China E-Mobility. Speech

Transcription

1 China E-Mobility Speech Suzhou, April 12, 2018

2 The speaker of Today Speaker Alex Xu Global Partner, Vice President of Roland Berger Great China Company Founded in 1967 in Germany by Roland Berger > More than 16 years of management consulting experience > Independent director of A-share listed manufacturing company > Helped China's major energy group develop European photovoltaic expansion plan > Helped leading investment agencies to conduct systematic research and benchmarking of China automotive industry > Helped China's leading low-carbon business district formulate its energy development strategy > 50 offices in 36 countries, with around 2,400 employees Nearly 220 RB Partners currently serving ~1,000 international clients 14 offices in Asian Pacific Source: Roland Berger 2

3 EV(or electrification) is most important trend in the automotive industry which we are discussing today Source: Roland Berger 3

4 Regulation CO2 legislation CO 2 legislation keeps the push on xev development CO 2 legislation: Light vehicle GHG emissions/fuel consumption GHG emissions/fuel consumption (CO 2 ) Europe USA Japan China > CO 2 emissions target 1) > CAFE 2) > Fuel efficiency targets 3) > CAFC 4) (phase IV) > Additional ZEV regulation > Add. potential fleet xev CARB target share % % % 115 n.a % Methodology > Baseline for indicator rating is CO 2 -legislation in 2025 In case 2025 CO 2 targets remain as planned, the score is set at 3 points In case legislation in the region decided on changing CO 2 targets, today's scoring is adjusted by 1 point for each 5% change (up- and downwards) tbd Indicator rating: to base-line % less strict than baseline 10% less strict than baseline 5% less strict than baseline Baseline 5% stricter than baseline 10% stricter than baseline 1) Weight-based corporate average 2) Footprint-based corporate average; converted to NEDC 3) Weight-class based corporate average; showing JC08 4) Weight-class based per vehicle and corporate average Note: GHG = greenhouse gases Source: Press research, ICCT, Roland Berger 4

5 Global EV/PHEV sales - forecasts Therefore, strong growth is expected across all regions in xev sales by 2025 xev sales forecast for major xev markets, China ['000 units] Europe ['000 units] 20% CAGR 25% % 5,447 13% HEV 40.2% +32% 22% PHEV 35.3% BEV 33.7% 21% 9% 65% 69% 21% 56% 23% USA ['000 units] Japan ['000 units] 34% CAGR 71% % 4, % 8% BEV 19.7% 13% PHEV 24.5% 1,069 1% 2% % 70% 16% 78% HEV 28.9% 98% 4,793 3% 37% 61% ,688 5% 6% 88% HEV PHEV BEV BEV PHEV HEV CAGR % 39.5% 33.6% CAGR % 35.2% 9.5% Comments > China is expected to remain the leader in xev sales globally by 2025 as well > Strong growth is expected in all geographies for xevs, aim for sustainable transportation and reducing the emissions would be the key push in all geographies for xevs > Declining costs of Li-ion batteries would increase the attractiveness of xev for customers > However, development of charging infrastructure would be necessary to sustain demand in the market XX% Expected penetration by Source: Expert Interviews, Roland Berger 5

6 China deep dive China announced ambitious BEV/PHEV plans and pushes for domestic EV and cell manufacturing Current activities in China Target sales of EV/PHEV [% of total sales] Core activities EV/PHEV vehicle park [m vehicles] 0.5 >5 >20 > % % % 1.5% > Subsidies Direct EV subsidies Vehicle registration process Free of purchase tax > Push domestic EV/PHEV vehicles OEM specific CO2e targets OEM specific NEV credit ratio targets 1) > Drive domestic battery cell production White list of battery cell supplier whose cells are eligible for NEV subsidies currently exclude Korean cell manufacturer Likely Korean cell manufacturer will be added 1) Effective from 2018/4/1, NEV credit ratio targets in 2019 is 10%, 2020 is 12% Source: MIIT; Roland Berger 6

