.4 16.5 16.2 16.2 15.3 15.1 15.3 15.4 PHEV 1.0 1.1 0.8 0.9 0.9 1.0 1.0 1.0 HEV 0.20.3 0.4 0.6 0.4 0.9 1.3 2.2 2.4 0.4 0.5 1.5 1.8 1.8 2.1 2.4 2.6 0.5 0.5 mHEV • If Trump’s “preferred alternative” is 0.5 0.5 0.7 0.8 0.8 0.8 0.8 8.2 I3 implemented, OEM’s will have very little 7.9 incentives to implement EV/PHEV’s at scale 7.6 7.5 I4 7.3 7.6 7.6 7.6 7.7 7.7 7.6 7.3 • By 2030, the U.S. automotive industry could 7.3 V6 be significantly different from the rest of the V8 world in terms of GHG reduction 5.2 4.7 4.4 4.3 4.2 technologies 3.8 3.7 3.5 3.2 3.3 3.4 3.4 3.3

2.0 1.8 1.6 1.6 1.5 1.4 1.4 1.4 1.4 1.3 1.4 1.3 1.2 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30

-0.6% -2.4% -4.9% +1.2% +1.9% +2.9% +3.3% +3.6% +4.2% +4.5% +4.1% +4.0% +4.3% GHG gap to target without EV/PHEV (%)

0.3% 1.3% 3.1% 0.6% 0.5% 0.2% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% EV/PHEV % of total

244 235 227 241 241 241 241 240 240 240 240 240 240 Corporate avg. GHG regulation (g/mi)

1) Assumes 10g/mi off-cycle credits and 18g/mi(PC)/24g/mi (LT) A/C efficiency credits from unadjusted GHG performance 2) EV/PHEV ratio is 2.5 in 2019 and reduces to 1.5 (PC) and 1.2 (LT) in 2030 Source: Eichenberg, EV Model

Light vehicle production in NAFTA – PC+LT combined (Mill) 2 Incumbent (Obama) 18 EV 16.4 16.5 15.8 15.6 15.8 15.8 16.0 16.2 16.2 16 15.3 15.1 15.3 15.4 PHEV 0.4 0.9 0.2 1.7 2.1 2.5 2.8 3.1 3.4 3.7 HEV 0.4 0.4 3.8 3.9 14 0.4 0.3 0.8 0.8 0.5 1.0 1.3 0.5 0.6 1.6 mHEV • The incumbent regulations goes through 12 1.1 0.7 1.8 2.2 8.1 1.2 2.6 0.4 0.7 2.9 2025 resulting in ~28% EV/PHEV’s 0.4 1.4 0.7 3.3 I3 7.8 1.3 0.7 10 7.5 0.4 1.4 0.7 0.4 1.5 0.6 • Assuming the same -4.4% YoY reduction 6.8 0.5 1.5 0.6 I4 0.5 1.4 8 6.1 0.5 1.4 through 2030, ~45% results 6.0 0.5 5.8 V6 5.5 0.4 6 5.3 5.1 4.7 V8 5.2 4.3 4 4.7 4.1 4.4 4.0 3.5 3.1 2.8 2.6 2 2.2 2.1 2.0 1.9 1.7 2.0 1.8 1.6 1.5 1.2 1.2 0 1.1 1.0 1.0 0.9 0.8 0.7 0.6 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30

-2% -4% -6% -12% -16% -19% -23% -26% -29% -32% -35% -38% -40% GHG gap to target without EV/PHEV (%)

1% 2% 4% 9% 16% 20% 24% 28% 31% 34% 38% 42% 45% EV/PHEV % of total

240 230 222 207 198 188 179 170 164 158 152 147 142 Corporate avg. GHG regulation (g/mi)

Copyright ©2020, Paul Eichenberg and/or its affiliates. All rights reserved 25 NAFTA – EV/PHEV model forecast In Scenario #3 (Green New Deal – Buttigieg), ~60% EV/PHEV’s (9.6 Mill) would be required by 2030

