Stratas Advisors: Global Automotive Service

Transcription

1 Stratas Advisors: Global Automotive Service Contact: Trey Hohmann, Manager, Fuels & Transport TEL UPSTREAM MIDSTREAM DOWNSTREAM FUEL & TRANSPORT

2 Global Automotive Service Stratas Advisors

3 Global Automotive Service (GAS) Automotive Industry analysis and forward looking projections by vehicle powertrain & country GAS provides country level market analysis of short & long term trends Short-Term Forecast: 8-quarter new registration demand outlook by country for commercial vehicles and passenger cars. Long-Term Forecast: Outlook of light-duty vehicle demand by vehicle powertrain/fuel type & by country to 2035 updated annually. Market Profiles and Analysis Short-Term Forecasts Long-Term Forecasts to 2035 Stratas Advisors. All rights reserved. 3

4 Global Electric Vehicles Update Stratas Advisors

5 Global Electric Vehicles Legislation and Taxes Policies and Proposals for Electric Vehicles EV Programs: Programs and Mandates Asia China: New Energy Vehicle Program (NEV) India: Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME) Indonesia: Low Cost Green Car (LCGC) Korea: Ministry of Environment Eco-Friendly Car Supply Plan Japan: Ministry of Economy, Trade and Industry Clean Energy Program Europe France: Bonus / Malus Low CO2 Emission Incentive Program Germany: European Commission Proposed Post-2020 Plan Italy: European Commission Proposed Post-2020 Plan UK: Office for Low Emissions Vehicles Automated and Electric Vehicles Bill Latin America Brazil: Rota 2030 (postponed) North America USA: Zero Emissions Vehicle Program (ZEV) Stratas Advisors. All rights reserved. 5

6 Global Electric Vehicles Legislation and Taxes Policies and Proposals for Electric Vehicles EV Policies: Tax Incentives Asia China: Government subsidies have been extended through at least 2020 to give consumers a 10% rebate for new EVs for New Energy Vehicles (EVs, PHEVs, hydrogen fuel cell vehicles, etc). Freedom from license plate access restrictions; access to bus lanes, free charging, and free parking. India: Government subsidies are available for EVs and PHEVs from the federal government via FAME scheme. Some states offer no or reduced levy on the purchase. Delhi offers a 15% subsidy on certain EV brands. Korea: Government subsidies have been increased to 1.4 crore won at purchase. Purchase tax surcharges are also reduced, as are reductions in insurance premiums, expressway tolls, and fees for parking. Stratas Advisors. All rights reserved. 6 Asia Japan: New green tech vehicles are exempted from acquisition and tonnage taxes. Used green vehicles enjoy reduced acquisition taxes. Subsidies for purchasing a new green vehicle can vary from 2 lakh yen to 18 lakh yen, varying on fuel efficiency and emissions output. Latin America Argentina: 0 5% import duty on EVs from OEMs with manufacturing in Argentina Mexico: EVs are exempted from Mexico City s driving restrictions

7 Global Electric Vehicles Legislation and Taxes Policies and Proposals for Electric Vehicles EV Policies: Tax Incentives Europe France: Bonus/Malus System which is designed to incentivize low CO2 emission vehicles. Vehicles emitting less than 20 g/km CO2 receive a 6,000 subsidy and vehicles which emit between g/km CO2 receive 6,000 subsidy. France also has a diesel scrappage scheme which provides subsidies for retiring a diesel vehicle that is 11 years or older for a new BEV ( 4,000 bonus) or PHEV ( 2,500 bonus) Germany: Government sponsored subsidies through 2020 to increase EV adoption ( 4,000 for BEVs, 3,000 for hybrids and PHEVs). Additional local incentives include free parking, bus lane usage. Italy: EVs in Italy are exempt from the annual circulation tax (ownership tax) for 5 years after the date of first registration. After 5 years a 75% reduction in the tax rate is applied to EVs in many regions. Local purchase subsidies exist in many cities. Stratas Advisors. All rights reserved. 7 Europe UK: Vehicles with a zero-emission range of at least 110 km are eligible for a 4,500 grant. PHEVs costing under 60,000 are eligible for 2,500 grants. North America USA: Federal tax credits to consumers of $2,500 $7,500 for new EV purchases up to 200,000 units per OEM for use within country. Individual states and municipalities have purchase rebates and registration tax exemptions to varying levels of incentivization.

