Emission control in China some observations. November (NASDAQ: CDTI)

Transcription

1 Emission control in China some observations. November (NASDAQ: CDTI)

2 LARGE AND GROWING MARKET: LIGHT- AND HEAVY-DUTY ~ 90 million automobiles were produced worldwide in 2016 Robustness in light- and heavy-duty vehicles in China Robust growth in Asia is dominated by 24.5 million vehicles produced in China 600,000 heavy-duty engines in 15 recovering to 700,000 in 16: More than Europe and US combined! China 6 definition and timetable set for light-and heavy-duty. 2

3 DOMESTIC AND INTERNATIONAL TRENDING International car makers ( Joint Ventures ) at 60% of market and shrinking. ~ 8 million domestic passenger cars * Pressure on price! * Govt. small engine program (1.6L or less) favoring domestic players. Small engine dev. has caught up Discussion in China on whether to keep JV system is it working? Heavy-duty engines dominated by domestic makers convergence also. Yuchai, Weichai, Yunnei. Internationalization of domestic players role of capital markets Geely-Volvo; Pheonix Tree (Wuhan) purchase of Steyr etc.. 3

4 EMISSIONS LANDSCAPE We live in a post VW scandal world fall-out in US and in particular China. Europe little change. Impact on emissions regulations and underlying reality including monitoring and enforcement Eu-6 ~ Eu-5 (except for some OBD changes ) BS-6 ~ Eu-5 China 6 > China 5: WLTC/RDE, OBD, Emissions, Particles --- coming in 2019/2020 with some 2018 (early adoption). China 6 Heavy-Duty: start Market with the most stringent emissions with the lowest vehicle price! EVs at 20-40% by 2030? Still need Emission control! 4

5 Technology factors that impact gasoline emissions. Many factors outside just the catalyst design itself have an impact on the emissions performance; e.g. Engine and Engine Control Technology

6 EMISSIONS SYSTEM COSTS SOME GENERAL COMMENTS Pass. Car: $10,000-$12,000 (domestic) v over $20,000 (JV) Heavy-Duty Truck: $40,000 v $100,000 (international) Passenger car: $60 of PGM in China 5 catalyst: China 6 will push it even higher China 6 Diesel: Aftertreatment: DOC+DPF+SCR+ASC.!! DoE (US) model of Platinum Group Metal (PGM) Per Vehicle increase caused by EPA Tier-2 to Tier-3. Similar trend for China 5 to 6. 6

7 CHINA-6 HEAVY-DUTY SYSTEM BASED ON CONVENTIONAL THINKING Diesel Oxidation Catalyst (DOC) for CO, HC and NO oxidation Filter for Soot-Particulate control 4 catalysts. Significant Platinum Group Metal costs. Substrate costs Sensors, sub-systems, urea injection. Urea based fluid Engine technology upgrade And more Selective Catalyst (SCR) for NOx removal 7

8 INCUMBENT INTERESTS ONE EXAMPLE Emission control catalysts use Platinum Group Metals (PGM). In US, Japan, Europe..the PGM addiction is well-advanced. Promoted by companies whose business model is based on PGM Because of specific macro-pressures in Chinese market technology and value (as compared to cost) will dominate. Traditional incumbencies that push high costs will be vulnerable China PGM spend moving above $1bn 8

9 CHINA - VALUE PROPOSITION Test results from 3 rd party Chinese lab: OE China 5 catalyst uses $68 in PGM per car* CDTI catalyst meets China 5 with $24 in PGM per car* CDTI decreases $44 in cost, 65% in PGM savings e.g. Baojun NOx (g/km) OEM Aged aged China 5 limits NOX THC (g/km) OEM Aged aged China 5 limits THC * Pd at $636 (last 12 month av); Rh at $774 (last 12 month av.) 9

10 g/km MODAL TAILPIPE DILUTED SECOND BY SECOND DATA: NOX China 5 NOx standard = 0.06 g/km NAST NEDC Test cycle NOx analysis g/km cum OE (55 g/ft3) CDTi (16.5 g/ft3) Time (S) OE NOx g cum NOx g cum c_adist_vec [km] OE s NOx leakage at cold start is more severe than CDTi s CDTi s high OSM property plays crucial role at the transient state of the urban cycle 10

11 OBD degraded emissions CHINA 6 OBD & EMISSIONS GASOLINE PASSENGER CAR Gasoline China 5 China 6 Euro 5 Euro 6-1 Euro 6-2 CO (g/km) NMHC+NOx (g/km) NOx (g/km) NMHC (g/km) PM (g/km) Durability All vehicle lifetime Gasoline China 5 China 6a China 6b RDE* 110% Driving cycle NEDC WLTC CO (g/km) THC (g/km) NMHC (g/km) NOx (g/km) N2O (g/km) PM (g/km) China 6 OBD is the same as Eu 6-2. China 6b emissions much more stringent than Eu-6. Plus early WLTC/RDE plus PN!! (a) / (b) PN (#/km) 6x x x x

12 IMPACT OF SHIFT OF DRIVE CYCLE: NEDC TO WLTC Major part of China 6 is World Light-Duty Transient Cycle (WLTC). Much more indicative of real driving. Significant impact on emissions especially NOx Emission TP Variation from NEDC to WLTC standard Calibration, [g/km] TP Variation from NEDC to WLTC modified Calibration, [g/km] SPGM OEM SPGM OEM HC CO/ NOx HC+NOx

13 Roadspeed [km/h] NOx cumulated [g/km] IMPACT OF WLTC: A KEY PART OF CHINA kg vehicle weight; 1.8L Dual injectors; VVT etc OEM Catalyst 1.4L CCC 400/3.5 0/70/4 CDTI SPGM SPINEL 1.4L CCC 400/3.5 0/35/4 90hrs ZDAKW 1050 degc aging WLTC A3 TFSI R4EA888 SYST.1 OEM (0/70/4) SERIAL CAL. SYST.4 SPGM (0/35/4) SERIAL CAL time [s] CDTi OE SPINEL SPGM TWC with 50% Pd shows improved NOx performance in WLTC over OEM catalyst. Spinel enables improved transient control

14 O2 Delay Time 尖晶石的超高氧储存量应用在三效催化剂上的优势 尖晶石技术 SPINEL TM 的氧储存特性可在低温时显现 45 sec 40 sec 35 sec 30 sec 25 sec 20 sec 15 sec 10 sec 5 sec 一般储氧材料 + 贵金属 0 sec Temp. ( C) 刘如芬博士 Ru-Fen Liu, Dr. Zahra Nazarpoor, Dr. Stephen Golden 10/26/2016, Shanghai

15 China 6 China 6 China 6 g/km CDTI TECHNOLOGY APPLIED FOR CHINA 6: TEST RESULTS Initial CDTI Spinel technology easily meets China 6 standard Establish minimum PGM requirement to meet China 6 WLTC % % % NOx CO/10 THC Nox CO/10 THC 15

16 SUMMARY Robust regulations in all vehicle classes and some unique market/economic aspects drive a fundamental conflict. Technology innovation drives solutions can enable new performance-price curve JVs tendendcy to read-across developed market solutions for emission control is not sustainable: domestic OEMs will be open to new solutions. Value chain and segmentation models from the US and Europe incumbencies have a high cost and need to be critically assessed. 16