Assessing the Future of Hybrid and Electric Vehicles: The xev Industry Insider Report

Assessing the Future of Hybrid and Electric Vehicles: The xev Industry Insider Report Based on private onsite interviews with leading technologists and executives advanced automotive batteries

ACKNOWLEDGEMENTS This study was conducted by Advanced Automotive Batteries. Dr. Menahem Anderman, President of Advanced Automotive Batteries and principal author of the study wishes to acknowledge the valuable contributions of the following individuals: Dr. James George, former President, George Consulting International, Inc. Mr. Kevin Konecky, Associate Consultant, Total Battery Consulting, Inc. Dr. Robert Spotnitz, President, Battery Design Company Prof. Martin Winter, Chair, Applied Material Science for Energy Conversion and Storage, Institute of Physical Chemistry, University of Muenster The author also wishes to acknowledge the cooperation of forty-three organizations listed below who shared their professional know-how and views in support of this study during and following one or more on-site interviews throughout the last ten months. Automakers/Automotive Systems Audi AVL BMW Chrysler Continental AG Daimler Ford General Motors Honda Hyundai Magna E-Car Mitsubishi Motors Opel AG Porsche PSA Peugeot Citroën Renault Robert Bosch Toyota Valeo Volkswagen ZF Sachs Battery Producers A123 Systems AESC Deutsche Accumotive Dow Kokam Exide GS Yuasa Hitachi Johnson Controls LG Chem Li Energy Japan Primearth EV Energy Panasonic-Sanyo Robert Bosch Samsung SK Innovation Toshiba Other Participants California Air Resources Board Hitachi Chemical Mitsubishi Chemical NEC Devices Showa Denko Umicore Finally, our thanks to Catherine Searle for her dedicated work in the preparation of this report and to Jennifer for her support.

TABLE OF CONTENTS Executive Summary... 1 1. xev Vehicle Technology... 2 a. Market Drivers... 2 b. Hybrid-Vehicle Architecture... 2 2. HEV Battery Technology... 2 a. Cell Module and Pack Technology... 2 b. Key Energy-Storage Technologies for HEVs... 4 i) Lead-Acid Batteries... 4 ii) Nickel-Metal Hydride Batteries... 5 iii) Lithium-Ion Batteries... 6 iv) Ultracapacitors... 6 3. Battery Requirements and Battery Selection for Each Hybrid-Vehicle Category... 6 a. Overview... 6 b. Micro 2... 6 c. Mild-1 48V Systems... 7 d. Energy Storage for hybrid Cars - Summary... 8 4. Batteries for EVs & PHEVs... 8 a. EV & PHEV Battery Cost... 8 b. EV Cell and Pack Key Characteristics...11 c. PHEV Pack Key Characteristics...12 d. Life, Reliability, and Safety...12 e. Technology Enhancement Roadmap...13 5. xev Vehicle Market...13 a. Market Drivers and Challenges for xevs...13 b. Market Forecast for xevs...14 c. xev Market Conclusions...16 6. Battery Market for xevs...17 a. Battery Markets for xevs through 2016...17 i) Micro Hybrids... 17 ii) Strong/Mild HEVs... 17 iii) PHEVs... 18 iv) EVs... 18 v) Combined Li-Ion Cell Markets... 18 vi) Combined xev Pack Markets... 18 b. xev Battery Market to 2020...19 c. Industry Overcapacity...19 Chapter I: Introduction and Hybrid-Vehicle Technologies... 21 1. Introduction... 22 2. Powertrain Technology... 24 3. Electrical Power on Board Vehicles... 25 a. Power Generation and Demand... 25 b. Electrically Powered Ancillaries and Accessories... 25 4. The Stop/Start Function... 26 5. Hybrid-Vehicle Powertrain Architectures... 27 a. Overview... 27 b. Series-Hybrid Architectures... 27 c. Classical Parallel Architectures... 27 d. The Integrated Starter Generator (ISG), or Integrated Motor Assist (IMA)... 28 e. Series/Parallel Single-Mode Transmission Power-Split Architectures... 28 6. Levels of Powertrain Hybridization... 29 a. Micro Hybrids... 29 b. Mild Hybrids... 30 c. Moderate Hybrids... 30 d. Strong Hybrids...31 e. Plug-in Hybrids...31 7. Hybridization of Specialty Vehicles...31 8. Hybridization Summary...31 Chapter II: Energy Storage Technologies for HEVs... 33 1. High-Power Battery Technology Key Attributes... 34 a. Introduction... 34 b. Battery Impedance and Power Rating... 34 c. Battery Life, Reliability, and Safety / Abuse Tolerance... 36 2. Energy-Storage Systems and Module/Pack Technology... 37 a. Introduction... 37 b. Battery Module... 38 c. Thermal Subsystems... 38

d. Mechanical and Structural Subsystems... 40 e. Battery Management Systems (BMS) and Electronics Hardware... 40 f. Battery Management System Software...41 g. ESS Safety Considerations...41 3. Lead-Acid Batteries... 42 a. Introduction...42 b. Enhanced Flooded Lead-Acid Batteries (EFLAs)... 43 c. AGM VRLA Designs... 44 d. VRLA Performance... 44 e. VRLA Life... 45 f. Manufacturing and Cost Considerations for Enhanced-flooded and VRLAs... 46 g. New Lead-Acid Designs... 46 i) Batteries incorporating a high-surface area capacitive carbon... 46 ii) Bipolar Designs... 47 h. Lead-Acid Outlook...47 4. Nickel-Metal Hydride Batteries... 48 a. Overview... 48 b. High-Power Cell Design... 48 c. Cell-Manufacturing Tolerance Issues... 49 d. Module Design... 50 e. Thermal and Electrical Management... 50 f. HEV Cell and Pack Performance... 50 g. Operating Temperature...51 h. Life... 52 i. Cost Estimates for NiMH Cells, Modules, and Battery Packs... 52 j. Outlook... 53 5. Lithium-Ion Batteries... 53 a. Overview... 53 b. HEV-Cell Configurations... 54 c. Choice of Cathode Material... 56 d. Choice of Anode Materials... 57 e. Electrolyte Considerations... 58 f. Separators... 59 g. HEV Module Design... 59 h. HEV Cell and Module Performance... 59 i. Operating Life... 60 j. Cost...61 k. Safety / Abuse Resistance... 63 l. Summary and Outlook... 64 6. Ultracapacitors... 64 a. Overview... 64 b. Symmetric Ultracapacitors (EDLCs)... 65 c. Hybrid (Asymmetric) Ultracapacitors... 66 d. Hybrid Ultracapacitors in Non-aqueous Electrolytes... 66 e. Performance of Symmetric EDLCs... 67 f. Cost... 68 g. Applications and Outlook... 69 7. Summary and Comparison... 69 Chapter III: Battery Requirements and the Choice of Battery for Each Hybrid Vehicle Category... 71 1. Overview... 72 2. Basic Requirements and Conventional SLI Applications... 72 a. Requirements... 72 b. Energy-Storage Solutions... 73 3. Micro-1 Stop/Start Vehicles with No Regenerative Braking... 73 a. Load Profile and Energy-Storage Requirements... 73 b. Energy-Storage Solutions...74 4. Micro-2 Stop/Start Vehicles with Regenerative Braking...74 a. Load Profile and Energy-Storage Requirements...74 b. Energy-Storage Solutions...75 i) VRLA battery... 76 ii) Single Graphite-LFP Li-Ion Battery... 76 iii) EFLA + UCap... 77 iv) EFLA + Graphite-LFP Li-Ion Battery... 77 v) EFLA + LTO-NMC Battery... 77 vi) VRLA + NiMH String... 77 c. Discussion...77 d. Outlook... 79 5. Mild-1 48V Systems... 79 a. Load Profile and Energy-Storage Requirements... 79 b. Energy-Storage Solutions... 80 6. Mild-2 Hybrid Vehicles...81 a. Energy-Storage Requirements...81 b. Energy-Storage Solutions...81 c. Discussion of Micro-2 and Mild Hybrid Architectures... 82 7. Moderate Power-Assist Hybrids... 82 a. Energy-Storage Requirements... 82 b. Energy-Storage Solutions... 83 8. Strong-Hybrid Vehicles... 83 a. Energy-Storage Requirements... 83 b. Energy-Storage Solutions... 84 9. Summary... 84 10. Power-assist Fuel-Cell Hybrid Vehicles... 85 11. Hybridization of Specialized Heavy Vehicles... 86 a. Introduction... 86 b. Buses... 87 c. Delivery Vehicles... 87 d. Military Vehicles... 87 e. Heavy-Duty Vehicles... 87 f. Outlook... 88 Chapter IV: Lithium-Ion EV and PHEV Battery Technology... 89 1. Battery Manufacturing and Cost... 90 a. Introduction... 90

