Chemistry-driven innovation for the automotive industry Dr. Stephan Kothrade President, Greater China and Functions Asia Pacific Tokyo, March 1, 2018
Cautionary note regarding forward-looking statements This presentation contains forward-looking statements. These statements are based on current estimates and projections of the Board of Executive Directors and currently available information. Forward-looking statements are not guarantees of the future developments and results outlined therein. These are dependent on a number of factors; they involve various risks and uncertainties; and they are based on assumptions that may not prove to be accurate. Such risk factors include those discussed in the Opportunities and Risks Report from pages 111 to 118 of the BASF Report 2017. BASF does not assume any obligation to update the forward-looking statements contained in this presentation above and beyond the legal requirements. 2 March 2018 International Auto Conference Tokyo
Agenda 1 BASF at a glance 2 3 Trends, challenges and opportunities BASF as supplier to the automotive industry 3 March 2018 International Auto Conference Tokyo
Chemicals a growth industry Global annual growth rate of ~3.4%* Agriculture Health & Nutrition Energy & Resources Construction & Housing Consumer Goods Transportation Electrical & Electronics Chemistry as enabler to meet current and future needs ~10 bn 70% 50% 30% people by 2050 of the world population will live in cities by 2050 more primary energy consumption by 2050 more food needed by 2050 4 March 2018 International Auto Conference Tokyo * Forecast average annual real change 2018 2020; BASF Report 2017, p. 121
BASF has global market access through regional presence North America Sales 15,357 million EBIT 1,236 million Employees 18,295 Antwerp Ludwigshafen Florham Park Europe Sales 29,214 million EBIT 4,742 million Employees 71,653 Asia Pacific Sales 14,343 million EBIT 2,209 million Employees 18,256 Freeport South America, Africa, Middle East Sales 5,561 million EBIT 335 million Employees 7,286 Geismar São Paulo Kuantan Regional centers Selected sites Verbund sites Selected research and development sites Nanjing Hong Kong 5 March 2018 International Auto Conference Tokyo 2017: Sales by location of customer; EBIT by location of company
Our broad and resilient portfolio caters to multiple industries 2017: Sales of 64.5 billion; EBITDA of 12.7 billion Percentage of sales 2017 * 25 % 25 % 9 % 5 % Chemicals Performance Products Functional Materials & Solutions Agricultural Solutions Oil & Gas EBITDA 5.4 billion EBITDA 2.4 billion EBITDA 2.3 billion EBITDA 1.3 billion EBITDA 2.1 billion Petrochemicals Monomers Intermediates Dispersions & Pigments Care Chemicals Nutrition & Health Performance Chemicals Catalysts Construction Chemicals Coatings Performance Materials Crop Protection Exploration & Production; Natural Gas Transport 6 March 2018 International Auto Conference Tokyo * Not depicted here: Other 4% of BASF Group sales and EBITDA of (679) million
Agenda 1 2 3 BASF at a glance Trends, challenges and opportunities BASF as supplier to the automotive industry 7 March 2018 International Auto Conference Tokyo
Electrification Past pilot stage but before mass consumer acceptance Drivers Regulation on CO 2 emissions Regulation on other emissions Geo-political considerations Requirements Improved vehicle range Investments into battery production Reduced battery cost Charging infrastructure Impacts Mass demand New value chains Exists today Selected BEV for early adopters, focused on some brands (e.g. Tesla, Renault, BYD) Starting now Broad portfolio of electric vehicles Past 2020 Marketing towards mass consumers New value chains will be established Opportunities for BASF Battery materials, coolants, heat management, NVH solutions, lightweight structural materials 8 March 2018 International Auto Conference Tokyo
Autonomous driving Adoption is conditioned by regulation, technology and infrastructure Drivers Requirements Impacts Convenience and access Cost advantage Optimized traffic Safety Technology Local infrastructure Regulation, legal/ethical framework, data security Managed mobility New vehicle concepts Enabler for increased shared mobility Exists today Pilot projects today Barely started Past 2030 Assisted driving Human supervised autopilots Finalization of sensors Legal and regulatory changes ( Outside of auto industry) Mass roll-out and consumer adoption Opportunities for BASF Advanced materials and systems for electronic components, materials for new interior concepts 9 March 2018 International Auto Conference Tokyo
Car sharing Limited impact today, high potential with autonomous driving Drivers Convenience and access Cost advantage Safety Requirements Decrease in cost per driven kilometer Optimized mobility management Impacts Change in consumer preference and ownership Change in vehicle configurations and production numbers Today Mid to long term Car sharing concepts with limited impact on number of vehicles produced, or their configuration Development of concepts alongside adoption of autonomous driving Opportunities for BASF Materials for new interior surfaces, other advanced materials and systems 10 March 2018 International Auto Conference Tokyo
Agenda 1 2 3 BASF at a glance Trends, challenges and opportunities BASF as supplier to the automotive industry 11 March 2018 International Auto Conference Tokyo
BASF is the largest chemicals supplier to the automotive industry Top suppliers to the automotive industry 2016 Rank Company Sales (in $ billion) 1 Bosch 46.5 2 ZF Friedrichshafen 38.5 3 Magna 36.4 21 10.4 89 Dow Automotive 1.7 12 March 2018 International Auto Conference Tokyo Source: Automotive News, June 26, 2017