8 Fuel Saving Technology Update Stratas Advisors

9 Start-Stop Technology Turning off engine, rather than idling, improves fuel efficiency Unnecessary Engine Running is Wasteful When the vehicle is decelerating or at a stop, the internal combustion engine (ICE) is deactivated rapidly When the driver presses the accelerator/gas pedal, the engine quickly restarts and resumes fuel consumption Start-stop technology can be widely and inexpensively employed in new models Mild hybridization maintains the ICE nature of the vehicle but seeks to maximize periods without fuel consumption Market Growth and Efficiency Gains Through 2017, Start-Stop in U.S. LDVs has grown very rapidly, accruing a CAGR of 94.7%, with nearly 17% of new vehicles having Start-Stop technology included, led by Mercedes-Benz, BMW, Ford, and Volkswagen In normal driving conditions, Start-Stop can economizes fuel consumption by 3-5%, while in high congestion situations, it can reduce fuel consumption by up to 10% Stratas Advisors. All rights reserved. 9

10 Forced Induction Technology Using fewer cylinders and forcing airflow boosts per cylinder output Doing More with Less Forced induction raises efficiency of an engine by increasing the compression of air blended in the cylinder, giving the gasoline more oxygen to combust Turbocharging technology can be dovetailed with a smaller engine that uses less fuel to produce the same or increased torque and power output In 2017, 61.3% of U.S. LDV cars with 4-cylinder engines were turbocharged; 17.3% of 4-cylinder trucks had a turbocharger Forced Induction Can Alter Octane Needs Increasing the compression of the engine can increase the knock and increase premature combustion To mitigate, many forced induction engines require higher octane levels Stratas Advisors. All rights reserved. 10

11 Gasoline Direct Injection Technology GDI technology enables ultra lean burn to boost fuel efficiency More Efficient Blending By inserting fuel into the combustion chamber directly, rather than spraying into the intake port (as with port fuel injection), GDI mixes gasoline more efficiently with the air More thorough and efficient mixing helps the blend to be more homogenous to create a leaner burn, reducing wasted fuel mass to boost fuel utilization Two-fold Advantages GDI leverages two unique advantages over traditional technology Fuel Apply Rate Higher pressure in the chamber and complete fuel dispersion during the combustion cycle allows less fuel to be needed Fuel Timing Mixing the fuel in the combustion chamber allows for greater control of when to allow that mixing to happen. Using the optimal timing minimizes fuel waste and leans the burn Stratas Advisors. All rights reserved. 11

12 Fuel Saving Technology Fuel efficiency can be gained with marginal additional cost Most Cost Effective Technologies Variable Valve Timing - Intake Turbo Charging and Downsizing Cylinder Deactivation Stoichiometric Gasoline Direct Injection Stratas Advisors. All rights reserved. 12

13 Global Electric Vehicles Infrastructure Global Electric Vehicle Infrastructure Charging Stations EV Charging Points: Current Count in Major Countries Asia China: 440,000 (split between public and private) India: (split between public and private) Korea: 3,114 (1,606 Normal Power; 1,508 High Power) Japan: 40,000 (6,469 High Power charging points) Europe France: 16,129 (14,407 Normal Power; 1,722 High Power) Germany: 10,800 (23,000 to be installed by end of 2020) Italy:9,000 (split between public and private) UK: 15,983 (12,620 Normal Power, 3,363 High Power) Latin America Argentina: 10 (220 to be installed by the end of 2018) Brazil: 256 (split between public and private) Mexico: Approx. 700 (Limited to metro Monterrey, Mexico City) North America USA: 61,506 (16,120 Charging Stations; 45,386 Charging Outlets) Stratas Advisors. All rights reserved. 13

14 LDV Fleet (Billions) Global Light-Duty Vehicle Fleet ( ) Global Light-Duty Vehicle Stock From 2018 Through Global Light-Duty Vehicle Fleet Light-Vehicle Fleet Outlook Global LDVs by Billion Africa 54.7 million Asia million Europe million Latin America million North America million Global LDVs by Billion Africa 74.8 million Asia million Europe million Latin America million North America million Africa Asia Europe Latin America North America CAGR Global 2.9% Africa 3.2% Asia 4.5% Europe 1.9% Latin America 2.6% North America 0.9% Stratas Advisors. All rights reserved. 14

15 Global LDV BEV & PHEV Fleet ( ) Global Light-Duty BEV & PHEV Stock From 2018 Through 2028 BEV & PHEV Volume (Millions) Global BEV & PHEV Fleet Light-Vehicle Fleet Outlook Global EVs by Million Africa 500 Asia 2.2 million Europe 1.2 million Latin America 76,000 North America 1.4 million Global EVs by Million Africa 18,000 Asia 28.6 million Europe 14.3 million Latin America 890,000 North America 8.3 million Africa Asia Europe Latin America North America CAGR Global 24.2% Africa 42.1% Asia 24.1% Europe 25.9% Latin America 27.8% North America 21.6% Stratas Advisors. All rights reserved. 15