b. Li-Ion Cell Manufacturing Technology... 90 i) Overview...90 ii) Electrode Fabrication... 91 iii) Cell Assembly... 92 iv) Formation and Final Quality Assurance... 92 v) Process Control and Yields... 93 vi) Challenges Relative to Large Automotive-Cell Manufacturing... 93 c. Li-Ion Cell Cost Estimates... 94 i) General Considerations...94 ii) Cost Estimates for 2.4-Ah 18650 Consumer Cells... 95 iii) Manufacturing Investment in a 1000-MWh Plant Producing 25-Ah Prismatic Metal-Can Flat Wound PHEV Cells...96 iv) Cost and Price Estimate for a 25-Ah NMC-Graphite Metal-Can Cell at a Production Volume of 10 Million Cells (1000 MWh) per Year... 97 v) Cost Analysis of a 36-Ah EV Pouch Cell with an NMC/LMO Blend Cathode... 98 d. Battery Pack Development and Cost... 99 i) Introduction...99 ii) System Development and Integration...99 iii) Development Timeline and Manpower Investment... 99 iv) Test and Validation... 100 v) Subsystem Design Cost Consideration... 101 vi) Cell-Size Selection... 101 vii) Cost Summary... 101 2. Battery Design and Key Attributes...103 a. Cell Design...103 i) Introduction... 103 ii) Mechanical Cell Construction... 103 iii) Cathodes... 104 iv) Anodes... 104 v) Electrolytes... 104 vi) Separators... 105 b. Cell and Battery Key Characteristics... 105 i) EV Cell Key Attributes... 105 ii) Key Attributes of PHEV Cells... 106 iii) Key Attributes of EV Packs... 106 iv) Key Attributes of PHEV Battery Packs... 109 c. Battery Power and Temperature Performance...110 3. Battery Durability and Safety...112 a. Battery Durability...112 i) Durability and Reliability... 112 ii) EV-Battery Cycle Life... 113 iii) EV Battery Calendar Life... 114 iv) Battery Life in PHEV Applications... 115 v) Life Modeling and Predictions... 115 vi) Summary: EV and PHEV Life and Reliability... 117 b. Safety / Abuse Resistance...117 i) Overview of Safety Challenges... 117 ii) Safety Characteristics... 117 iii) Abuse Testing versus Field Failure... 118 iv) Soft Short Developing into a Hard Short... 118 v) Standardized Tests... 119 vi) Cell-Level Safety Enhancements... 119 vii) Pack-Level Safety Enhancements... 120 viii) Outlook: Safety Aspects of Utilizing Li-Ion Batteries in PHEV and EV Applications... 120 4. Technology Enhancement Roadmap...120 a. Introduction...120 b. Key Short-Term Li-Ion Cell and Pack Performance Enhancement Opportunities...121 c. Cell Design Enhancements...121 i) Cathodes... 121 ii) Anodes... 122 iii) Electrolytes... 123 iv) Separators... 123 v) Cell Packaging... 123 d. Enhanced Li-Ion Pack Technology...123 e. Beyond Li Ion...123 i) Introduction... 123 ii) Lithium-Air (Oxygen) Chemistry... 124 iii) Lithium- Sulfur Chemistry... 124 iv) Zn-Air (Oxygen) Chemistry... 125 v) Hybrid Energy-Storage Systems... 125 vi) Conclusions... 125 Chapter V: xev Vehicle Market... 127 1. Market Drivers and Challenges for xevs...128 a. Introduction...128 b. Environmental and Energy-Security Drivers...128 i) Influence of Governments on the Industry... 128 ii) The Environmental Driver... 128 iii) Energy Security... 129 c. Benefits to Customers...130 i) Fuel Savings for Customers... 130 ii) Electrically Powered Ancillaries... 130 d. Industrial Competitiveness and Corporate Image...131 i) Industrial Competitiveness... 131 ii) Corporate Image... 131 e. Market Risks...131 i) Success of Advanced Diesel in North America... 131 ii) Stabilization or Reversal in Oil Pricing and Concern about Energy Security... 132 iii) Relaxation of Government Regulations... 132 iv) Life, Reliability, or Safety of xev Batteries... 132 2. Market Conditions in Key Regions...132 a. The U.S. Market...132 i) California and its Air Resources Board (CARB)... 132 ii) CAFE Standards and the U.S. Federal Scene... 134 iii) Consumers... 135 b. Europe...135 i) Regulations... 135 ii) Consumers and Carmakers... 135 c. Japan...136 d. China...136 i) Governmental Activities... 136 ii) Vehicle and Battery Producers... 136 iii) Chinese Customers... 137 e. Summary...137 3. Market Forecast for xevs...137 a. Micro-Hybrids...137 b. Mild, Moderate, and Strong Hybrids...138 c. Plug-In Electric Vehicles...140 d. Electric Vehicles...142

e. PHEV and EV Market Conclusions...143 4. Activities of Key Automakers... 144 a. Japanese Automakers... 144 i) Toyota/Lexus... 144 ii) Honda... 145 iii) Nissan... 145 iv) Mitsubishi Motors... 145 v) Other Japanese Automakers... 146 b. US Automakers...146 i) General Motors... 146 ii) Ford... 146 iii) Chrysler-Fiat... 147 iv) Tesla... 147 c. European Automakers...147 i) Renault... 147 ii) BMW... 148 iii) Volkswagen/Audi/Porsche... 148 iv) Daimler... 149 v) PSA... 149 d. Korean and Chinese Producers...149 i) Hyundai... 149 ii) Fully-Chinese-Owned Companies... 150 iii) Joint Ventures with Western Companies... 150 e. Premium Brands: Jaguar, Land Rover, and Others...150 f. Heavy-Duty Vehicles...150 i) HEV Buses, Delivery Vehicles, and Work Vehicles... 150 ii) EV Buses in Chinese Market with Fast Charge and/or Fast Mechanical Battery Replacement... 150 b. Korea... 164 i) LG Chem... 164 ii) Samsung Display Devices (SDI)... 164 iii) SK Innovation (SKI)... 164 iv) EIG... 165 c. China and Taiwan... 165 i) BYD... 165 ii) Tianjin Lishen Battery Co... 165 iii) ATL Battery... 165 iv) Other Chinese Suppliers... 165 d. U.S. and Europe... 166 i) Johnson Controls (JCI)... 166 ii) Exide... 166 iii) A123 Systems... 166 iv) Bosch Automotive... 166 v) Li-Tec Corporation... 167 vi) Magna International... 167 vii) Continental AG... 167 viii) Saft... 167 ix) EnerDel... 167 x) Others... 168 Glossary... 169 Chapter VI: Battery Market for xevs...151 1. Batteries for Micro-Hybrids...152 a. Lead-Acid Batteries...152 b. Other Energy-Storage Technologies...152 2. Mild, Moderate, and Strong HEV Battery Market...153 3. PHEV Battery Market... 155 4. EV Battery Market... 156 5. The xev Battery Market Summary...157 6. Advanced Automotive Li-Ion Cell Materials Market... 159 7. Cell and Pack Business Structure and Key Criteria for Success... 160 a. Emerging Industry Structures... 160 b. Manufacturing Experience...161 c. Overcapacity...161 8. Notes on Key xev Battery Producers...162 a. Japan...162 i) PrimeEarth EV Energy (PEVE)... 162 ii) Panasonic Including Sanyo Electric Division... 162 iii) Automotive Energy Supply Corporation (AESC)... 162 iv) GS Yuasa Corporation (GSYC)... 163 v) Hitachi Vehicle Energy (HVE)... 163 vi) Toshiba... 163 vii) Shin Kobe Electric Machinery... 163 viii) Furukawa... 164 ix) Sony... 164