7 China NEV market forecast By scenario We have developed three scenarios of BEV/PHEV market forecast till 2025 We expect sales to vary from 3,382k to 6,231k China NEV market forecast till 2025E [k units, NEV sales, Passenger Vehicles] [k units] 2025 NEV penetration E CAGR E CAGR Comments E 3,157 2,469 1, E 6,231 4,721 3, E Optimistic Base Conservative 21.6% 16.3% 11.7% 40% 34% 27% 25% 24% 20% Note: In China definition, HEV(hybrid) is normally not counted as part of EV plan, which is different from some countries So in this model, we only count BEV/PHEV > Three scenarios have been developed based on different regulatory environment and OEM's reaction, which is the key driver for BEV/PHEV sales in China > Base case reflects a realistic OEM response to CAFC and BEV/PHEV Credit mechanism Most likely scenario Source: Public information, Expert interview, Roland Berger 7

8 China market forecast base scenario Under base scenario, China BEV/PHEV markets are expected for a strong growth, BEV will take major shares China NEV market forecast by PHEV/BEV Passenger Vehicles [k units] NEV Penetration 1) 0.1% 23 Subsidy driven market > Strong subsidy > Plates in restricted cities > No purchase tax 0.4% % 2.4% 1.1% % 76% 19% 24% % % 33% Product driven market > Fastly retreating subsidy > Dual credits requirements > Higher tech. requirements 4.8% 1,205 66% 34% 6.1% 1,587 66% 34% 7.6% 2,014 68% 32% 9.0% 2,469 70% 30% 11.1% 3,085 71% 29% 13.5% 3,829 73% 27% 16.3% 4,721 75% 25% BEV PHEV CAGR '15-20E 50% 48% 55% CAGR '20E-25E 24% 27% 18% COMMENTS > PHEV is expected to increase its share after 2017 with ambitious PHEV product launch plan of JV/import OEMs > BEV will remain major share in the long run Supportive policies in favor of BEV (e.g. more credits accumulated for BEV models) Economics cost of BEV will be further reduced to be lower than PHEV E 2023E 2024E 2025E Source: Expert interview, IHS database, CAAM; Roland Berger 8

9 Backup In 2017, China is the largest automotive market with some emerging players, which attract much attention Top 20 by country and by OEM group, light vehicle production 1) Production 2017e vs [%] 2) Avg. 2.0% By production country Brazil Mexico Iran Russia Turkey France Italy India Czech Republic Indonesia South Korea Thailand Germany Slovakia Spain United Kingdom Winners Japan China By OEM group Dongfeng Geely Changan BMW Suzuki Tata Honda Daimler PSA FCA Great Wall SAIC-GM-Wuling BAIC Mazda Ford GM Hyundai Winners VW R-N Toyota -10 Canada United States Losers Losers Total production 2017e [m units] 1) Incl. light commercial vehicles; 2) Year-on-year growth rate Source: IHS, Lazard, Roland Berger 9

10 Policy & Regulation Demand Supply The seven key factors are expected to be the main driver of China xev market development in the next 3-5 years Key xev market drivers 1 New xev models > The major OEMs take much effort in new xev planning and are expected to launch more xev products within the near 3-5 years BEV PHEV 2 Consumer demand > More consumers have the opportunity to know EV manufacturers and consider to purchase their products, esp. PHEV models 3 Cost effectiveness > Will the subsidy not be removed in 2020, BEV is more cost-advantageous than ICE models; Otherwise, BEV's TCO is expected to catch up 2-3 years later 4 Policies > China government will leverage different kinds of regulation tool to push xev market move forward 5 Subsidy > Government will continue xev subsidy till 2020, and BEV subsidy expected to phase out slower than PHEV's 6 CAFC and xev credit > CAFC and xev credit dual management is designed as successor to subsidy to keep the xev market growing after 2020 from top level 7 Infrastructure > Government has defined a clear target for charging pile construction in 2020, and physical constraints and commercial environment are also the key factors to affect infrastructure development Source: Roland Berger 10