16 China Market Update Stratas Advisors

17 China Market Trends China s local production is creating a strong basis for global expansion New Registration and Fleet Growth During , Chinese LDV new registrations grew by CAGR 5.2% and the overall LDV fleet grew by 20.0% CAGR, adding approximately 102 million new vehicles to the fleet. Over this 5 year period, the Chinese LDV fleet more than doubled in size. Light-duty new registrations grew 3.3% in 2016, while the LDV fleet grew 15.5%. Building Domestic Manufacturing by Partnering with Global OEMs Foreign OEMs in China must have a domestic partner to manufacture in the country. This strategy has been to facilitate the creation of a strong domestic automotive manufacturing base in conjunction with global partners. China Passenger Car Sales by Brand (2016, domestically produced) Brand Domestic Partner Manufacturer Market Share Volkswagen FAW, Shanghai 12.7% Buick Shanghai GM 5.2% Honda GAC, Dongfeng 5.1% Changan Changan 4.9% Hyundai Beijing 4.8% Toyota FAW, GAC 4.5% Nissan Dongfeng, Zhengzhou 4.3% Ford Changan 4.0% Haval Great Wall 4.0% Geely Geely 3.3% Stratas Advisors. All rights reserved. 17

18 China Emissions and Fuel Efficiency Policies China s Stage 6 Emission Standard and CAFC work hand in hand China 6 Combines Best Practices Euro 6 Standards for Emissions China 6a will take effect in 2020, while China 6b will come in 2022 Applies to vehicles up to 3,500 kg China 6a generally mimics the Euro 6 Standard, except: China 6a is fuel agnostic CO and NOx levels are the same for all vehicles China 6a regulates N 2 O and methane emissions Vehicle Type Passenger Vehicle < 2,500 kg CO g/km China 6a Emissions Standard (July 2018) THC g/km NMHC g/km NOx g/km N 2 O g/km PM g/km PN #/km 6.0 x Corporate Average Fuel Consumption (CAFC) Standards Aim to Reduce Fuel Consumption Fleet average target of 5.0 L/100km driven by 2020 Indexed to curb weight Off-cycle credits allow OEMs to generate offsetting credits by implementing fuel saving technologies in non-major refresh cycles Credits can be created by averaging lower consumption than mandated Credits can be banked and applied to future years (if shortfall) Credits can be disbursed among OEM s brands NEV credits can be applied to cover CAFC shortfalls LDV < 1,305 kg 1,305 kg < LDV < 1,760 kg LDV > 1,760 kg x x x Stratas Advisors. All rights reserved. 18

19 China New Energy Vehicle (NEV) Policy China s NEV policy promotes xevs and FCVs to reduce GHG emissions NEV Policy Creates a Weighted-Percentage LCV Fleet Target as Mandated by the Chinese Government 2019 target 10%, 2020 target 12% Applies only to Passenger Cars; takes effect in 2019 Policy creates market for NEV credit trades among OEMs OEMs who produce or import 30,000+ PCs annually will be required to comply PHEV Adjustment Factors Per vehicle credits FCV Adjustment Factor NEV Credits (2018 Onward) Credit Structure BEVs (0.012 electric range (km) + 0.8) adjustment factor [capped at 6] PHEVs 2 adjustment factor FCVs (0.16 fuel cell system rated power) adjustment factor [capped at 5] Adjustment factor is a function of curb mass and energy consumption, incentivizing lower energy consumption by weight. NEV Credit Options 1. If too many sell or use for CAFC 2. If too few buy from other OEMs BEV Adjustment Factor Stratas Advisors. All rights reserved. 19 Image source: ICCT

20 China Electric Vehicles Broad governmental support is boosting China s EV market Current EV Charging Infrastructure Approximately 450,000 charging points (split between public and private), a growth of 51% during 2017 Approximately half of the global EV market is in China 47% of EVs sold globally are Chinese-made Public Sector EV Support Nationally, all levels of China s government have purchased approximately 385,000 EV buses 90,000 were purchased in 2017 Shenzhen has purchased over 16,000 buses, replacing its entire fleet with EV buses Yutong and BYD dominate the domestic EV bus market Historically large government subsides are being cut now that 17% of the national bus fleet is electrified Shifting Subsides China s governmental subsidies for consumer EVs are pushing longer ranges and stronger batteries 400+ km EV range: 50,000 RMB (up from 44,000 in 2017) Minimum range for subsidy: 150 km (up from 100 km in 2017) Minimum energy density for subsidy: 105 Wh (up from 90 Wh) Model Chinese EV Sales (2017) Market Share BAIC EC-Series 13% Zhidou D2 EV 7% BYD Song PHEV 5% Chery eq 5% JAC iev6s/e 4% BYD e5 4% Geely Emgrand EV 4% BYD Qin PHEV 3% SAIC Roewe erx5 PHEV 3% Zotye E200 3% Source: Clean Technica Stratas Advisors. All rights reserved. 20