LIST OF TABLES AND FIGURES Tables Executive Summary...1 Table E.1.1: Hybrid Vehicle Configurations... 3 Table E.2.1: Characteristics of Candidate High-Power Energy-Storage Technologies for HEV Applications... 4 Table E.2.2: Cost, Manufacturing, and Logistic Issues of Candidate Energy-Storage Technologies for HEV Applications... 5 Table E.3.1: Energy-Storage Solutions for Micro-2 Profile with Existing Production Cells (Case 2); (HP = High Power, UHP = Ultra High Power)... 7 Table E.3.2: Energy-Storage Solutions for Mild Hybrids... 7 Table E.3.3: Energy-Storage Technology Solutions for Advanced Vehicles by Vehicle Category... 8 Table E.3.4: Load Profiles for the Various Hybrid Architectures and Li-Ion Solutions... 8 Table E.3.5: Energy-Storage Solutions for Hybrid Vehicles: Key Characteristics... 9 Table E.4.1: Cost Estimate for a 25-Ah PHEV Cell... 9 Table E.4.2: Cost Estimate for a 36-Ah EV Pouch Cell...10 Table E.4.3: PHEV and EV-Pack Pricing...10 Table E.4.4: Li-Ion Cells Employed in Current EVs...11 Table E.4.5: EV Packs Key Energy Characteristics...11 Table E.4.6: Key Characteristics of PHEV Packs...12 Table E.6.1: 2020 Automotive Li-Ion Battery Market...19 Table E.6.2: Estimated Globally Installed and Utilized xev Li-Ion Cell Manufacturing... 20 Chapter I: Introduction and Hybrid-Vehicle Technologies...21 Table I.6.1: Hybrid Vehicle Configurations... 30 Table I.8.1: Levels of Hybridization/Electrification...31 Chapter II: Energy Storage Technologies for HEVs...33 Table II.1.1: Key Processes that Contribute to Electronic Impedance... 35 Table II.1.2: Key Processes that Contribute to Ionic (Including Kinetic) Impedance... 35 Table II.1.3: Typical Abuse Tests or EV / HEV Cells and Modules... 36 Table II.2.1: Types of Thermal Control System... 39 Table II.2.2: Summary of xev Electrical Subsystem Components...41 Table II.4.1: Cost Estimate for a High-Power NiMH 6-Ah Nominal Cell, and a Module and a Battery-Pack Assembly of 6-Ah Cells... 53 Table II.5.1: HEV Li-Ion Cell-Design Matrix Current/Future... 58 Table II.5.2: Comparison of Module Design with Pouch and Metal-can Cells... 59 Table II.5.4: USABC HPPC Test Profile Data for a 5-Ah Samsung HEV Cell... 60 Table II.5.3: USABC HPPC Test Conditions... 60 Table II.5.5: Material Cost Estimates for a Li-Ion 5-Ah, 18-Wh, 500-Watt HEV Cell (250-MWh Plant)... 62 Table II.5.6: Price Estimate for a 5-Ah, 18-Wh High-power Li-Ion Cell... 62 Table II.5.7: Cost Estimate for a 1.3-kWh Nominal 35-kW Air-Cooled Pack... 63 Table II.6.1: Electrode Configurations for Ultracapacitors and Li-Ion Cells... 67 Table II.6.2: Performance Targets for Cylindrical Hybrid Capacitor Device (Nippon Chemi-Con)... 68 Table II.7.1: Characteristics of Candidate High-Power Energy-Storage Technologies for HEV Applications... 69 Table II.7.2: Cost, Manufacturing, and Logistics Issues of Candidate Energy-Storage Technologies for HEV Applications... 70 Chapter III: Battery Requirements and the Choice of Battery for Each Hybrid Vehicle Category...71 Table III.3.1: Duty Cycle Estimates for Micro-1... 73 Table III.4.1: Micro-2 Duty Profile...75

Table III.4.2: Micro-2 Energy-Storage Solutions (Case 1)...75 Table III.4.3: Key Characteristics of Energy-Storage Components for Micro-2 Applications... 76 Table III.4.4: Lower Performance, Lower Cost Energy-Storage Components for Micro-2 (Case 2)... 78 Table III.4.5: Energy-Storage Solutions for Micro-2 Profile with Existing Production Cells (Case 2)... 78 Table III.5.1: Mild-1 Duty Cycle... 80 Table III.5.2: Energy-Storage Solutions for Mild Hybrids... 80 Table III.6.1: Duty Profile for Mild-2 Hybrids...81 Table III.6.2: Energy-Storage Solutions for Mild-2 Hybrids... 82 Table III.7.1: Duty Profiles for Moderate and Strong Hybrids... 82 Table III.8.1: USABC Battery Specifications for a Strong Hybrid... 83 Table III.7.2: Energy Storage Solutions for Moderate Hybrids... 83 Table III.8.2: Energy-Storage Solutions for Strong Hybrids... 84 Table III.9.1: Energy-Storage Technology Solutions for Advanced Vehicles by Vehicle Category... 84 Table III.9.2: Load Profiles for the Various Hybrid Architectures and Li-Ion Solutions... 85 Table III.9.3: Regenerative Charge Loads for the Various Hybrid Architectures and Li-Ion Solutions... 85 Table III.9.4: Energy Storage Solutions for Hybrid Vehicles: Key Characteristics... 86 Chapter IV: Lithium-Ion EV and PHEV Battery Technology...89 Table IV.1.1: Cell Assembly Techniques... 93 Table IV.1.2: Typical Manufacturing Yields in Li-Ion Cell Manufacturing... 93 Table IV.1.3: 18650 Cell Materials Cost... 95 Table IV.1.4: 18650 Cell Cost and Price... 95 Table IV.1.5: Equipment and Plant Cost Estimates... 96 Table IV.1.6: Materials Cost Estimate for a 25-Ah PHEV Cell... 97 Table IV.1.7: Cost Estimate for a 25-Ah PHEV Cell... 98 Table IV.1.8: Materials Cost for a 36-Ah EV Pouch Cell... 98 Table IV.1.9: Cost Estimate for a 36-Ah EV Pouch Cell... 99 Table IV.1.10: Four-Step ESS Development Process... 100 Table IV.1.11: 36-Month Project Timeline... 100 Table IV.1.12: Thermal Subsystem Design Comparison...101 Table IV.1.13: System-Configuration Analysis for a 60-Ah, Nominal 22kWh EV System...102 Table IV.1.14: Amortization of NRE and Tooling Investment...102 Table IV.1.15: PHEV and EV-Pack Pricing...103 Table IV.2.1: Li Ion Cells Employed in Current EVs... 106 Table IV.2.2: Key Characteristics of Current PHEV Cells... 106 Table IV.2.3: Specifications of the Battery Pack for Mitsubishi Motors i-miev...107 Table IV.2.4: Tesla Roadster Battery Pack...107 Table IV.2.5: Key Attributes of EV Packs... 108 Table IV.2.6: EV Packs Key Energy Characteristics... 108 Table IV.2.7: Key Characteristics of PHEV Packs...110 Table IV.2.8: Chevy Volt Battery Key Characteristics...110 Table IV.3.1: Hazard Level Categories for Abuse Tests...119 Chapter V: xev Vehicle Market... 127 Table V.3.1: Strong, Mild and Moderate Hybrid-Vehicle Market (Historical and Forecast) by Producer...139 Table V.3.2: PHEV Unit Production by Automaker...141 Table V.3.3: Historical and Forecast EV Sales by Automaker (in 000 Units)...143 Chapter VI: Battery Market for xevs... 151 Table VI.2.1: Dollar Volume of HEV Cell and Battery Production...155 Table VI.3.1: PHEV Battery-Cell Market by Producer ($ Million)...155 Table VI.4.1: EV Battery-Cell Market by Cell Producer ($ Million)...156 Table VI.5.1: xev Li-Ion Battery-Cell Marke by Producer ($ Million)...157 Table VI.5.2: Advanced Automotive Battery Pack Business ($ Million)...158 Table VI.5.3: 2020 Automotive Li-Ion Battery Market...159 Table VI.6.1: Li-Ion HEV Battery Cell-Material Consumption...159 Table VI.6.2: Li-Ion PHEV and EV Battery Cell-Material Consumption...159 Table VI.7.1: Estimated Globally Installed and Utilized xev Li-Ion Cell Manufacturing Capacity...161 Figures Executive Summary...1 Figure E.2.1: Liquid-cooled Li-Ion Mild HEV (Cylindrical Cells) Battery Pack for Mercedes S Class Vehicle... 4 Figure E.5.1: Comparison of Global CO 2 Emission Regulations in g CO 2 /km for Passenger Cars (Test Conditions Normalized to the New European Drive Cycle (NEDC)...14 Figure E.5.2: Micro-Hybrid Market by World Region...14 Figure E.5.3: Strong, Mild/Moderate Hybrid-Market Growth by World Region...15 Figure E.5.4: PHEV Market Growth by World Region...15 Figure E.5.5: World EV Market Growth by Region...16 Figure E.5.6: Historical and Forecast EV Sales by Automaker...16 Figure E.6.1: Estimated Unit Sales of EFLA and VRLA Designs (in Million Units)...17 Figure E.6.2: NiMH vs. Li-Ion HEV Battery-Pack Business ($ Million)...17 Figure E.6.3: Li-Ion HEV Battery-Cell Business by Cell Producer...18