We innovate continuously, to meet evolving industry requirements Soft-touch valure TM Engineering plastics and polyurethanes Fuel additives and lubricant oils Integrated processes Design Weight reduction Emission reduction Energy saving NVH solution Cellasto Infra-red-reflective film Battery materials FWC TM catalyst Comfort and safety Heat management Alternative powertrains Emission control 13 March 2018 International Auto Conference Tokyo
BASF has multiple touchpoints to OEMs and tier-suppliers BASF Group sales 2017 Industry structure * BASF products #1 Chemical automotive supplier ~30% OEM Engineering plastics Coatings Coolants and brake fluids Fuel additives and lubricants 64.5 bn Automotive driven sales ** 11.4 bn ~60% Module/system supplier Tier-1 Component supplier Tier-2 Catalysts Engineering plastics Coatings (car parts) Battery materials Engineering plastics Catalysts Coatings (car parts) Pigments Parts supplier Tier-3+ Engineering plastics Pigments Solvents ~10% Aftermarket Refinish coatings Coolants and brake fluids Fuel additives and lubricants 14 March 2018 International Auto Conference Tokyo * Based on business model, not real supply chain ** Includes Precious Metals
We develop light-weight materials for heavy tasks First all-plastic front end carrier Lightweight Golf 7 Lower emissions Self-supporting rear seat shell made of the polyurethane Elastolit Full electric BMW i3 Higher energy efficiency 15 March 2018 International Auto Conference Tokyo
We help to improve air quality with our innovative catalyst solutions Three-way catalyst BASF s TWC * catalyst technology features a patented construction of precious metals (e.g. platinum, palladium, rhodium) that enables it to significantly outperform conventional TWC catalysts in the oxidation of hydrocarbons and carbon monoxide Four-way catalyst BASF s single-component FWC TM** technology can remove particulate matter, as well as carbon monoxide nitrogen oxides from gasoline-engine exhaust, helping automakers meet strict new emissions regulations including Euro 6 16 March 2018 International Auto Conference Tokyo * TWC: three-way conversion ** FWC: four-way conversion
We improve driving experience and comfort with our Cellasto noise vibration and harshness (NVH) solutions Properties of Cellasto : High compressibility Light-weight High characteristic flexibility by density Noise isolation Damping of high load impacts High performance: durability and quality High degree of design freedom High frequency isolation 17 March 2018 International Auto Conference Tokyo
We pursue holistic heat management solutions to reduce cabin heat loads Functional pigments for exterior and interior Near infra-red (NIR) reflective polymer film for glazing Polymer foams for thermal insulation 18 March 2018 International Auto Conference Tokyo
We capture the fast-growing battery materials market E-mobility drives battery materials growth Chemistry of cathode active materials (CAM) is key to address e-mobility challenges ~15-20% p.a. 2017 Li-ion 2025 battery market Market projections for 2025: 8-15 million electric vehicles * built per year 600-900 kt of CAM in e-mobility 18-24 billion CAM market size BASF enables electromobility Unparalleled access and commitment to the automotive industry Strategic global supply, technology and production partnerships Well-established position in key CAM technologies (NCA & NCM)** Rapid expansion to global, cost-competitive asset Industry leading position in NCA capacity footprint 19 March 2018 International Auto Conference Tokyo *Electric vehicles: BEV, HEV and PHEV **NCA: nickel cobalt aluminum oxide; NCM: nickel cobalt manganese
We are a key supplier in battery materials, well-positioned for further growth Elyria, Ohio BASF TODA America Europe, planned production Onoda/Kitakyushu, Japan BASF TODA Battery Materials Battle Creek, Michigan BASF TODA America* Amagasaki, Japan R&D, Application Technology Center Beachwood, Ohio R&D, Application Technology Center Production site Technology center Ludwigshafen, Germany R&D, Application Technology Center Shanghai, China R&D, Application Technology Center Shanghai, China BASF Battery Materials Headquarters Innovation in battery materials Leading technology portfolio and core patents ~ 250 million total R&D spent so far ~150 scientists at four R&D centers across all regions Highest energy density CAM commercialized for EV application Market presence Triple-digit-million euro battery material sales Supplier to world s largest cell producers Already supplying leading OEMs platforms Under qualification for future key platforms 20 March 2018 International Auto Conference Tokyo * BASF TODA America: pending closing
Our innovative materials enable more freedom for individual design valure Unique transfer coating technology Can be applied on leather and other natural or synthetic substrates Imparts limitless design options along with soft and breathable surfaces 21 March 2018 International Auto Conference Tokyo
We address specific market needs Success factors: identifying market trends, close interaction with customers and enhanced capabilities Emissions catalysts system BASF solution: Advanced EMPRO emission catalyst Key contributions: Reduced use of precious metals; meets new regulations Waterborne coating system for minivans BASF solution: Coating system with differentiated performance Key contributions: Lean portfolio combining mono-coat and integrated paint systems Sound reduction for chassis BASF solution: LASD * emulsions applied to chassis Key contributions: Long lasting sound reduction 22 March 2018 International Auto Conference Tokyo * LASD: liquid applied sound damping
Key Takeaways BASF is the leading chemical supplier to the automotive industry Our global reach enables us to forge long-term collaborations with leading industry players and to develop solutions for many of their challenges We innovate continuously to meet the automotive industry s evolving requirements for materials We invest in technologies that shape the future 23 March 2018 International Auto Conference Tokyo