Media Briefing, June 10, 2021 US Automotive Product Pipeline Car Wars 2022-2025 Electric Vehicles shock the product pipeline John Murphy, senior automotive analyst This research report provides general information only. No part of this report may be used or reproduced or quoted in any manner whatsoever in Taiwan by the press or other persons without the express written consent of BofA Securities. >> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analyst under the FINRA rules. Refer to "Other Important Disclosures" for information on certain BofA Securities entities that take responsibility for the information herein in particular jurisdictions. BofA Securities does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. 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Analyst Certification on page 29. 12291440 Agenda • Car Wars background & thesis 3-4 • Industry & manufacturer trends 5-12 • Select company analysis 13-17 • Future Car Wars 18-19 • Conclusions 20 • Appendix – Company analysis 21-23 2 Car Wars background & thesis • An annual proprietary study ‒ Based on numerous primary and secondary sources • Quantifies industry product trends ‒ Counts number of new, all new, or next generation models ‒ Forecasts annual unit volume of new models • Measures the competitiveness of OEM product plans in several ways ‒ Replacement rate (% of OEM’s volume replaced annually) ‒ Average showroom age (years on the market) ‒ Mix of new model volume by segment ‒ Key is to measure performance relative to competitors, industry average • Provides historical perspective ‒ First published in 1991 ‒ Datasets extend back to 1987 ‒ Time series for replacement rate, showroom age, and model mix 3 Car Wars background & thesis Replacement rate ▼ Showroom age ▼ Market share ▼ Profitability ▼ Stock Price Replacement Rate, Showroom Age (Vol Weighted), Market Share (2002-2021) Avg. Replacement Avg. Showroom Age US Market Share Rate[1] O/(U) D[2] Stellantis 11.4% 0.4 -2.0% GM 15.1% 0.0 -11.0% Ford 15.2% 0.7 -9.2% Industry Avg. 15.9% 0.0 0.0% European 16.8% (0.2) 3.4% Toyota 17.5% 0.1 5.3% Honda 17.8% (0.2) 2.6% Nissan 19.1% (0.0) 1.9% Korean 20.0% (0.9) 6.1% Source: BofA Global Research [1] Volume weighted average annual replacement rate for MY2002-2021 4 [2] Market share change is based on calendar years 2001-2020 Industry trends Industry trends – New model launches 70 63 62 2002-2021 Average = 40 2022-2025 Average = 60 60 60 55 55 50 47 48 43 43 41 42 40 40 39 39 40 40 40 37 38 35 34 32 32 32 30 20 Number ofLaunchesNumberModelNew 10 - 2008 2017 2002 2003 2004 2005 2006 2007 2009 2010 2011 2012 2013 2014 2015 2016 2018 2019 2020 2021 2022E 2023E 2024E 2025E We expect OEMs to launch 240 new models during our forecast period (MY2022-25), or an average of 60 per year. Typically, this level of new model introductions is a positive sign for the industry, which we believe is the case as the cycle recovers from the COVID-induced trough in MY2021 (CY2020). However, many incumbent and entrant automakers appear to be chasing the same hot segments of the market. Source: BofA Global Research estimates Industry trends 5 Industry trends – Annual replacement rate 35% 30% Average 2002-2021 = 16% Average 2022-2025 = 21% 29% 25% 22% 21% 20% 20% 18% 19% 17% 17% 18% 18% 17% 17% 16% 15% 16% 15% 15%14%15% 14% 15% 13% 13% Replacement RateReplacement 12% 10% 10% 5% 0% 2002 2009 2015 2003 2004 2005 2006 2007 2008 2010 2011 2012 2013 2014 2016 2017 2018 2019 2020 2021 2022E 2023E 2024E 2025E Between model years 2002 and 2021, the industry replaced about 16% of its volume each year with new models. Over the next four model years, we expect the annual replacement rate of industry volume will trend at about 21%, above the historical average level, which partially reflects the relatively low volume base in 2020 to which it is measured. Source: BofA Global Research estimates 6 [1] Average is volume weighted Industry trends Industry trends – Average showroom age 4.0 Average 2002-2021 = 3.1yrs Average 2022-2025 = 3.1yrs 3.5 3.6 3.4 3.4 3.5 3.2 3.3 3.2 3.3 3.3 3.1 3.2 3.1 3.1 3.1 3.0 3.0 3.0 3.0 2.8 2.8 2.9 2.9 2.9 2.7 2.6 2.5 2.0 1.5 1.0 AverageShowroomAge(Years) 0.5 - 2004 2008 2017 2021 2002 2003 2005 2006 2007 2009 2010 2011 2012 2013 2014 2015 2016 2018 2019 2020 2022E 2023E 2024E 2025E Competitive pressures, newer entrants, product line expansion, and product