Figure E.6.4: Combined Li-Ion Automotive Cell Market for HEV, PHEVs, and EVs by Producer...18 Figure E.6.5: Advanced Automotive Battery-Pack Business ($ Million)...19 Figure E.6.6: xev Key Cell Material Business ($ Million)... 20 Chapter I: Introduction and Hybrid-Vehicle Technologies...21 Figure I.3.1: Dual-Voltage Dual-Battery Architecture... 26 Figure I.5.1: Series-Hybrid Architecture... 27 Figure I.5.2: Classical Parallel Architecture... 28 Figure I.5.3: Architecture with ISG... 28 Figure I.5.4: Picture of Honda 2006 Accord IMA System... 29 Figure I.5.5: Series/Parallel Single-Mode Transmission Power-Split Architecture... 29 Chapter II: Energy Storage Technologies for HEVs...33 Figure II.1.1: Li-Ion Discharge Processes... 34 Figure II.2.1: Liquid-cooled Li-Ion Mild HEV (Cylindrical Cells) Battery Pack for Mercedes S Class Vehicle... 37 Figure II.3.1: Enhancements to Flooded Lead-Acid Battery (After Exide)... 43 Figure II.3.2: Improved EFLA Cycle Life with Carbon Added to Negative Electrode (After Exide)... 43 Figure II.2.2: Hitachi s Air-Cooled Li-Ion Mild HEV (Cylindrical Cells) Battery Pack... 37 Figure II.2.3: Chevy Volt Direct Liquid Cooled (Pouch Cells) PHEV Battery Pack... 38 Figure II.2.4: NiMH 12-Cell Module Used in the 2006 Honda Civic Hybrid... 38 Figure II.2.5: Schematic of a Direct Liquid-cooled ESS by MagnaSteyr... 39 Figure II.2.6: Direct Air Cooling Scheme for the Audi Q-5 HEV Li-Ion Battery... 39 Figure II.3.3: Rapid Fading of Charge Acceptance (in Amp/Ah) of Lead-Acid Batteries Over Time... 44 Figure II.3.4: Rapid Fading of Charge Acceptance with Time for VRLA Batteries... 45 Figure II.3.5: Cycle-life Data for the Exide Orbital Battery at 2.5% DOD... 45 Figure II.3.6: Schematic of the Ultrabattery with a Carbon-Lead Negative Electrode... 46 Figure II.3.7: Cycle Life of the Ultrabattery Against Conventional and Enhanced SLI Designs - SAE J240 (17% DOD) Test Protocol...47 Figure II.4.1: Schematic of the Spirally Wound HEV Cell (After Sanyo Electric)... 49 Figure II.4.2: Current Collection Arrangement of a Recent Cylindrical HEV Cell from Sanyo... 49 Figure II.4.3: NiMH Cylindrical Cells and String (Module)... 50 Figure II.4.4: Prius Battery - 6-Cell Prismatic Module Block... 50 Figure II.4.5: Power Characteristics of PEVE NiMH Modules at 60% SOC...51 Figure II.4.6: Charge Efficiency for Sanyo NiMH HEV Cells as a Function of Temperature...51 Figure II.4.7: In-Vehicle Cycle Life of Prius NiMH (2009)... 52 Figure II.4.8: Nickel-Metal Pricing from 2003 to 2013... 52 Figure II.5.1: Li-Ion Shuttle in a Li-Ion Cell... 54 Figure II.5.2: A Prismatic Elliptic Spirally Wound Cell from Panasonic... 54 Figure II.5.3: Pouch HEV Cell from AESC 55 Figure II.5.4: Comparison of Packaging Hardware for a Spirally Wound Hard-Can Cell (A) and a Soft-Pouch Cell (B)... 55 Figure II.5.5: Surface-modified Graphite Electrode (Hitachi Chemicals)... 57 Figure II.5.6: Samsung 5-Ah NMC-Cathode Prismatic Cell: Specific Power Charge and Discharge Performance... 60 Figure II.5.7: Discharge Power Capabilities (10 Seconds) of Hitachi 4.4-Ah, 260-gram HEV Cell...61 Figure II.5.8: Charge Power Capabilities (10 Seconds) of Hitachi 4.4-Ah, 260-gram HEV Cell...61 Figure II.5.9: Power Retention over Cycle Life of Samsung HEV Cells...61 Figure II.5.10: Calendar Life for Hitachi 4.4-Ah HEV Cells...61 Figure II.6.1: Idealized Voltage Profiles of a Battery and a Capacitor... 65 Figure II.6.2: Ultracapacitors Operating Voltages... 66 Figure II.6.3: Operating Mechanism of the Graphite Activated Carbon (AC) Cell (after Nippon Chemi-Con)... 67 Figure II.6.4: Two EDLC Cells (Maxwell) and a Module (Continental) for PSA C-3 Micro-1 Vehicle... 68 Chapter III: Battery Requirements and the Choice of Battery for Each Hybrid Vehicle Category...71 Figure III.4.1: Driving Mode Profile for Proposed Worldwide Light-Duty Vehicle Test Procedure (WLTP) Versus Existing European Drive Cycle (NEDC)...74 Figure III.4.2: Denso Micro-Hybrid Pack with Toshiba LTO Cells... 77 Chapter IV: Lithium-Ion EV and PHEV Battery Technology...89 Figure IV.1.1: Major Cost Stages in the Production of EV Battery Packs... 90 Figure IV.1.2: Electrode Fabrication Process Flow...91 Figure IV.1.3: Knife-over-Roll Coating Head... 92 Figure IV.1.4: Production Calender... 92 Figure IV.1.5: Production Slitter... 92 Figure IV.2.1: AESC Pouch Cell... 104 Figure IV.2.2: Lithium Energy Japan Prismatic Cell Structure... 104 Figure IV.2.3: LG Chem s Safety Reinforcing Separator... 105 Figure IV.2.4: The First Mass-Produced Li-Ion EV Cell by Li Energy Japan... 105 Figure IV.2.5: AESC Cell Module and Pack...107 Figure IV.2.6: The Nissan Leaf Battery Installed in the Car...107 Figure IV.2.7: Battery Pack Integration for the BMW Active E... 109 Figure IV.2.8: GM Chevy Spark Battery Pack... 109