11 1 New EV models The major OEMs take much effort in new xev planning and are expected to launch more xev products within the near 3-5 years EV Model pipeline Sales vs. supply [Unit: k units] Price range in RMB10K RB sales forecast Market supply forecast ,205 1, ,587 1, ,014 2, ,469 2,584 Source: Desk research; Roland Berger 11

12 Brand premium 1 New EV models Besides traditional OEMs, there are new entrants with focus ONLY on EV OEM clustering on xev sector High 1 ICE-oriented International 2 Electrified International 5 New Entrants 3 Local PHEV-focused 4 Local BEV Pioneer Low ICE-dominated PHEV-majority Powertrain Strategy BEV-focused Source: Desk research, Roland Berger analysis 12

13 2 Consumer demand With the market gradually developed, consumers get to know the xev manufacturers and consider to purchase their products Customer needs Awareness Acceptance 46% 44% 37% 31% 29% 25% 21% 19% 16% 14% 12% 9% 2% 1% BYD Toyota Audi VW Honda BMW Chery MB Nissan Already bought/will buy Consider buying Wait till few accepts Still early to decide Not clear Source: JD Power; Roland Berger 13

14 MSRP Purchase tax Subsidy Total Fuel Insurance Maintenance Total Price Purchase tax Subsidy Total Electricity Insurance Maintenance Total 3 Cost effectiveness Cost effectiveness of EV will improve, which fundamentally supports the market growth Roewe RX5 / erx5 TCO comparison [Shanghai, 2017 & 2020] Roewe RX5 (ICE) [k, RMB] Roewe erx5 (EV) [k, RMB] 5-year Cost Payback ,000 km/yr One-time cost Annual operating cost One-time cost Annual operating cost ICE EV th year 2020 with subsidy 2) 15,000 km/yr nd year 2020 without subsidy 15,000 km/yr th year Source: Desk research, expert interview, Roland Berger 14

15 5 Subsidy National PV NEV subsidy is expected to continue promoting EV sales strongly but gradually phasing out National PV NEV subsidy [ ] Declining national PV NEV subsidy level from 2015 to 2020 [k CNY/unit] 2018 no subsidy Notice on Adjusting the Subsidy Policies on the Promotion and Appl. of NEV MIIT, MOF, Central Office 22 0 BEV: 100km R < 150km BEV: 150km R < 200km BEV: 200km R < 250km BEV: 250km R< 300km BEV: 300km R< 400km BEV: 400km R PHEV(incl. EREV): R encouragement 20% Central (national) government further lower (declining rate of 20% is applied 2016 vs. 2017) the subsidy level among different endurance mileage category and across BEV and PHEV segment 50% Municipal (local) government subsidy shall not exceed 50% of the subsidy from the central government (previously under most frequent case, central subsidy : municipal subsidy = 1:1, local government also offers other expense cut and subsidy on usage) Source: Desk research; Roland Berger 15

16 6 CAFC / xev credits CAFC and xev credits are in place in order, indicating a higher xev market penetration CAFC 1) and xev credit management Government target: industry average fuel consumption ( E) [L/100km] Method: credit management ( E) Trends towards CAFC credit xev credit Punishments for OEMs with total negative credits or negative xev credits: > Suspend new product approval which cannot meet FC target > OEM will be fined if target not met Impact > Government is expected to issue more aggressive management method to ensure achievement of stricter fuel consumption target E 2025E 2030E > In order to reach credit target, OEMs need to Adjust product portfolio, e.g. - Develop / localize xev models in China - Increase share of energy saving models Enhance fuel efficiency of engine 1) Corporate (OEM dependent ) average fuel consumption Source: MIIT, CAFC and xev credit management method, Roland Berger 16