21 China LDV New Registrations ( ) China s LDV Registrations are projected to have growth through 2028 LDV New Registrations (Millions) China: Light-Duty Vehicle New Registrations China s Light-Vehicle New Registrations Million New LDV Registrations Gasoline will continue to lead the way NEVs will become the 2 nd largest cluster of new registrations Million New LDV Registrations Gasoline will continue to grow but at a slower pace Gasoline hybrids and xevs will rapidly expand market share New Registrations Powertrain %s Type Gasoline 89.4% 80.2% 73.9% Diesel 2.5% 2.3% 2.2% Conventional Gasoline Conventional Diesel Electric-Gasoline Hybrid HEV 2.2% 6.9% 9.5% Electric-Diesel Hybrid CNG/LPG Plug-In Gasoline Hybrid Plug-In Diesel Hybrid Electric Fuel Cell Hydrogen BEV 3.4% 5.5% 7.6% PHEV 1.3% 2.5% 3.3% CNG/LPG 1.2% 2.5% 3.4% FCV 0.01% 0.1% 0.1% Stratas Advisors. All rights reserved. 21

22 China LDV Fleet by Powertrain ( ) China s Light-Vehicle Fleet is projected to have sustained growth through 2028 LDV Fleet (Millions) China: Light-Duty Vehicle Fleet Conventional Gasoline Conventional Diesel Electric-Gasoline Hybrid Electric-Diesel Hybrid CNG/LPG Plug-In Gasoline Hybrid Plug-In Diesel Hybrid Electric Fuel Cell Hydrogen China s Light-Vehicle Fleet Million Light-Vehicles Gasoline million New Energy Vehicles 2.7 million By 2028, the registered light duty fleet should number million, with corresponding sales reaching 34.3 million vehicles. The ownership ratio by 2028 will continue to rise to approximately 257 vehicles per 1000 people. Over this time period, alternative fuel vehicles will gain market share particularly as New Energy Vehicles expand across the country. The light-vehicle fleet is poised for rapid growth in tandem with China s emerging middle class and continuing population growth. Between , the Chinese LDV fleet is expected to have a CAGR of 6.8% Million Light-Vehicles Gasoline million New Energy Vehicles 22.7 million Stratas Advisors. All rights reserved. 22

23 Vehicle Fleet Energy Demand - China Vehicle fleet attributes drive road sector energy demand outlooks Demand (mb/d) China: Fuel Demand to 2028 China: Implications for Demand Gasoline Demand: ,018 mb/d ,317 mb/d CAGR 3.6% Diesel Demand: - Including Commercial Vehicles ,694 mb/d ,917 mb/d CAGR 0.6% Gasoline Diesel Demand Loss from EVs By 2028 (~ 210 mb/d) depending on adoption rates BEV only Stratas Advisors. All rights reserved. 23

24 India Market Update Stratas Advisors

25 India Market Trends India s automotive market continues its rapid expansion New Registration and Fleet Growth During , Indian Automotive market grew by an average 7.9% CAGR. Increased Competition in the Indian Market Maruiti Suzuki sells a majority of LDVs in India, though that market dominance has eroded as new domestic and foreign OEMs emerge as players in the Indian market. India Automotive Market Share by Manufacturer and Vehicle Segment (2017) Top 8 Passenger Vehicles Two Wheelers Commercial Vehicles Maruiti Suzuki 51% Hero 37% Tata Motors 41% Hyundai 16% Honda 30% Mahindra 29% Mahindra 7% TVS 14% Ashok Leyland 17% Tata Motors 6% Bajaj 9% VECV 7% Honda 5% Yamaha 4% Force 3% Toyota 4% Royal Enfield 4% Isuzu 2% Renault 3% Suzuki 2% Suzuki 1% GM 3% Others <1% Others <1% Stratas Advisors. All rights reserved. 25 India Automotive Market CAGR % Passenger Vehicles 2,503,509 2,601,236 2,789,208 3,047,582 3,287, % Three Wheelers 480, , , , , % Two- Wheelers 14,806,778 15,975,561 16,455,851 17,589,738 20,192, % Total LDV 17,790,372 19,109,423 19,783,267 21,149,199 24,116, %