Figure IV.2.9: Discharge Curves for Samsung 63-Ah EV Cell at 25 C... 111 Figure IV.2.10: Power Capability of Li Energy Japan 50-Ah EV Cell... 111 Figure IV.2.11: Power versus Temperature and SOC for Samsung 63-Ah EV Cell... 111 Figure IV.2.12: PHEV Charge and Discharge Power Profile in Relative Power Versus SOC...112 Figure IV.3.1: Cycle Life for Samsung 63Ah EV Cells...113 Figure IV.3.2: Cycle Life for LFP-Based Cathode EV Cells from ATL Battery (a Chinese Manufacturer)...113 Figure IV.3.3: Cycle Life of Toshiba LTO-Based EV Cells...113 Figure IV.3.4: Calendar-Life Data for Samsung EV Cells as a Function of Temperature...114 Figure IV.3.5: Li Energy Japan Cells Calendar Life Performance at 25 C and 45 C...114 Figure IV.3.6: State of Charge in an Ageing PHEV Battery...115 Figure IV.3.7: Calendar-Life Test Results for Automotive Cells Tested at BMW at 60 C...116 Figure IV.3.8: Cycle Life Data of Lishen EV Cells as % of Initial Capacity...116 Figure IV.3.9: Cell Self-Heating Rate During Forced Thermal Ramp Test of a Li-Ion Cell...118 Figure IV.4.1: Challenges Inherent to Battery EVs...121 Figure IV.4.2: Discharge Voltage of Future and Current Li-Ion Cathodes...122 Figure IV.4.3: Li-Air Cell Processes...124 Figure IV.4.4: Discharge/Charge Profile of Li-Sulfur Chemistry and Associated Species...124 Figure V.3.8: PHEV Unit Production by Automaker...142 Figure V.3.9: World EV Market Growth by Region...142 Figure V.3.10: Historical and Forecast EV Sales by Automaker...143 Chapter VI: Battery Market for xevs... 151 Figure VI.1.1: Estimated Unit Sales of EFLA and VRLA Designs (in Million Units)...152 Figure VI.2.1: NiMH vs. Li-Ion HEV Battery-Pack Business ($ Million)...153 Figure VI.2.2: Li-Ion HEV Battery-Cell Business by Cell Producer... 154 Figure VI.3.1: PHEV Battery-Cell Market...156 Figure VI.4.1: EV battery-cell Market by Cell Producer ($ Million)...157 Figure VI.5.1: Combined Li-Ion Automotive Cell Market for HEV, PHEVs, and EVs by Producer...158 Figure VI.5.2: Advanced Automotive Battery Pack Business...158 Figure VI.6.1: xev Key Cell-Material Business ($ Million)... 160 Chapter V: xev Vehicle Market... 127 Figure V.1.1: Comparison of Well-to-Wheel Greenhouse Gas (GHG) Emissions...129 Figure V.2.1: CARB Projections of Likely Sales of PHEVs (TZEVs), Battery EVs (BEVs), and Fuel Cell EVs (FCVs) in California to Meet the 2018-2025 Regulations...133 Figure V.2.2: US GHG C02 and CAFE Targets for 2012 to 2025... 134 Figure V.2.3: Comparison of Global CO 2 Emission Regulations in g CO 2 /km for Passenger Cars (Test Conditions Normalized to the New European Drive Cycle (NEDC))...137 Figure V.3.1: Micro-Hybrid Market by World Region...138 Figure V.3.2: Micro-Hybrid Unit Market by World Region...138 Figure V.3.3: Hybrid Market Growth: Strong Versus Mild and Moderate...139 Figure V.3.4: Strong, Mild and Moderate Hybrid-Vehicle Market by Carmaker...140 Figure V.3.5: Strong, Mild and Moderate Hybrid Vehicle Market Excluding Toyota and Honda...140 Figure V.3.6: Strong, Mild and Moderate Hybrid-Market Growth by World Region...140 Figure V.3.7: PHEV Market Growth by World Region...141

Executive Summary

1. xev Vehicle Technology a. Market Drivers The drive to reduce fuel consumption in the transportation sector has reached unprecedented levels in the last 3-4 years. Hybrid and electric vehicles are sought after as critical technologies that can reduce fuel consumption and emission of CO 2, the increased levels of which in the atmosphere are considered a major contributor to global warming. Various governmental policies around the world are providing financial incentives for vehicle electrification, setting standards for lower fleet-average fuel consumption and even mandating the introduction of electrified vehicles. The automotive industry is being forced to develop multiple technologies to address these governmental initiatives, but faces significant challenges. The latter include technological readiness and cost 1, product reliability and durability, and above all customer interest and willingness to actually pay for the technology. In addition to electrification, other technologies with some environmental benefits, such as ultra-efficient IC engines, clean turbo-diesel engines, and bio-fueled IC engines, are also evolving. In many cases, these alternative technologies are less expensive and less risky to the automakers, thus explaining their interest in pursuing them in parallel to, or instead of, the electrification approach. However, automotive engineers are discovering that many of the alternative solutions will also require increased electrical power, which reinforces the desirability of at least some level of vehicular hybridization. b. Hybrid-Vehicle Architecture 1 All cost estimates in this report are based on an exchange-rate of 90 Yen per U.S. dollar. Hybrid cars today cover a range of technologies characterized broadly by the extent to which electrical power is used for propulsion in an ICE vehicle. At one end of the spectrum is the micro-hybrid a car that is not truly a hybrid as it supplies no electrical energy in support of traction, but features a beefed-up starter or a 2- to 4-kW belt-driven integrated-starter-alternator, in which fuel is saved during vehicle idle stop, and some mechanical energy is captured during braking. At the other end of the range is the plug-in hybrid (PHEV), in which a 30- to 100-kW electric motor is capable of propelling the car on its own for, say, 10 to 40 miles, and supplements the power of the internal combustion engine in most acceleration events. Beyond the hybrids are full electric vehicles (EVs), which use a single electric motor with an all-electric powertrain powered by a battery or a fuel cell (FC). While FC-powered vehicles have been in development since the mid-1990s and are still of interest, infrastructure issues appear to limit their commercial viability for the foreseeable future. The debate over the right level of electrification or hybridization has recently intensified. On the one hand a low level of hybridization provides only a small fuelefficiency benefit but its relatively low cost facilitates high-volume introduction and can thus rapidly produce a notable impact on fleet-average fuel consumption. At the other extreme, full EVs and PHEVs offer significantly lower fuel consumption per vehicle, but their much higher cost, in addition to the limited range of the EV, reduce the market appeal and thus the environmental impact on the fleet. Several levels of hybridization are possible as is discussed in detail in Chapter I. They are generally classified according to i) the functions they provide, or ii) the ratio of the power of the electric-drive motor to total power (the rated maximum power of the electric motor added to that of the IC engine.) Table E.1.1 describes the various hybridvehicle categories and the main functions they enable. 2. HEV Battery Technology a. Cell Module and Pack Technology The important parameters for hybrid-vehicle batteries are i) the cost of usable energy under conditions of high- Executive Summary 2