17 7 Infrastructure To support xev market development, government actively introduced relevant policies with support of SOE grid companies Infrastructure policies interpretation Topic Central government planning Regional implementation Total number Price Standard Grid > Plan to construct 400 k charging piles and 2 k change station to set up power supply network by end of 2015 > State Grid plans to construct fastcharging network by 2020 based on fourvertical & four-horizontal high way network, covering 19,000 km > Formulate energy pricing standard and service fee standard > Encourage parking fee deduction > Complied with German standard and improved facility compatibility > State Grid announced to open and distributed grid connection project and other major measures to better serve EV charging facility market > Southern Grid also develops similar plan with dedicated subsidiary to invest in the infrastructure > Beijing: New estates must equip 18% parking place with charging piles > Shanghai: There must be one public charging facility spot every 5 km 2 downtown area. By end of 2015, Shanghai plans to build over 6,000 charging piles across the city to support over 10,000 EVs > Wuhan: xev is expected to charge for free in the appointed charging spots > Hefei, Nanjing, Hebei, Foshan, Jiangxi: Formulated charging service fee related standard > Suzhou: Subsidy for charging facilities service provider, 15% of the construction fee Wider and more interconnected charging network for xev market development Further eliminate consumers range anxiety for future development of continuous driving, long-distance driving and high-speed driving Source: Desk research; Roland Berger Analysis 17

18 Beyond aforementioned drivers, some investors believe that fundamental change in automotive ecosystem will favor EV growth Geographic shift Mobility solutions Automated driving Alternative fuels Fuel cells Low cost brands Emissions regulations Lightweighting Powertrain electrification 1. New Mobility Changing customer behavior (sharing vs. owning) New mobility mix and new business models/players 4. Electrified Compliance with future emissions regulations Electrification landscape incl. infrastructure Automotive disruption 2. Autonomous Technology and regulatory progress High customer value and improved safety 3. Digitalized Connectivity AI Evolution of digital technologies and culture Connectivity New retail ICE advancement Robotaxi world Start-up OEMs Non-traditional entrants Source: Roland Berger Analysis 18

19 There are different scenarios on the future, but one thing is clear that the ecosystem will be more complicated Ecosystem change Market is more complicated, and more challenging Past Tier 1 Tier 1 OEM OEM Traditional supplier OEM Tier 1 Traditional OEM Future Tier 1 traditional supplier Tier 1 xxx xxx OEM OEM xxx OEM xxx traditional OEM Consumer electronics Apple Tier 1? Softwa re Google Huawei Platform Car DIDI sharing? Tech giant Zipcar Tesla? Service provider New OEM Next EV New OEM Comments > New entrants are not necessary to become new OEMs, but looking for new value chain position > Mobility platform operator will likely have more power in defining products and control the major value chain > Technology giant could cooperate with OEMs and operators to explore extra value Source: Roland Berger Analysis 19

20 Under the push of new technology and business models, many new players entered auto industry with different objectives Overview of new entrants Objectives Non car manufact urer Car manufact urer Focus on hardware 1) Mobility Service Platform 和谐富腾 Competency Start ups Focus on software Comments The new entrants are mainly 2 groups: > Startup EV players > Tech giants MSP 1) Tech giants focusing on producing AD vehicles New technology supplier focusing on EV core tech, AD relate tech, connectivity etc. Source: Roland Berger analysis 20

21 The trend of electrification results in significant impact on components and hence machinery OEMS Key impacts Growing electric vehicle market Impact on selected components and resulting impact on machining capacity for: Electrical and Electronics Interior Chassis 1 Powertrain 2 Body & Structure 1 > Casting > Forging/Forming > Machining > Surface treatment > 2 Powertrain Body & Structure > Tools/Machining > Metal sheet forming > Die casting > Extrusion > GFK/CFK production > Welding/Joining > Painting > Source: Roland Berger 21