26 India Legislation and Taxes India has policies to encourage xev market growth FAME Scheme Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles FAME Phase 1 (Through Q3 2018): Extended budget TBD, lowering retail prices for EVs FAME Phase 2 (Starting Q4 2018): Rs 8,730 crore funding has been announced Rs 5,550 crore for demand-side incentives Rs 2,500 crore for EV buses Rs 1,000 crore for EV 4 wheelers Rs 750 crore for high-speed 3 wheelers Rs 600 crore for high-speed 2 wheelers New Goods and Services Tax (GST) Scheme Introduced in 2017, the new scheme reduces the categories of vehicles for GST into two categories xev and non-xev Bharat Stage 6 Emissions Standards Effectively bring India into compliance with EU-level emissions standards for LDV, HDV, and 2-wheelers Will go into effect for vehicles produced in April 2020 Vehicle Tax Rates by Vehicle Category (2017 Onward) Vehicle Category Goods and Services Tax (GST) Electric Passenger cars, commercial vehicles, 3 wheelers, 2 wheelers 12% Passenger cars, commercial vehicles, 3 wheelers, 2 wheelers 28% Vehicle Category Compensation Cess (additional tax) >4 meter passenger vehicles (Petrol, Diesel, CNG, Ethanol, methanol, + 15% hybrid electric and fuel cell) <4 meter passenger vehicles (petrol, CNG, Ethanol, Methanol) + 1% <4 meter passenger vehicles (diesel, Ethanol, Methanol) + 3% >350cc displacement 2 wheelers + 3% seater public transport vehicles + 15% Source: The Society of Indian Automobile Manufacturers Tax Stratas Advisors. All rights reserved. 26

27 India LDV New Registrations ( ) India s Light-Vehicle Fleet is projected to have strong growth through 2028 LDV New Registratinos (Millions) India: Light-Duty Vehicle New Registrations India s Light-Vehicle New Registrations Million New LDV Registrations including three-wheelers Gasoline will grow; diesel will decline Slow growth in xev new registrations Million New LDV Registrations including three-wheelers Battery tech and infrastructure are assumed to improve and help bolster BEVs and PHEVs Gasoline will decline; HEVs and BEVs will expand rapidly New Registrations Powertrain %s Type Gasoline 73.47% 67.38% 62.27% Diesel 22.00% 21.30% 20.73% HEV 2.64% 6.47% 9.25% LDV - CNG/LPG LDV - Conventional Gasoline LDV - Electric-Gasoline Hybrid LDV - Fuel Cell Hydrogen LDV - Conventional Diesel LDV - Electric-Diesel Hybrid LDV - Electric LDV - Plug-In Diesel Hybrid BEV 0.86% 2.85% 5.10% PHEV 0.70% 1.64% 2.33% CNG/LPG 0.32% 0.28% 0.25% FCV 0.00% 0.08% 0.07% Stratas Advisors. All rights reserved. 27

28 LDV Fleet Volume (Millions) India LDV Fleet by Powertrain ( ) India s Light-Vehicle Fleet is projected to have strong growth through India: Light-Duty Vehicle Fleet CNG/LPG Conventional Diesel Conventional Gasoline Electric-Diesel Hybrid Electric-Gasoline Hybrid Electric Fuel Cell Hydrogen Plug-In Diesel Hybrid Plug-In Gasoline Hybrid Three-Wheeler Stratas Advisors. All rights reserved. 28 India s Light-Vehicle Fleet Million Light-Vehicles Passenger Cars 34.5 million Three Wheelers 5.2 million including CV three-wheelers By 2028, the registered light duty fleet should number 61.9 million, with corresponding sales reaching 5.6 million vehicles. The ownership ratio by 2028 will continue to rise to approximately 41 vehicles per 1000 people. Over this time period, alternative fuel vehicles will gradually gain market share especially as India s government promotes the FAME initiative and electric vehicles. The light-vehicle fleet is poised for growth due to the fact that India s economy and population are expected to continue rapid expansion.. Between , the Indian LDV fleet is expected to have a CAGR of 4.1% Million Light-Vehicles Passenger Cars 50.9 million Three Wheelers 10.9 million