1 2 3 4 5 6 7 8 HYBRID CATEGORY: Micro-1 Micro-2 Mild-1 Mild-2 Moderate Strong Parallel Plug-in Extended- Range EV (EREV) Main attribute Stop/Start Regen brake Launch assist Mild power assist Moderate power assist Limited electric drive Extended electric drive Largely Electric Drive Electric machine Regular starter or belt-driven alternator Regular starter or Belt-driven alternator Belt-driven or crank shaft Crank shaft Crank shaft Two crank shaft Two crank shaft Drive Motor Electrical power level, small to mid-size car 2-4 kw 2-4 kw 5-12 kw 10-15kW 12-20 kw 25-60 kw 40-100 kw 70-130 kw Operating voltage 14 14-24 48 100-140 100-150 150-350 150-600 200 Example Most new German cars Mazda, Suzuki In development GM Malibu Eco Honda Civic Prius/Ford Fusion C-max PHEV Chevy Volt Cold engine cranking Desired Stop/start cranking Crank to idle speed Regen braking Alternator assist Torque smoothing Launch assist Power assist Electric drive Table E.1.1: Hybrid Vehicle Configurations power discharge, ii) their life in the application, and iii) the volume and weight of the energy-storage device capable of delivering the required power for the required length of time, derived from the energy density (Wh/liter and Wh/ kg) and power density (W/liter and W/kg). The first two parameters (cost and life), in combination, represent the economic cost of an energy-storage system capable of providing the hybridization function over the vehicle s life. Other energy-storage system parameters include: i) operating temperature range, ii) thermal management requirements, which relate to the weight and cost of the device and the complexity of keeping it at temperatures that do not shorten the desired life, iii) charge acceptance, for effective regenerative braking, iv) electrical management requirements, v) robustness under abuse, vi) charge retention on storage, vii) availability, reliability, and long-term security of supply, and viii) logistic issues relative to shipping, storage, and recycling. In addition, a fundamental requirement for all hybrid-vehicle energy-storage systems is that they must be essentially maintenance-free. Battery packs for xev applications are complex systems composed of multiple modules usually arranged in series electrical configurations, together with supporting subsystems to maintain the battery cells and communicate key parameters to a higher-level vehicle controller. The modules are in turn composed of several individual cells (typically four or more) arranged in parallel, series, or a parallel/series combination with the related electronics. Modules include a thermal management system, some voltage and temperature sensors, and could also include local electronic control functions such as a cell-balancing system. The battery pack is comprised of the modules, cooling system, mechanical enclosures and fasteners, battery controller and electrical components, including contactors, connectors, bus-bars, sensors, and fuses. Figure E.2.1 shows a general view of a liquid-cooled HEV Li-Ion battery pack. Executive Summary 3

current HEVs and are the only technologies of interest for the foreseeable future (10+ years). Table E.2.1 provides a generic comparison of the technologies. The table was assembled based on data from both car companies and battery developers, and should be taken as representing general typical-to-best characteristics of high-power devices designed for HEV applications. Figure E.2.1: Liquid-cooled Li-Ion Mild HEV (Cylindrical Cells) Battery Pack for Mercedes S Class Vehicle b. Key Energy-Storage Technologies for HEVs Table E.2.2 compares estimated initial cost, manufacturing, and logistic issues relating to the battery and ultracapacitor technologies presented in Table E.2.1. i) Lead-Acid Batteries The flooded SLI (Starting/Lighting/Ignition) Lead-Acid battery has been the dominant automotive battery Four energy-storage technologies, Lead-Acid (Pb-Acid), Nickel-Metal Hydride (NiMH), and Lithium-Ion (Li-Ion) batteries as well as Ultracapacitors (UCaps) are used in Table E.2.1: Characteristics of Candidate High-Power Energy-Storage Technologies for HEV Applications (Pack level unless noted otherwise) Available with Report purchase Executive Summary 4

Available with Report purchase for over a century. Its annual sales globally amount to about $11 billion. This type of battery has been finetuned for the application through extensive cooperation between battery manufacturers and the automotive industry, and a major advantage is its low cost ($40-70/kWh, related to the price of lead). Recent improvements in the flooded design predominantly aim at improving cycling behavior, power density, and charge acceptance. Key design modifications in the so-called Enhanced Flooded (EFLA) designs include adding carbon to the negative electrode, a more sophisticated grid matrix, and the addition of a glass mat next to the polyethylene separator. As the load on the micro-hybrid battery during idle stop increases, the cycling throughput requirement follows, which has prompted many European automakers to introduce a better-cycling valve-regulated (VRLA) design. However, since the pressure on automakers to keep battery prices low cannot be overstated, a continued large market share for EFLAs is assured, at least in the high-volume economy-car market in Europe, Japan, and China. While more complex designs utilizing capacitance carbon in the negative electrodes are under test, it is still too early to tell whether such designs will find market acceptance. Lead-Acid batteries will remain the dominant 14V battery technology in automotive applications for many Table E.2.2: Cost, Manufacturing, and Logistic Issues of Candidate Energy-Storage Technologies for HEV Applications years to come, although in higher-voltage systems the competition from the lighter and better-cycling Li-Ion technology is strong. The immediate challenge for Lead- Acid is to enhance charge-acceptance, cycling throughput, and operating life at intermediate states-of-charge, to support its use in micro-2 vehicle configurations. ii) Nickel-Metal Hydride Batteries Nickel-Metal Hydride (NiMH) offers the advancedvehicle industry a fairly rugged battery with good cycle life, good power and charge-acceptance capabilities, and excellent reliability. Its weakest points are its moderately high cost with limited opportunity for further cost reduction, marginal power at low temperatures, and significant cooling/thermal-management requirements. Used in HEVs for 13 years, NiMH has proven to be a very reliable product with a life expectancy of more than 10 years in most installations, albeit only two companies, PEVE and Sanyo Electric (now a division of the Panasonic group), have been successful in the market place with a reliable product. Although some minor improvements in performance and reduction in cost (which is influenced significantly by the price of Executive Summary 5

nickel) can still be expected, the technology is mature and close to its perceived potential. While NiMH will continue to be used in HEVs throughout this decade, their subsequent market position will depend largely on the field reliability and cost reduction achieved by competing Li-Ion batteries. Should Li Ion match the cost and reliability of NiMH HEV batteries, their advantage in power, energy density, and energy efficiency would make them the preferred choice for just about all HEV applications. iii) Lithium-Ion Batteries The Lithium-Ion (Li-Ion) battery technology that now dominates much of the portable-battery business entered the HEV market in 2009 and is the preferred technology for most HEV applications in the future. Its power density is 50 to 100% greater than that of existing HEV NiMH batteries, and early field data support the laboratory testing that indicates good life. For a given application, current Li-Ion technology offers a battery that is about 20% smaller and 30% lighter than existing NiMH batteries, which is a notable, if not overwhelming, advantage. In the long run, it is anticipated that Li Ion will increase its performance margin over NiMH batteries, strengthen its record for reliability, and also offer lower cost, a factor that is most critical for the market. The lower cost can be achieved by increasing manufacturing yields and simplifying pack electronics, but mainly by enhancing low-temperature power and reducing power-fading over life. This approach will substantially eliminate the current practice of using an oversized battery to meet the specifications for low-temperature power and provide sufficient margin for fading. There are multiple cell and pack designs for HEV applications, the most critical being the cathode chemistry and the cell s physical configuration. These design variables and the performance, life, safety, and cost issues and trade-offs are discussed in detail in Chapter II. iv) Ultracapacitors Ultracapacitors (UCaps), a family of energy-storage devices with higher power but much lower energy density than that of batteries, are of interest for some HEV applications. They can generally be divided into two main categories: i) devices with two symmetric activated-carbon electrodes featuring electrostatic energy storage, and ii) hybrid (asymmetric) devices with one redox-storage (battery-like) electrode and one electrostatic-storage electrode. Existing applications for UCaps in vehicles are presently limited to: i) distributed power in an active or backup role, ii) engine start for heavy-duty vehicles in ultra-cold climates, and iii) micro hybrids (so far limited to PSA and Mazda), and iv) mild hybrid buses, and other heavy-duty vehicles. Future applications could include usage in mild-1 hybrids. 3. Battery Requirements and Battery Selection for Each Hybrid-Vehicle Category a. Overview Chapter III reviews the required performance and comparative merits of batteries (and UCaps) to qualify as power sources for the seven categories of hybrid vehicles identified in Chapter I. The electrical loads and duty-cycle requirement data were gathered from multiple sources, including field interviews, and averaged to obtain a typical profile for each category. The numerical analyses apply to a typical U.S. family vehicle of the C-D segment, a category that includes popular vehicles such as the Toyota Camry, GM Malibu, Ford Fusion, Honda Accord, Hyundai Sonata, and Nissan Altima. All of these vehicles are currently offered in the U.S. market with a hybrid-powertrain option. While battery selection appears clear-cut in many vehicle categories, in some others, particularly the micro-2 and 48V mild-1 hybrids, several approaches may be viable, as discussed in Chapter III and noted below. b. Micro 2 Automakers aiming to enhance the fuel economy benefits of the current micro-1 hybrid by developing micro-2 architectures are faced with selecting an energy-storage system that is either a heavy and unsatisfactory (in charge acceptance) Lead-Acid battery or one Executive Summary 6