22 1 Powertrain First, xev powertrain components have new production capacity requirements Detailed analysis of component change ICE Capacity impact on machine level BEV New components Required > Electric motor > Battery > Power electronics (inverter, charger, DC/DC) > High voltage wiring Ceased components Not required anymore > Combustion engine and auxiliaries > Fuel tank and supply > Exhaust system > Multi-stage transmission and clutch Combustion engine E-Motor Gearbox Differential Clutch Battery Very high CNC machine demand no CNC machine demand 1) CNC: Computerized Numerical Control Source: Roland Berger 22

23 1 Powertrain Growth rates in relevant markets for conventional powertrain components expected to turn negative before 2025 Example: Market value growth, [CAGR %] Engine 4% 2% Exhaust (incl. Aftertreatment) 5% 2% -1% -4% Fuel system (tank, filter, pump, pipes) Multi stage transmission 3% 1% 4% 1% 0% -2% year CAGR [%] Growth of vehicle production Source: Roland Berger component model 23

24 1 Powertrain while electrified powertrain components will further see strong growth rates Example: Market value growth, [CAGR %] E-motor 34% Battery 47% 17% 14% 3% 2% Inverter Other power electronic 30% 29% 22% 19% 13% 14% year CAGR [%] Growth of vehicle production Source: Roland Berger component model 24

25 2 Body & Structure In xevs weight reductions gain in importance to ensure drivability OEMs are willing to pay a partial premium per kg weight reduction Focus areas for lightweight construction in a passenger car Conventional ICE vehicle Electric vehicle 0 Market feedback "Electric vehicles are fairly balanced due to the low center of gravity caused by the batteries. Therefore, weight reduction measures are implemented in all parts of the car", Market expert "To improve driving dynamics, the focus for weight reduction of conventional cars is put close to the engine. This offers potential for further hollow parts in the drivetrain", Market expert "The center of gravity needs to be in the lower center of the car, therefore side shafts are a popular part for the use of hollow components", Market experts Relative importance for lightweight material substitution High Low Source: Daimler; Roland Berger 25

26 2 Body & Structure Light weighting is more than just light weight material Many opportunities for advanced production technologies Methods towards light weighting (overview) Optimized material Optimized parts design New technologies Optimized car design Substitution of conventional materials with innovative lightweight materials : > Ultra-high strength steel (UHSS) instead of steel > AL/MG cast components > CFRP instead of metal > Coated components Optimized design within specifications: > Load-capable design of control arms > Optimized beads and topology of sheet metal parts > Multi-material solution > Aluminum-Space-Frame New innovative and efficient manufacturing technologies: > Tailored products > Laser welding (instead of fitting) > Hybrid forging for complex powertrain parts > Prepreg stamping for Fiber reinforced plastics New innovative module, system or car design: > Direct fitting into the chassis > Integral design and functional integration > Redundancy of joining technologies Alternative materials New innovative design and production technology Source: Roland Berger 26

27 2 Body & Structure Al cast components are key components of multi-material solutions in vehicle bodies High growth rates beyond 2025 expected Market development for selected body & structure components Doors & closures Shock tower IP beam Front end carrier Mg/Al die casting Al die casting Mg/Al die casting Al die casting >100% 78% ~100% 44% 14% 14% 10% 46% 14% 17% 29% 13% '10-'15 '15-'20 '20-'25 '10-'15 '15-'20 '20-'25 '10-'15 '15-'20 '20-'25 '10-'15 '15-'20 '20-'25 5-Year CAGR [%] Growth of vehicle production [%] Source: Roland Berger 27

28 Segments 2 Body & Structure Casted AL structural components will be used in many upper segment cars Selected OEM's usage of casted AL structural components by 2020 Illustrative Considered OEMs with casted AL structural components Potential additional OEMs with casted AL structural components A/B not covered not covered not covered (especially Cadillac) C not covered not covered Further OEMs with niche application D E/F BEV No application Small content per vehicle (1-2 component, e.g. front shock towers) Medium content per vehicle (e.g. front and rear shock towers) High content per vehicle (> 4 components) Very high content per vehicle Source: IHS; EuroCarBody; Roland Berger 28

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