LINAMAR Success in a Rapidly Changing Automotive Industry Linda Hasenfratz Chief Executive Officer January 2019
Linamar Diversified Global Manufacturing Diversified Manufactured Products that Power Vehicles, Motion, Work and Lives Infrastructure Food Transportation Power Water Powertrain, Chassis and Body Linamar Machining & Assembly Age Linamar Light Metal Casting Linamar Montupet Light Metal Casting GF Linamar Linamar Seissenschmidt Forging 2017 Sales $6.6 Billion Facilities 60 Employees 29,000 Linamar Corporation 2
We are Living in a Time of Extreme Uncertainty Uncertainty Can Lead to Opportunity with the Right Approach Linamar Corporation 3
We are Living in a Time of Extreme Uncertainty UNCERTAINTY Pace of Change Data Availability Disruption Digital Economy Politics & the Economy Linamar Corporation 4
Success in Uncertain Times FLEXIBILITY Flexibility of strategy should be directly correlated to level of uncertainty CULTURE Rely on who we naturally are as guide posts STAY FOCUSED Don t get distracted by shiny objects THINK LONG TERM Look past the noise and focus on fundamentals KEEP INNOVATING Innovation is the key driver of our competitiveness THINK BIG PICTURE Think cradle to grave, be practical Linamar Corporation 5
Future of Automotive Linamar Corporation 6
Where is the Automotive Market Going. Propulsion ICE, BEV, Fuel Cell EV, Hybrid Autonomous Vehicles Ride Hailing vs Vehicle Ownership Ride Sharing Linamar Corporation 7
Impact of Automated Driving Likely Less Impactful on Demand Than Most Think Automated driving reduces the number of Starts work at 8am vehicles required in off peak times only we Starts work at 8am Starts work at 8am must have sufficient vehicles to support peak Starts work at 8am demand. Excess vehicles not needed Starts in work off at 8ampeak times will need to be parked somewhere close by. Starts work at 8am Only ride sharing reduces the number of Starts work at 8am vehicles in peak demand periods. Starts work at 8am Starts work at 8am Starts work at 8am Starts work at 8am Starts work at 8am Starts work at 8am Starts work at 8am? Linamar Corporation 8
Assumptions for Future Vehicle Volumes Peak Demand _ Ride Sharing + Untapped Markets Autonomous Driving or Ride Sharing/Hailing may Open Linamar Corporation 9
Future Propulsion Technology Capabilities - Range - Charge/Refuel time Cost - Cost of battery pack for large sedan $12,000 - Morgan Stanley study identifies mfg cost premium EV vs ICE vehicle of ~$8,000 Government Regulations Infrastructure Readiness - Electric - Hydrogen Consumer Demand Investment & Time to Establish New Vehicle Propulsion Capacity Linamar Corporation 10
BEV Why Not Faster? Technical & Infrastructure Challenges Energy Infrastructure Must Change for EV to Make Meaningful Environmental Improvement Greenhouse gas Emissions in gco 2 /km Fuel Consumption in L/100km, gasoline equivalent Projected 2030 Vehicle WtW GHG Emissions and Petroleum Fuel Consumption Over Combined, Adjusted HWFET/FTP Drive Cycle 300 250 Gap Diesel ICE to Battery EV not meaningful 10.00 9.00 8.00 200 Electric Propulsion Systems 7.00 6.00 150 5.00 4.00 100 3.00 50 2.00 1.00 0 2006 NA-SI Baseline 2030 NA-SI Turbo Diesel HEV PHEV-10 PHEV-30 PHEV-60 BEV FCV 0.00 Well-to-Tank GHG Tank-to-Wheel GHG Petroleum Fuel Consumption Source: Kromer and Heywood, SAE 2008-02-0459 Linamar Corporation 11
Lithium-ion Batteries Source: IVL - The Life Cycle Energy Consumption and Greenhouse Gas Emissions from Lithium-Ion Batteries, Mia Romare, Lisbeth Dahllöf, May 2017 Linamar Corporation 12
Think Big Picture Look cradle to grave when developing solutions Ie if your goal is reducing energy use or waste for a product you need to assess such for every step in its life Be practical and realistic about what can happen in what time frame Waste/Emissions Energy Source Waste/ Emissions We tend to focus here Linamar Corporation 13
Where Do We Go From Here? Linamar Corporation 14
Flexibility Flexibility of Strategy Have multiple alternatives when making strategic decisions Don t make a bet on one future, create a plan that will be successful in a variety of future outcomes Keep resources fluid Access to cash Flexible equipment Ensure workforce multi skilled and flexible Monitor and measure results to highlight when you need to shift gears Learn from mistakes Uncertainty Linamar Corporation 15
Preparing for the Future of Propulsion Internal Combustion Engine (ICE) Hybrid Vehicle (HEV) Electric Vehicle (BEV) & Fuel Cell EV (FCEV) Focus on Light Weighting, Fuel Efficiency, Emissions Reduction solutions which offer a unique value to customers. Leverage global footprint, vertically integrated capabilities and manufacturing reputation to be benefit from increased OEM Powertrain Outsourcing. Continue to increase Content Per Vehicle on Hybrid Electrics as it will be an important bridging technology to pure Battery Electric Offer solutions focused on increased power density, Noise Vibration Harshness (NVH), light weighting. Strong organizational focus on integrated eaxle technology solutions Provide Light Weight Aluminum and Magnesium Body & Structural Castings Look to augment eaxle offerings for Fuel Cell Vehicle (FCV) applications, which could play a key future role in market Linamar objective is to pursue content in all Propulsion categories in order to be well positioned for multiple technology adoption scenarios. Linamar Corporation 16
Global Light Vehicle Production Growing Actual IHS Forecast Advanced Consensus Projection Source IHS Forecasting 2000-2025 Advanced Consensus Projection 2025-2030 i) 1% YoY Growth in overall industry volumes 2025-2030 ii) Production Share of Technologies by 2030 of ICE 50%, HEV 24%, EV 21%, Fuel Cell 5%. (Based on Consensus Average of External Industry Expert Forecasts for EV adoption, Updated Q3 2018) Linamar Corporation 17
Global Total Addressable Market Revenues or Addressable Market (Billions $CAD) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 $350 $325 $300 $275 $250 $225 Pure Battery EV penetration reaches 20% of the market by 2030 $200 $175 $150 $125 $100 $75 $50 $25 $0 ICE HEV EV Fuel Cell Updated: October 2018 Linamar Corporation 18
Content on Electrified Vehicles Growing Quickly $80 Global Content Per Vehicle by Propulsion System $70 $60 $50 $40 $30 $20 $10 $0 2015 2016 2017 2018 2019 2020 2021 2022 Hybrid Electric ICE Updated October 2018, estimates based on current projections and EV applications in market. Linamar Corporation 19
Success in Uncertain Times FLEXIBILITY Flexibility of strategy should be directly correlated to level of uncertainty CULTURE Rely on who we naturally are as guide posts STAY FOCUSED Don t get distracted by shiny objects THINK LONG TERM Look past the noise and focus on fundamentals KEEP INNOVATING Innovation is the key driver of our competitiveness THINK BIG PICTURE Think cradle to grave, be practical Linamar Corporation 20
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