29 India Two-Wheelers Outlook ( ) India s Two-Wheelers are projected to have sustained growth through 2028 New Registrations (Millions) India: Two-Wheelers New Registrations Two-Wheeled Fleet (Millions) India: Two-Wheeler Fleet Two-Wheeler New Registrations Two-Wheeler Fleet India s Two-Wheeler New Registrations India s Two-Wheeler Fleet Million Two-Wheelers newly registered The two-wheeled scooter and motorcycle market will continue healthy growth in India. As the GDP/Capita rises, so will the motorcycle ownership rate. This is an entry mode of transportation and accessible to more people compared to a car Million Two-Wheelers newly registered Stratas Advisors. All rights reserved Million Two-Wheelers in the fleet With continued growth in sales of two-wheelers the fleet will maintain a healthy growth rate of approximately 4.9% CAGR. This will increase the overall level of motorization in India Million Two-Wheelers

30 India Electric Vehicles EVs have a future in India but hurdles remain Current EV Charging Infrastructure Approximately charging points (split between public and private) Mahindra offers charging infrastructure exclusively for their customers in various cities across India (red markers) Free to use; access restricted to Mahindra EV owners Roughly 240 community charging stations (green markers) Not operated by a traditional energy/power company. Community charging stations are generally Level 1 (lower power stations) India s first traditional open access EV station was opened by Ola and IOC in Nagpur in November 2017 Proposed/Future EV Charging Infrastructure ABB India is planning 4,500 charging stations in India Maharashtra is planning 500 charging stations by 2020 (MSEDCL) Fortum and NBCC are planning 150+ charging stations by 2020 across India Conflicting Guidance is Weakening EV Market Lack of clear timeline and mission from India s government is hindering xev adoption and infrastructure development across the country Stratas Advisors. All rights reserved. 30 Image source: RE:Charge India

31 Fuel Demand (mb/d) Vehicle Fleet Energy Demand - India Vehicle fleet attributes drive road sector energy demand outlooks India: Fuel Demand to 2028 Gasoline Demand India: Implications for Demand Gasoline Demand: mb/d ,003 mb/d CAGR 4.5% Diesel Demand: Including Commercial Vehicles ,728 mb/d ,350 mb/d CAGR 3.1% Demand Loss from EVs By 2028 (10 15 mb/d) depending on adoption rates BEV only Stratas Advisors. All rights reserved. 31

32 U. S. Market Update Stratas Advisors

33 U.S. Market Trends The U.S. s LDV market remains mature and light truck- and SUV-heavy New Registration and Fleet Growth During , American overall LDV new registrations grew by CAGR 5.5% and the overall LDV fleet grew by 1.9% CAGR, adding approximately 88.8 million new vehicles to the fleet. Light-duty truck sales grew by 6.9% CAGR ( ), adding nearly 9.7 million vehicles in Over that same period, passenger cars grew by 4.2% CAGR, adding 9.5 million vehicles in Light Truck Market Key for U.S. Market Growth Light-duty trucks have outsold passenger cars since 2014, bringing the class into near parity with passenger cars as components of the light duty vehicle market. Given manufacturer trends, light-duty trucks will remain a big player in the market. U.S. Automotive Market Share by Brand and Vehicle Segment (2017) Passenger Vehicles Light Trucks Toyota 14.9% 910,600 Ford 17.2% 1,908,203 Honda 12.3% 752,563 Chevrolet 12.8% 1,425,102 Nissan 10.9% 664,268 Toyota 11.0% 1,218,578 Chevrolet 10.5% 640,777 Jeep 7.4% 828,522 Ford 9.1% 555,838 Nissan 7.0% 775,781 Hyundai 6.8% 417,055 Honda 6.6% 734,264 Kia 6.0% 366,108 GMC 5.0% 560,687 Volkswagen 4.3% 262,029 Ram 5.0% 556,790 Source: Stratas Advisors, Crain Communications Stratas Advisors. All rights reserved. 33

34 U.S. Corporate Average Fuel Economy (CAFE) CAFE standards create a minimum fuel efficiency targets for automakers CAFE Places A Floor On Required Fuel Economy, Not Greenhouse Gases The U.S. National Highway Transportation Safety Agency (NHTSA) regulates fuel economy, while the U.S. Environmental Protection Agency is tasked with GHGs EPA tests fuel economy and reports the figures to NHTSA Current CAFE regulation covers the years ; the GHG regulation covers Burning fuel produces CO 2 at a known rate (about 9 kg per gallon of gasoline consumed), so solving the CAFE formulas for fuel economy will also solve for GHG limits Incremental MPG Improvement Based on Footprint And Classification Fuel economy improvement factors are defined to spur efficiency gains, regardless of what vehicle blend the market demands The Overall Target by 2025 Is Not Rigid At This Point In Time The 54.5 MPG nationwide average target in 2012 was a projection of fleet composition by 2025; it was revised down to 51.4 MPG in 2016 when trends were reassessed Each manufacturer s and the overall fleet s target average MPG is variable by individual OEM and annually, based on fleet composition Stratas Advisors. All rights reserved. 34