Light vehicle production in NAFTA – PC+LT combined (Mill) 3 New Green Deal (Buttigieg) EV 18 16.4 16.5 15.8 15.4 15.6 15.8 15.8 16.0 16.2 16.2 16 15.3 15.1 15.3 PHEV 0.3 0.7 0.2 1.5 2.0 HEV 14 0.4 0.3 1.8 3.0 3.5 4.1 4.6 0.4 0.7 4.9 5.2 0.8 1.0 0.5 0.5 1.3 mHEV • A 60% EV/PHEV penetration in 2030 could 1.1 0.6 12 0.7 1.7 8.2 0.4 1.2 2.1 lead to a 100% zero emission vehicle status 0.7 2.6 I3 7.9 0.4 1.4 3.2 10 0.4 1.3 0.6 by 2035 (Buttigieg’s campaign statement) 7.6 3.7 7.0 0.4 1.3 0.6 I4 1.3 0.6 4.4 8 6.3 0.4 6.1 0.5 1.3 0.5 V6 5.7 0.4 6 5.4 1.1 0.4 5.0 0.4 1.0 V8 4.6 5.2 0.3 4.7 4.0 4 4.4 3.4 4.1 3.0 3.6 3.1 2.8 2.5 2 2.1 2.0 1.8 1.5 2.0 1.3 1.8 1.6 1.5 1.3 1.2 0 1.1 1.0 0.9 0.8 0.7 0.6 0.5 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30

-1% -2% -5% -10% -14% -18% -23% -28% -33% -38% -43% -49% -54% GHG gap to target without EV/PHEV (%)

0% 1% 3% 7% 14% 19% 21% 29% 35% 41% 47% 53% 60% EV/PHEV % of total

244 235 227 215 203 191 179 167 155 143 131 119 107 Corporate avg. GHG regulation (g/mi)

Copyright ©2020, Paul Eichenberg and/or its affiliates. All rights reserved 26 NAFTA – EV/PHEV model forecast When comparing the 3 scenarios, scenario #2 (incumbent – Obama) is aligned with global trends @ ~45% EV/PHEV’s by 2030

% of total sales U.S. GHG regulations by scenario (2030) # of EV/PHEV’s in 2030 (Mill) in 2030

EV PHEV Proposed 1 240 0% (Trump) 0.0

Incumbent 2 142 3.9 3.3 7.2 45% (Obama)

New Green Deal 3 106 5.2 4.4 9.6 60% (Buttigieg)

0 100 200 300 0 5 10 15

This model suggests that a significant acceleration of the EV/PHEV’s adoption, which in line with recent announcements in the UK, European Union, and China, thus displaying alignment with these global trends

Source: Eichenberg, EV Model

Forecast

Impact

Strategies

CopyrightCopyright ©2020 ©2020, Paul, Paul Eichenberg Eichenberg and/or and/or its affiliates. its affiliates. All rights All rights reserved. reserved | 28 Traditional powertrain component market declines

Traditional powertrain components

Forging/Billet Casting Gasket/hoses

• Piston head • Block • Cylinder head gasket • Connecting rod • Cylinder head • Crankshaft seal • Crankshaft • Cam cover • Intake manifold seal • Camshaft • Oil pan • Exhaust manifold seal Engine • Valve lifter • Cover • Exhaust/intake valve • Water pump housing

Powertrain • Planetary gear set • Main housing • Axle seal • Ring • Rear housing • Parking interlock seal • Shaft • Hydraulic block • Oil pump seal • Spring assembly • Oil pan Transmission • Crown • Gears

In addition to forgings, machined from billet, castings, and gaskets component, other types such as bearings, front end accessory drive (FEAD), fuel injection, control module, stampings, and engine mounts can expected to be disrupted by vehicle electrification

Traditional Hybrid Electric Full Electric (Jeep Grand Cherokee example) (Chevrolet Volt example) (Nissan Leaf example)

V6 engine I4 engine Motor/gearbox assembly

Engine

Powertrain 8-spd Automatic Transmission Hybrid powersplit transmission

Transmission

Selected plastic additions and subtractions Potential impact of shift from ICE to EV ~30 kg per vehicle (Example 2015 Golf ICE vs. 2015 e-Golf EV, kg) Examples of key plastics systems to be eliminated with the ICE