cancellations will help keep the industry’s average showroom age relatively fresh over our forecast period. Specifically, we estimate that average age for the next three years will tick up just slightly, before dropping once again in MY2025, but overall averaging around the historical level at 3.1 years. Source: BofA Global Research estimates 7 [1] Average is volume weighted Industry trends Industry trends – New models by segment 100% Crossover 90% 80% 38% 52% Light Truck 70% 60% Luxury & 50% 24% Sporty Car 40% 20% 7% Mid/Large 30% Car 16% 7% 20% 10% 10% Small Car 15% 11% 0% 12-21 22-25 New model emphasis remains on Crossovers and Light Trucks, with launches accounting for 52% and 20% of new volume in MY2022-25, respectively, which should continue to support industry mix. However, the proliferation of CUV models (117 launches) will likely pressure OEM’s profitability in the segment as the market gets increasingly crowded and price competition emerges. Source: BofA Global Research estimates 8 Not volume weighted Industry trends 30% 60% 90% 100 0% Industry trends 20 40 60 80 0 Source: Source: 2002 AutomakerspursuingaggressivelyaretheCrossover particularlysegment, Thispoint.price at premiumthe 1987 Existing Cars Existing 2003 Car Luxury & BofA Global Research estimates Research Global BofA 1989 Small Car Small 2004 Car Mid/Large 1991 2005 1993 2006 Sporty Light Truck Light industryoverweightprofitabilitythesegment’spressurethelikelyyears.fewnext willin 1995 2007 New Cars New 1997 2008 1999 2009 2010 2001 2011 2003 2012 – 2005 2013 intensifiessurgeCrossover 2007 2014 2009 2015 2016 2011 2017 2013 2018 2015 2019 Crossover 2017 2020 2019 2021 2021 2022E 2023E 2023E 2024E 2025E 2025E 100 100 120 140 160 180 20 40 60 80 20 40 60 80 0 0 1987 1987 1989 Trucks Light Existing 1989 1991 1991 CUVs Existing 1993 1993 1995 1995 1997 1997 1999 1999 New Light Trucks Light New 2001 2001 CUVs New 2003 2003 2005 2005 2007 2007 2009 2009 2011 2011 Industry trends Industry 2013 2013 2015 2015 2017 2017 2019 2019 2021 2021 2023E 2023E 2025E 2025E 9 Manufacturer trends – Dispersion of replacement rate widens Honda 112% Toyota 102% Industry Avg. 83% European 80% VW 78% Nissan 76% Korean 71% Ford 69% Stellantis 59% GM 55% 0% 20% 40% 60% 80% 100% 120% The dispersion in product replacement rates among OEMs over the next four model years is the widest that it has been in recent history. The delta in the spread of cumulative replacement rates among OEMs is 57% from the high end (Honda) to the low end (GM). For comparison, this disparity is about 3x what it has been in recent years. Source: BofA Global Research Manufacturer trends 10 Manufacturer trends – Average showroom age by OEM 9 General Motors Ford Stellantis 8 Industry European Korean 7 Toyota Honda Nissan 6 5 4 3 AverageShowroomAge(Years) 2 1 - 2006 2010 2014 2018 2002 2003 2004 2005 2007 2008 2009 2011 2012 2013 2015 2016 2017 2019 2020 2021 2022E 2023E 2024E 2025E Average age in the industry continues to converge around the 3 year range, with only slight outliers on either side, which is largely a function of disparities in product cadence. By the end of our forecast period (MY2025), the biggest outliers include Toyota (1.5yrs) and Honda (2.0yrs) at the low end and GM (4.0yrs) and Stellantis (3.7yrs) at the high end. Source: BofA Global Research estimates Manufacturer trends 11 Manufacturer trends – Expected market share shifts MY2022-25 Annual Avg. Showroom 2020 Mkt. Direction of US Mkt. Share, Replacement Age O/(U) Share CY24 vs. CY20 [2] Rate [1] Honda 28.0% (0.5) 9.3% Up Toyota 25.6% 0.5 14.0% Up Industry Avg. 20.7% 0.0 nm Nm European 20.1% (0.0) 8.3% Neutral Nissan 19.1% (0.3) 6.2% Neutral Korean 17.8% (0.8) 8.5% Neutral Ford 17.3% (0.9) 13.6% Neutral Stellantis 14.6% 1.3 12.5% Down GM 13.7% 0.4 17.5% Down Over the next four model years, there is a relatively wide dispersion of OEM replacement rates. This appears to be due to differences in product investment towards traditional models versus alternative powertrain development. There is theoretically some market share opportunity at Honda and Toyota, and conversely risk at GM and Stellantis. Source: BofA Global Research estimates [1] Volume weighted average annual replacement rate for MY2002-2021 12 [2] Market share change is based on calendar years 2001-2020 Manufacturer trends Company analysis – Honda Replacement rate vs.