35 U.S. Corporate Average Fuel Economy (CAFE) CAFE standards give manufacturers flexibility in compliance CAFE Figures Are Not Measured The Same Way As Mileage On The Window Sticker The U.S. EPA administers testing in a specialized laboratory environment 55% weighting: city fuel consumption low speeds with many starts and stops 45% weighting: highway fuel consumption with sustained higher speeds The Adjusted Fuel Economy ( sticker mileage ) uses a five cycle average that includes variables like variable speed, starting and stopping, air conditioning usage, and cold air starts These factors lower the fuel economy forecast, more likely representing real world conditions to consumers The U.S. EPA offers a mathematical formula for manufactures to translate their two stage CAFE-rated mileage into the Adjusted Fuel Economy statistics for consumers, reducing testing fees CAFE Credit Multipliers Model Year EV and FCV PHEV Note: FFV incentives expired in How Do Manufacturers Comply? Improving new models fuel efficiency through traditional methods Improvements upon existing vehicle, engine, and transmission designs and concepts Leveraging new technologies during the traditional rating cycle to reduce GHGs Flex-fuel vehicles, improved air conditioners, EVs Over-complying in a prior model year Ratable at 0.1 MPG over the standard, credits can be banked for the future, shared among other brands in the OEM s portfolio, retroactively used to cover previous non-compliance, or traded to other OEMs to for monetary compensation Off-Cycle Credits Allow For Innovation Manufacturers can apply for credits that use technology that was not in place, or not recognized as credit eligible, during the normal testing cycle Start-Stop Technology, Active Aerodynamic Improvements, Waste Heat Recovery Technology Stratas Advisors. All rights reserved. 35

36 U.S. LDV New Registrations ( ) The U.S. s Light-Vehicle Fleet is projected to have steady, if slower, growth through 2028 New Registrations (Millions) USA: Light-Duty Vehicle New Registrations Gasoline TDI Diesel Ethanol-Flex Fuel ICE 100 Mile Electric Vehicle 200 Mile Electric Vehicle Plugin 10 Gasoline Hybrid Plugin 40 Gasoline Hybrid Electric-Diesel Hybrid Electric-Gasoline Hybrid Natural Gas ICE Natural Gas Bi-fuel Propane ICE Propane Bi-fuel Fuel Cell Gasoline Fuel Cell Methanol Fuel Cell Hydrogen U.S. Light-Vehicle New Registrations Million New LDV Registrations Gasoline will continue to lead the way Light trucks will continue to outsell PCs Million New LDV Registrations HEVs and EVs will begin to expand market share in PCs Diesel and hybridized light trucks will grow in sales New Registrations Powertrain %s Type Gasoline 84.4% 80.3% 77.2% Diesel 2.5% 4.3% 4.7% HEV 3.2% 4.2% 6.0% BEV 1.2% 2.9% 4.2% PHEV 1.4% 2.8% 3.0% CNG/LPG 0.9% 0.9% 0.9% FCV 0.01% 0.08% 0.22% Stratas Advisors. All rights reserved. 36

37 New Registrations (Millions) U.S. LDV Fleet by Powertrain ( ) The U.S. s Light-Vehicle Fleet is projected to have steady, if slower, growth through USA: Light-Duty Vehicle Fleet Gasoline TDI Diesel Ethanol-Flex Fuel ICE 100 Mile Electric Vehicle 200 Mile Electric Vehicle Plugin 10 Gasoline Hybrid Plugin 40 Gasoline Hybrid Electric-Diesel Hybrid Electric-Gasoline Hybrid Natural Gas ICE Natural Gas Bi-fuel Propane ICE Propane Bi-fuel Fuel Cell Gasoline Fuel Cell Methanol Fuel Cell Hydrogen The U.S. Light-Vehicle Fleet Million Light-Vehicles Passenger Cars million 53.7% of the fleet Light-Duty Trucks million 46.3% of the fleet By 2028, the registered light duty fleet should number million, with corresponding sales reaching 17.9 million vehicles. The ownership ratio by 2028 will continue to rise to approximately 805 vehicles per 1000 people. Over this time period, gasoline hybrids (HEV and PHEV) are expected to grow. Light trucks and passenger cars will be in near parity by The light-vehicle fleet is likely to grow at 0.8% CAGR from Million Light-Vehicles Passenger Cars million 50.1% of the fleet Light-Duty Trucks million 49.9% of the fleet Stratas Advisors. All rights reserved. 37