Golf ICE plastic 134 Air System (full) 3 Body frame 4 Bumpers 2 Engine 5 Air Intake Manifold Fuel Tank Engine Cover Fuel system (full) 13 Air Systems Fuel Systems Engine Transmission 1 2-6 kg per vehicle 10-17 kg per vehicle Components xEV system 1 2-6 kg per vehicle Cooling sys (water) 2 Other additions/ 8 subtractions (net) e-Golf plastic 101

Potential impact of elimination of ICE is ~750 KT of annual plastic resin production by 2030

Source; A2Mac1; Eichenberg

Forecast

Impact

Strategies

We see an emerging risk to top-line growth and profitability for even the world's best suppliers, particularly those with significant exposure to the internal combustion ecosystem. We believe investors must pay close attention to the challenges facing OEMs as they confront unprecedented pressures to completely reengineer the propulsion system from internal combustion to electric. “Roughly 25% of Delphi'sDelphi’s global profit comes from its powertrain division”division”, a collection of businesses that optimize the combustion of diesel and gasoline through highly engineered pumps, injection systems, fuel delivery, exhaust flow, emission canisters, throttle controls, and sophisticated control modules. “We're“We’re not suggesting thesethese productsproducts willwill bebe replacedreplaced immediately,immediately, butbut wewe dodo seesee scopescope forfor diminisheddiminished economiceconomic returnsreturns givengiven changingchanging OEMOEM prioritiespriorities thatthat createcreate materialmaterial riskrisk toto thethe company’scompany's earnings trajectory. "

Source: Adam Jonas – Morgan Stanley

Divestiture

Transformation

Diversified

Consolidation Private Equity

T: (248) 670-9108 E: [email protected]

www.linkedin.com/in/pauleichenberg

Web: www.PaulEichenberg.com

35 Outline

▪ Current automotive environment

▪ Trends and path forward

2020 – Widespread but short global recession 2021 – Solid expected recovery…not without risks!

2020 GDP GROWTH 2020 2020 2019 2020 -4.0% -3.5% -7.3% 2.1%

Global USA Eurozone China

2021 GDP GROWTH 2021 2021 2021 2021 +5.1% +4.2% +4.7% +8.1%

2012 2018 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 2014 2015 2016 2017 2019 2020

140 LV SAAR by country/region, 2019 =100 ▪ Normalised or better. China Japan better than 2019 since May. Korea 120 Korea China cooling but solid. West European 100 markets produced a ‘normal’ USA market level in July, though it is W. Eur. being supported by moderately 80 strong incentives. Brazil 60 ▪ Tempered rebound. The US passing through renewed COVID 40 surge. Japan has passed through a second outbreak (low level). 20 India gaining. India 0 India ▪ Slow recovery. Brazil slower to

recover, but now gaining traction Jul-20

Oct-20

Apr-20

Jan-20 Jun-20

Mar-20

Feb-20

Nov-20 Dec-20

Aug-20 Sep-20 though recent high case numbers May-20 have hindered recovery.

© 2020 LMC Automotive Limited, All Rights Reserved. Source: LMC Automotive 5 2020 LV demand in all regions see major contraction World – 77.mn, up 14% from 2020 Europe China 25.5 N. America 20.7 -4% 24.5 -20% 16.5

-15% 20.2 17.0

2019 2020 2019 2020 2019 2020 Rest of Asia Units: millions 15.7 -15% S. America 13.3 4.1 -27% 3.0

2019 2020 2019 2020

17.0 +9% 18.4

2020 2021 2020 2021 2020 2021 Rest of Asia Units: millions 15.4 S. America 13.3 +16% 3.0 +28% 3.8

2019 2020 2020 2021

Global LV Sales US LV Sales

-16% +19% -15% --10%18%

Global LV sales % Global BEV sales % US LV sales % US BEV sales % change Nov-20 YTD change Nov-20 YTD change Dec-20 YTD change Dec-20 YTD

Global BEV sales Tesla Sales by market (000’s) (000’s) Tesla 300 10% ROW 1,500 7% 23% 20% Europe 1,200 22% 27% ROW – 9% 200 900 11% 30% China Europe – 34%

Thousands 600 China 45% 100 54% 300 40% US US – 13% 0 YTD Oct YTD Oct 0 2019 2020 YTD Oct 2019 YTD Oct 2020

Light Vehicle Sales (millions)

-14.5% -18.6% -27.7%

US Light Vehicle SAAR 19

5 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Pre-COVID-19 Projected SAAR

US Light Vehicle SAAR 19

5 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Pre-COVID-19 Projected SAAR

• Gradual improvement in Monthly US LV Sales performance with 2020 off 1.8 +6% 15%. 1.5 -11% -19% +4% +1% -39% -30% -26% -16% 1.2 -46% 0.9 Millions • Incentives back above $4k 0.6 0.3 – up 7% from Oct-19. 0.0 • CFTP at all time high again! Up 5% above year- 2019 2020 ago.