of several systems incorporating higher performance, but also higher initial cost and some yet-to-be-resolved complexities. The results of one of the cases analyzed in Chapter III are summarized in Table E.3.1. In practice, the automakers resolve these dilemmas by entering the market in low volumes, which permits an evaluation of costs and merits at low exposure. c. Mild-1 48V Systems Table E.3.2 displays the load profile and provides three energy-storage solutions for the mild-1 architecture. While NiMH seems the least expensive solution, it is the largest and heaviest and has somewhat lower energy efficiency. Just as important, the calculated 10-11Ah size cell is not available commercially and there is scant incentive for the development of such a cell, considering the market risk and the momentum toward Li-Ion solutions. The latter do seem to be the most promising, but in the short term the lack of availability of 7-8Ah ultra-high-rate Li-Ion cells is a barrier. The UCap solution at an estimated cost of Table E.3.2: Energy-Storage Solutions for Mild Hybrids Parameter Micro-2 - Case 2 Unit i ii iii iv v vi Full VRLA Li Ion COMBINATIONS 60Ah EFLA + UHP HP-LFP UCap UHP LFP UHP LTO NiMH Max charge current Amp 38.4 336 225 139 225 142 Number of years # 5.0 10 10 10 10 10 Rated capacity Ah 80 70 1.1 4.0 3.1 6.0 Volume liter 22 14.0 21 18 18 19 Weight kg 31 18 27 25 25 26 Cell cost, upfront $ 100 337 261 94 97 98 Pack cost (excluding DC/DC ) $ 115 604 426 228 245 187 Pack cost, 10 years $ 250 604 527 330 347 288 Table E.3.1: Energy- Storage Solutions for Micro-2 Profile with Existing Production Cells (Case 2); (HP = High Power, UHP = Ultra High Power) $1,049 is the most predictable and presents the lowest risk in the short term. However, it is difficult to see UCaps in this application for any but the highest-end European cars, as the value proposition of the architecture is not nearly sufficient to support that level of pricing for the energy-storage system. Thus, all solutions seem problematic, making the 48V mild-1 hybrid a challenging architecture for all but the most expensive cars. Incentives for its use may well be predominantly driven by the need for extra power on board to support high-end comfort and drivability features, with the fuel-economy benefits becoming a secondary priority. To experience significant market expansion, some combination of the following must unfold: Characteristics Unit Li Ion NiMH UCap Max power, pulse and regen. kw 7 7 7 Max current, pulse and regen. Amp 200 200 200 Annual kwh throughput kwh 192 192 192 10-year throughput kwh 1920 1920 1920 Cell capacity Ah 7.6 10.4 0.70 Design charge acceptance A/Ah 26.3 19.2 286 Cell energy, Wh Wh 27.7 12.8 1.75 Number of cells # 13 38 20 Battery energy Wh 361 486 35 Design throughput FOM 5324 3950 54885 Battery weight kg 9.5 13.9 8.7 Battery volume liter 10.9 13.9 10.0 Cell cost $ 270 292 455 Battery cost $ 568 492 729 System cost $ 728 652 1049 Executive Summary 7

SLI-FLA EFLA VRLA Lead Acid + UCap Lead Acid + Li Ion Lead Acid + NiMH Li Ion NiMH 14V 48V 45-120V 100-200V 200-380V SLI Micro-1 Micro-2 Mild-1 Mild-2 Moderate Strong PHEV EV Table E.3.3: Energy-Storage Technology Solutions for Advanced Vehicles by Vehicle Category and EVs) provides an overview of the relative prospects of energy-storage technologies to capture the various hybridvehicle market segments. Legend: Dominant Contender Some prospects i) A significant reduction of system cost below the values calculated here ii) A significant increase in the value of reduced fuel consumption due to increased fuel prices and/or tightened regulations iii) A sharing of the amortized cost of the upgraded power system with additional power-hungry features that may be introduced in future vehicles d. Energy Storage for hybrid Cars - Summary When hybrid vehicles were first introduced in the late 1990s, NiMH was chosen for essentially all highvoltage configurations, and Lead-Acid as well as NiMH solutions were promoted for the lower level of hybridization. NiMH is still the dominant battery in the highvoltage hybrid market but its monopoly has been ended by Li-Ion technology, which started to take market share around 2009 and is expected to continually increase its share with time. Table E.3.3 (which also covers PHEVs Maximum Average Discharge Pulse Table E.3.4 summarizes typical pulse-discharge requirements of the mild, moderate, and strong-hybrid architectures, and the rated capacities of Li-Ion batteries that could meet these requirements, while Table E.3.5 presents a condensed summary of the potential energy-storage solutions discussed in Chapter III, for vehicle hybridization levels ranging from micro-2 to strong. 4. Batteries for EVs & PHEVs a. EV & PHEV Battery Cost Chapter IV provides detailed analyses of PHEV and EV Li-Ion cell and pack design, manufacturing, and cost. Presented in Table E.4.1 is a cost estimate for a 25-Ah PHEV prismatic metal-can cell based on NMC/graphite chemistry the most common cell used in the applica- Table E.3.4: Load Profiles for the Various Hybrid Architectures and Li-Ion Solutions Battery Average power assist energy Freq. ISS Total Rated Throughput consumption Load Duration Load Duration Per day Event Day Per Year Per Year Per Year Capacity FOM kw sec kw sec # Wh Wh kwh kwh kwh kwh # Mild-1 7 10 6 3 120 5.0 600 192 84 276 0.24 11500 Mild-2 12 10 9 3 150 7.5 1125 360 198 558 0.48 11625 Moderate 18 10 12 4 200 13.3 2667 853 198 1051 0.8 13142 Strong 30 12 18 4 200 20.0 4000 1280 198 1478 1.25 11824 Executive Summary 8

Available with Report purchase Table E.3.5: Energy-Storage Solutions for Hybrid Vehicles: Key Characteristics tion. The cost components are analyzed in detail in Chapter IV and are noted in the table. The resulting perkwh price of $350/kWh allows for a somewhat low gross margin of 23%. The analysis is only moderately sensitive to the choice of chemistry, with LMO-NMC blends providing lower cost (but requiring more aggressive cooling) and LFP-based cells, slightly higher cost per kwh due to the inherently lower voltage of that system. A somewhat lower cost than that calculated above could be achieved at the more recent yen-dollar exchange rate (102 yen/$ in May 2013), and also through engineering and chemistry optimization. Table E.4.1: Cost Estimate for a 25-Ah PHEV Cell However, only chemistries with higher capacity/higher voltage would lower the costs significantly, developments which are likely to take at least another 4-5 years. Table E.4.2 details the cost of a 36-Ah EV pouch cell for which the yielded COG amounts to $28.1, equivalent NMC Cathode, Metal Can, 10 Million 25Ah PHEV Cells / year Component $ Per kwh % Materials 15.6 170 53% Factory Depreciation 5.3 58 18% Manufacturing Overhead 1.78 19 6.1% Labor 1.15 13 3.9% Un-yielded COG 23.9 259 81.6% Scrap, 4% 0.99 10.8 3.4% Yielded COG 24.9 270 85% Company Overhead 4.4 48 15.0% Burdened Cost 29.2 318 100% Warranty & Profit 2.9 32 10% Price 32.2 350 135% Gross Margin 7.3 23% Executive Summary 9