38 USA EV Charging Infrastructure Leaders California and ChargePoint lead the way for EV Charging infrastructure Number of Charging Stations EV Charging Networks in the US Market Share Accessibility Cost ChargePoint Network 33.98% Membership/Open Many free, local decision Unaffiliated / Independent 29.62% Membership/Open Varies Tesla 14.80% Tesla Only for Supercharging / others use destination charging Free for Model S and Model X, pay per use for Model 3 Blink Network 8.29% Membership/Open Per kwh or minute used SemaCharge Network 4.27% Membership/Open Some free, local decision EVgo Network 3.71% Membership/Open Subscription ChargePoint Network Unaffiliated Tesla Blink Network SemaCharge Network EVgo Network GE WattStation Greenlots Stratas Advisors. All rights reserved. 38

39 C.A.R.B. - ZEV Programs & Incentives California Leads the Way with EV adoption C.A.R.B. Zero Emission Vehicle Overview C.A.R.B. California Air Resources Board The California Air Resources Board is responsible for protecting air quality within California by reducing air pollution, CO2, and overall greenhouse gas (GHG) emissions in California. CARB developed the Zero Emission Vehicle (ZEV) program in California to lower emissions from light-duty vehicles. California accounts for nearly 50% of new EV and PHEV registrations to date. ZEV: How It Works- The ZEV program provides ZEV credits based on the number of electric vehicles each manufacturer sells per year. Automakers are required to keep a balance of ZEV credits equal to a set target percentage of conventional non-electric vehicle sales. In 2018 the target percentage will be 4.5% and by 2025 the target percentage will be 22%. CVRP Rebates- CARB in conjunction with the Center for Sustainable Energy has developed the Clean Vehicle Rebate Project (CVRP) which is designed to incentivize mass adoption of EVs and PHEVs by providing California residents a rebate up to $7,000 (USD) for either the purchase or lease of a new EV or PHEV. CVRP Monthly Rebates Source: CARB Stratas Advisors. All rights reserved. 39

40 U.S. EV Infrastructure & Key Drivers Development and expansion of Charging Stations will help ease Range Anxiety EV Charging Infrastructure 2017 Key Drivers To Increase EV & PHEV Penetration U.S. 16,287 EV Charging Stations (excluding private stations) U.S. 45,386 EV Charging Outlets (excluding private stations) California 3,887 EV Charging Stations California 13,544 EV Charging Outlets Stratas Advisors. All rights reserved. 40 Rebates & Tax Incentives- If all 50 states in the U.S. were to adopt a framework that supports the purchase of EVs and PHEVs then adoption rates would increase as overall vehicle costs at the retail level are more comparable to the current price of ICE vehicle which use conventional fuels. CAFE Targets Post The current 2025 CAFE target sits at an average of 54.5 MPG. The U.S. EPA in conjunction with NHTSA will be evaluating the CAFE targets moving forward. If the EPA greatly increases the MPG targets post 2025 then this could accelerate electric vehicle sales by forcing manufacturers to produce more EVs in order to maintain CAFE compliance and avoid costly penalties. Increased Charging Infrastructure- Many consumers have stated that they have range anxiety A.K.A. the fear of running out of battery power. An increase in the number of charging stations across federal highways, along with higher energy density batteries (longer range) could easily drive further adoption of EVs. Federal Ban on ICE Vehicles- European countries such as France and the United Kingdom have set targets to ban the sale of conventional fueled vehicles by If the U.S. issues a similar ban on conventional vehicles this could drastically accelerate the adoption of EVs and PHEVs.

41 Vehicle Fleet Energy Demand - USA Vehicle fleet attributes drive road sector energy demand outlooks Fuel Demand (mb/d) USA: Fuel Demand to 2028 USA: Implications for Demand Gasoline Demand: ,389 mb/d ,017 mb/d CAGR 0.40% Diesel Demand: - Including Commercial Vehicles ,853 mb/d ,693 mb/d CAGR 0.42% Gasoline Diesel Demand Loss from EVs By 2028 (~ 163 mb/d) depending on adoption rates BEV only Stratas Advisors. All rights reserved. 41

42 Key Takeaways for the Global Market Key Highlights and Outlook for the Global Market Key Growth Markets Asia: China, India, ASEAN Vehicle and Fuel Demand Growth Expected in these markets. Global LDV Fleet: Global CAGR 2.9% Billion Billion Global EV Fleet: Global CAGR 24.2% Million Fuel Efficient Technologies pose more of a threat to fuel demand than Electric Vehicles at the current EV adoption rates. Global EV Charging Infrastructure, along with rising materials cost (Lithium, Cobalt), and production capacity will be large hurdles for Evs. Stratas Advisors. All rights reserved. 42

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