• Leasing is off a bit but $4,231 $35,176 remains high at 27%. Long $33,448 $3,957 loans are up (>72-month is 39% of transactions). Incentives Transaction Prices Dec-19 Dec-20 Dec-19 Dec-20 © 2020 LMC Automotive Limited, All Rights Reserved. Source: LMC Automotive, J.D. Power Not all sales equally impacted - Trucks have held up well!

US Sales % Change 2020 from 2019

Industry

Pickup

MPV

Van

SUV

Sporty

Car

-35% -30% -25% -20% -15% -10% -5% 0%

US Light Vehicle SAAR 19

13 US LV Forecast 2020 – 14.5mn 11 2021 – 15.7mn +9%

7 Jan Mar May Jul Sep Nov 2020 2021

20% • Marked improvement in 10% performance with YTD 0% September off -23%. -10% -20% • 4Q now expected up 4% -30% from same period in -40% 2019, as inventory -50% rebuild ramps up. -60% -70% • 2020 expected down - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 16% from Pre-Covid-19,

92.5 improvement of 3.4mn 89.4 -16% -6% units from May. 86.9 74.7 • 2021 expected down -6% 2020 2021 from Pre-Covid-19

Pre-Covid-19 Current Pre-Covid-19 Current forecast.

US Light Vehicle Days' Supply China Change in Stock Europe Light Vehicle Days' Supply 150 4 3 114 119 120 6 Production 94 3 100 5 100 87 2 78 7678 76 73 Millions 80 65 67 4 6969 67 67 66 66 67 60 59 59 61 Millions 59 60 61 59 57 2 Retail Sales 55 51 50 55 48 1 60 3 50 1 0 40 2 20 1 0 0 -1 0 0

Yr-Ago Days' Supply Days' Supply Days' Supply Inventory ▪ US days’ supply was holding in 50-60-day range but fell below 50 as inventory levels continue to be constrained. Will not likely see normal inventory levels until mid-2021 or later. ▪ China was destocking heading into the outbreak. Given rapid rebound and restart in production, inventory has begun building again relative to retail demand. ▪ Europe saw a similar supply spike but has since balanced as production appears to be keeping pace with demand. With strict lockdowns, demand has cooled.

© 2020 LMC Automotive Limited, All Rights Reserved. Source: LMC Automotive 17 Global Production microchip shortage risk • NA can’t afford any loss of Global LV Production Volume Forecast production but could lose more than 10% in 1Q. 24

Millions 22 • China expected down 10% in January with continued risk. 20 Some chips stocks being diverted from Europe. 18

16 Risk Range • Korea may avoid major impact 1Q - 1.4-2.6mn 2Q - 0.7-1.5mn as some stockpiling took place 14 3Q - 0.4mn and chip production ramps up. Total Risk – 2.1-4.6mn 12 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 • Europe does have some inventory as a buffer, but impact also expected widespread.

Light Vehicle production (millions)

-22% -16% -18% -19% -5% -32% -2%

150 Tesla Model Y Hyundai Tucson

214 100

Audi A3 122 Launching… 50

68 69 62 52 55 58

0 Ford Mustang Mach E Ford F-150 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2020 2020 2020 2020 2021 2021 2021 2021

▪ Current environment

▪ Trends and path forward

Cumulative Projected Volume Loss Forecast Development (relative to pre-pandemic forecast) 100 2020 2021 2022 0 95.1 94.4 95 +6% -10

Millions 90.3 91.1 Millions -20 -13 90 +11% -19 -23 85.9 -30 85 -40 77.4 -50 80 -60 -14% 75 Forecast Scenario Range 100 70 90 65 2014 2015 2016 2017 2018 2019 2020 2021 2022 80 Jan-21 May-20 Dec-19 70

CAGR Global Sales ‘20-’23 ▪ Global CAGR at 7% 2020- Brazil 13.3% 2023, with most emerging Eastern Europe 10.6% markets outperforming mature. ROW 10.2% Western Europe 9.6% ▪ China and South Korea are in a much stronger position in 2020 India 9.0% so recovery is less than other Global LV Sales 7.1% markets. China 5.5% US 4.8% ▪ Growth into the longer term is Japan 3.1% still dependent on stability in mature markets and further S. Korea 0.0% growth in newer markets.

US LV Sales Volume Risk 18 16.9 17 16.3 16.7 16 15.7 Millions 15 14.5 14 13 17.4 17.5 17.2 17.2 12 16.4 17.0 16.4 15.6 15.1 15.6 15.9 11 14.5 14.4 13.2 12.8 10 11.6 9 10.4 8 20082009201020112012201320142015201620172018201920202021202220232024

▪ Recovery hinges on economy bounce back and continued improvement employment. Second stimulus needed to keep on track in early 2021. ▪ US trade policy, specifically the US-China trade progress, is an unknown under new administration but likely eases somewhat

7% SUV reign 6% continues Voyager addition + throughout forecast new EV MPVs help, but…

Car segment under -2% 4% Premium pressure but EVs EVs/Corvette drive slow share decline Sporty growth

5% New entries in 7% Total Premium Midsize and Large gains more ground driving slight truck after SUV and EV growth expansion

+16% ▪ Production expected down by 16% in 2020 with 87.6 rebuilding inventory to 4.6 Risk -16% meet stronger demand. 95.7 ▪ Recovery risks include a 92.2 88.8 90.4 second wave and short- 83.0 term capacity constraints. 74.7 ▪ Chip shortage could have lasting impact on the year 2019 2020 2020 2021 2022 2023 of up to 4-5mn units. Pre COVID-19 ▪ Pre-COVID-19 expected by 2022 as industry builds inventory hedge

China 61% Global Utilization 45% 51% 85% 80% 2017 2020 2023 75% Asia-China 70% 73% 69% 65% 64% 55% 60% 55% 2017 2020 2023

50% Europe 51% 73% 71% 45% 55% 40%

2017 2020 2023

85% North Am 73% 62%

2017 2020 2023

© 2020 LMC Automotive Limited, All Rights Reserved. Source: LMC Automotive Global BEV growth marches on! +48% ▪ COVID-19 hits BEVs but 4.5 +66% they are still expected to grow in 2020. +10% 3.1 ▪ China rebound and Europe regulations are driving growth. 2.2 -16% 1.8 1.6 ▪ Share of industry could rise faster given Tesla factor and new start-ups. ▪ By 2030, we expect volume to be nearly 15% LV volume. US BEVs about 9% of US LVs.

Number of mainstream BEV models on sale 531! 500 446 450 Models > 1,000 units per year 381 400 350 300 250 200 140 150 100 61 50 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2030

Global BEV PV market Global xEV PV market 20 50

Q3 2020 40 Q3 2020 Q4 2019 Q4 2019 30 10 20

Q4 19: 2020-31 - 111 mn Q4 19: 2020-31 - 356 mn

Sales (mn units) (mn Sales 10 Sales (mn units) (mn Sales Q3 20: 2020-31 - 115 mn Q3 20: 2020-31 - 350 mn 0 0

• There may be a net positive influence in BEV demand resulting from a reluctance to revert to the use of public transport (especially in China). • COVID-19 and the resulting improvement in air quality may act as a focal point for public opinion to shift in favour of faster elimination of fossil fuel emissions.

Group Market Share Tesla Other China VW R-N-M SAIC Startups BYD Hyundai Other BMW Daimler GM Toyota Ford 0% 5% 10% 15% 20% 25% 2020 2025

▪ Temporary factors that have boosted the rebound are going to weaken or disappear.

▪ Pent-up demand. During lockdown and the period of suppressed sales, pent-up demand had built up and is still being released – how much further than will this drive growth? (Note: buying a car to avoid COVID risk is also probably still relevant and may not disappear.)

▪ Inventory correction. Some sales measures, e.g. wholesales data used in some countries, are benefitting from post-lockdown inventory replenishment – this source of demand will also dry up when inventories are normalized.

▪ Incentives. Government incentives are in use in a number of markets, especially in Europe. They have been less prevalent elsewhere. When the incentives expire, or funding is used up, demand will weaken.

▪ Fiscal rescue. Direct economic support from governments will have a limited duration. When job and business support schemes end, or are tapered, a renewed macroeconomic slump could emerge, damaging underlying vehicle demand.

▪ Second wave/Dark winter. Case numbers are rising in a number of countries that have or may trigger new social distancing controls.

Oxford +44 1865 791737 [email protected] Detroit +1 248 817-2100 Bangkok +662 264 2050 lmc-auto.com Shanghai +86 21 5283 3526 Thank you

UHY Automotive Outlook Conference January 14, 2021

National Facts Automotive Expertise . 300+ automotive clients including OEM, tiered suppliers, 20+ Office 1,000+ 50+ Years of 300+ Auto tool and die, plastics, and metals clients Locations Professionals Experience Clients . Experts with prior automotive industry experience . Partnership with LMC Automotive providing access to production forecast data and industry news International Coverage Comprehensive Services . Host Annual Automotive Outlook Conference . Top 20 global professional services firm . Consulting . Quarterly publications including “NA Automotive . 8,500+ professionals in 100+ countries . Corporate Finance / M&A Production Forecast Summary” . Due Diligence . Active participation in automotive industry groups . Tax  Society of Automotive Analysts (SAA) . Audit / Assurance  Society of Automotive Engineers (SAE) . Forensic, Litigation, & Valuation  Original Equipment Suppliers Association (OESA) . International  Automotive Alley  Michigan Manufacturers Association (MMA)  National Tooling and Machining Association

Identify & develop strategies for disruptive technologies before they overtake sustaining technologies  52% of Fortune 500 companies in the year 2000 no longer exist

Sustaining Technologies Disruptive Technologies • Improve existing product performance • Reinvent product & generate new value proposition • Occur frequently • Occur less frequently • Typically year over year product improvements • Initial product typically simpler & more convenient

Sources: “The Innovators Dilemma” by Clayton Christenson, MIT, Accenture

An independent member of UHY International © UHY Consulting, Inc. 2021 All Rights Reserved. 3 Disruptive Change – Historical Transportation Example 13 Year Transformation of New York City Easter Parade

The motor vehicle was a disruptive change that quickly transformed the personal transportation industry and it’s surrounding infrastructure

Additional Changes

Change 1900 1913

Mode of Horse & Motor Transport Buggy Vehicle Food/Water Fuel Source Gasoline 13 Years Troughs

Road Type Dirt Pavement

Primary Metal, Vehicle Wood Rubber, Materials Glass Vehicle Electric Candles Lighting Headlights

Sources: U.S. National Archives, George Grantham Bain Collection, Building Context

Customers projected to shift from innovators/early adaptors to early majority over the next 10 years

Technology Adoption S-Curve

Companies are more likely to be Projected U.S. BEV successful if electrification strategies Sales Market Share are planned, developed, and executed 2030 before the adoption s-curve reaches the early majority customer segment 2020

Sources: University of Michigan Energy Institute

Electrification is expected to have an impact on every vehicle sub system over the next 5 - 10 years

Vehicle Sub System Example Impact Internal combustion engines and transmissions replaced by battery packs and Powertrain/Drivetrain electric motors

Chassis/Frame Unique, complex chassis are replaced by standardized skateboard chassis High power requirements introduce new components such as converters, Electronics inverters, and on-board chargers Engine waste heat used to warm the vehicle cabin is replaced by various Climate Control types of heaters Light weight materials (ex: AHSS, aluminum, plastics, carbon fiber) replace Exterior/Interior heavy metals to help offset battery weight and increase battery range

Suspension/Brakes Regenerative suspension & braking to extend battery range

Full Battery Electric Vehicles (BEVs) eliminate traditional ICE powertrain components

 Hybrid vehicles (PHEVs, HEVs) still require ICE components

Traditional ICE Vehicle Battery Electric Vehicle

Electrification is highly disruptive to the powertrain/drivetrain sub system, creating new opportunities for component suppliers as well as metal formers and plastic processors

Material Expected Electrification Impact on New Opportunities and/or Technologies (Process) Powertrain Components • Materials (AHSS, high strength aluminum) Metal Different components that still New opportunities • Electrical steels (motors, charging stations) (Stamping) require stamped parts and technologies • Battery enclosures, battery cell casings, housings require strategic Metal Large cast blocks for engine and • Non-powertrain automotive components planning, analysis, (Casting) transmission are eliminated • Non-automotive markets & development

Light weighting will continue to drive • Sensors and high power electronics Plastics metal to plastic part conversion • Battery enclosures and cooling components

Strategic planning and analysis needs to begin now due to the projected rapid acceleration of electrification over the next 5 – 10 years

Strategy Framework Overview

Strategic Planning Strategy Strategy Execution & Analysis Development & Implementation

• Strategic Planning Workshops • Joint Venture/Partnership • Implementation plan with goals, • Capability Assessments • Mergers & Acquisitions objectives, milestones, and assigned responsibilities • Product Portfolio Analysis • Divestiture • Key performance indicators • Market Analysis • New Market Entry (KPIs) to track progress • Customer Analysis • New Product/Service • Portfolio, program, and/or • Competitor Analysis Commercialization project management

Gather and analyze the data needed to determine the best strategic approach

Key Strategic Planning & Example Product Portfolio Analysis Purpose of Activity Analysis Activities Prioritize High Strategic Planning Workshop Create strategic initiatives aligned with company vision 1 2 Capability Assessment Profile capabilities & determine capability gaps 4

Exit Product Portfolio Analysis Assess product set profitability & demand Profit 3 Market/Product Analysis Analyze market/product size, growth, & trends

Customer Analysis Define current & future customer needs Low Low Revenue High Bubble for each product- bubble size Competitor Analysis Determine capabilities, product pipeline, key customers # represents 3 year growth rate

An independent member of UHY International © UHY Consulting, Inc. 2021 All Rights Reserved. 10 Electrification Strategy Strategy Development Utilize data from strategic planning & development to evaluate the best strategic approach

Strategy Electrification Examples Advantages of Strategy

Joint Venture/ Ford & Volkswagen Alliance - includes shared use of VW’s Share resources & technology to Partnership Modular Electric Toolkit (MEB) EV platform scale & improve market position

Dana Acquires TM4 – provides in-house electric motor, Quickly gain access & control of Acquisition power inverter, & control system capabilities new technologies & capabilities

AAM Sells Grede – sold casting operations to streamline Allocate resources & capital to Divestiture business, reduce debt, & enhance margin profile higher priority products/services Big River Steel Expands Electrical Steels – $1.2B expansion Market Entry/ Utilize capabilities to diversify includes anneal coating line, reversing cold mill, & slitting/ offerings & increase growth Expansion blanking for production of non-grain oriented electric steels

Product/Service Plugless Wireless EV Charger – first to market commercial Differentiate in the market and Commercialization application for wireless, inductive EV charging increase growth

Sources: Company Websites and Annual Reports, Steel Times, Business Wire

Execution & implementation is critical to the success of the strategy

Key Execution & Implementation Activities Strategy (Depending on Strategy) Joint Venture/ • Partner/Transaction Target Discussions & Negotiations Partnership • Due Diligence (Financial, Commercial, Operational) • Transaction Closing Project management provides an execution Acquisition roadmap & helps drive successful results • Post Transaction Integration  Implementation plan with goals, objectives, Divestiture • Capital Investment for Buildings, Machinery, Equipment, milestones, & activities with assigned & Technology responsibilities Market Entry/ • Plant Layout & Operations Optimization Expansion  Key performance indicators (KPIs) to track, • Recruiting & Hiring New Talent & Skill Sets monitor, & report progress Product/Service • Marketing Campaign Emphasizing Key Messaging to Commercialization Target Customers

Our experienced Strategy Consulting team is ready to help advise your strategy

Please contact us with any questions

Dan Bruce Senior Manager | Strategy Consulting Email: [email protected] Phone: (586) 840-3646 Office: Sterling Heights, MI