NMC/LMO Cathode, Pouch Cell, 16 Million Cells / Year Component $ Per kwh % Materials 16.8 126 51% Factory Depreciation 6.0 45 20% Manufacturing Overhead 2.40 18 8.2% Labor 1.30 10 4.4% Un-yielded COG 26.5 199 83.8% Scrap, 6% 1.69 12.7 5.1% Yielded COG 28.1 211 89% Company Overhead 5.0 37 15.0% Burdened Cost 33.1 249 100% Warranty & Profit 3.3 25 10% Price 36.4 273 138% Gross Margin 8.3 23% Table E.4.2: Cost Estimate for a 36-Ah EV Pouch Cell to $211/kWh. Most cost factors are similar to those for the 25-Ah prismatic-wound PHEV cell. To arrive at a selling price, 15% was added for SGA, and 10% over the burdened cost (COG + SGA) for profit and warranty. The selling price of $36.4 per cell translates to $273/ kwh, which is just slightly higher than that of 18650 cells, although it will clearly take the industry several years to achieve such a price level for EV batteries. the table should be regarded as a middle-ofthe-line cost for the 2016-17 time-scale with large variations possible based on specific design decisions in individual programs. Key factors that can increase cost include additional safety features such as crush protection and protection against fire propagation, more complex cooling systems, higher costs of testing, and additional electronics for safety, reliability, and diagnosis. Lower costs can be expected if developers can both amortize development/tooling costs and obtain lower piece-prices from larger-volume orders by using designs and components over multiple programs. The analyses show that there are multiple cost drivers for Li-Ion batteries, which include cell materials, cell manufacturing, pack components, and pack integration and testing. Considering the high level of R&D in automotive Li-Ion batteries worldwide, continued improvement in performance and reduction in cost are to be Table E.4.3 provides estimates for pack cost at two production volumes. It is assumed that the PHEV prismatic cells are liquid-cooled on their narrow side without a secondary loop, while EV pouch cells utilize a conductive heat sink on one side of each cell to remove heat to a centralized liquidcooled plate. The numbers in Available with Report purchase Table E.4.3: PHEV and EV-Pack Pricing Executive Summary 10

Cell Maker Chemistry Capacity Configuration Voltage Weight Volume Ener dens Spec Ener Used in: Anode/Cathode Ah V Kg liter Wh/liter Wh/kg Company Model 1 AESC G/LMO-NCA 33 Pouch 3.75 0.80 0.40 309 155 Nissan Leaf 2 LG Chem G/NMC-LMO 36 Pouch 3.75 0.86 0.49 275 157 Renault Zoe 3 Li-Tec G/NMC 52 Pouch 3.65 1.25 0.60 316 152 Daimler Smart 4 Li Energy Japan G/LMO-NMC 50 Prismatic 3.7 1.70 0.85 218 109 Mitsubishi i-miev 5 Samsung G/NMC-LMO 64 Prismatic 3.7 1.80 0.97 243 132 Fiat 500 6 Lishen Tianjin G-LFP 16 Prismatic 3.25 0.45 0.23 226 116 Coda EV 7 Toshiba LTO-NMC 20 Prismatic 2.3 0.52 0.23 200 89 Honda Fit 8 Panasonic G/NCA 3.1 Cylindrical 3.6 0.045 0.018 630 248 Tesla Model S expected. However, while some of the costs calculated in this report for relatively large volumes are already being equaled in the marketplace by a number of quotes for smaller volumes, it seems likely that the latter can be regarded as loss-leading buy-in prices, resulting from the highly competitive nature of the industry and the current overcapacity in large-battery production. b. EV Cell and Pack Key Characteristics Table E.4.4 provides the key characteristics of eight cells used in current EVs. While the first five are typical cells utilizing NMC or LMO-NCM/LMO-NCA blended cathodes versus a graphitic anode in prismatic or pouch cells, the last three are less common designs which comprise i) a Lishen cell utilizing LFP cathodes, a chemistry with somewhat lower specific energy that until recently was favored by many Chinese producers, ii) a Toshiba cell utilizing an LTO anode and thus delivering the lowest specific energy in the group, and iii) a Panasonic 18650 cylindrical cell utilizing a high-capacity computer-cell design with an NCA cathode, which delivers by far the highest energy density and specific energy. Table E.4.4: Li-Ion Cells Employed in Current EVs As seen in the table, state-of-the-art Li-Ion EV battery cells are rated at 90 to 160Wh/kg and 200 to 320Wh/ liter. In contrast, the best cylindrical consumer cells, as shown for the Panasonic cell (row 8), deliver 248Wh/kg and 630Wh/liter. This gap in performance is related to the design compromises made in the regular EV cells to support the more critical requirements of safety, reliability, durability, and cost. EV cell and battery performance can be expected to increase over time as confidence in the technology s durability and safety increases. Table E.4.5 details the energy characteristics of the various packs. The specific energy ranges from 73 to 100Wh/ kg, values that are approximately 50% higher than those available from NiMH batteries in the late 1990s. As noted in the last column of the table, specific energy at the pack level is only 53 to 74% of the cell s specific energy, demonstrating the significant extra weight involved in integrating cells into an automotive pack. Table E.4.5: EV Packs Key Energy Characteristics Available with Report purchase Executive Summary 11

The relatively poor packaging efficiency of EV batteries is due to odd pack shapes resulting from the need, in most current EVs, to fit the pack into an available space in the predesigned vehicle platform. For the same reason, effective volumetric energy densities for installed EV batteries can differ quite widely from nameplate values. Another parameter significantly affecting volumetric and gravimetric energy density is the cooling system, if there is one. While refrigerant/liquid cooling is more volume-efficient than air cooling, it is also more expensive. c. PHEV Pack Key Characteristics Table E.4.6 summarizes the key electrical characteristics of PHEV packs in, or close to, commercial production. The packs are listed by their rated capacity a parameter that correlates with the vehicle s electric range. For the first four vehicles with battery capacities exceeding 10kWh, two or three cells are assembled in parallel to reach the desired pack energy capacity at optimal motor voltages (typical 300-360V). The Toyota Prius stands out as a relatively low-capacity, as well as a relatively lowvoltage system. However, the Prius up-converts the battery voltage to over 600V so that motor and battery voltage are largely independent of each other. The energy density of the PHEV packs is typically 10-20% lower than that of the EV packs due to the higher-power design of the application. A very important quantity is the capacity that can be utilized over long cycle life, which is typically 55 to 75% of the initial rated capacity. d. Life, Reliability, and Safety The life and reliability of EV and PHEV Li-Ion batteries in the field will play a major role in the cost of ownership and thus the overall viability of these vehicles. While results in accelerated cycle-life testing support the Li-Ion battery s prospects of meeting the cycle-life requirements (at least for EVs), and provide an expectation of an adequate calendar life for batteries that do not experience temperatures above 40 C, real life in the field is obviously yet to be confirmed. This represents a significant risk factor for the industry. The automakers guiding principle for the use of Li-Ion batteries in any automotive application is that, regardless of what happens, no flame or burning materials should be expelled from the battery pack. A cell catching fire that does not propagate outside the battery pack is thus a reliability event rather than a safety incident. While it is the ultimate responsibility of the vehicle-engineering team to provide a vehicle that under any reasonable circumstances will not endanger Table E.4.6: Key Characteristics of PHEV Packs Cell Pack Carmaker Model Cathode Capacity Energy Capacity Voltage Maker Maker Chemistry Ah kwh Ah V Fisker Karma A123 LFP 20 A123 20 60 333 GM Volt LG LMO-NMC 15 GM 16 45 356 Mitsubishi Outlander LEJ LFP 21 LEJ 12 42 286 Volvo V60 LG LMO-NMC 15 LG 11 30 367 Porsche Panamera Samsung NMC-LMO 26 Bosch 9.4 26 362 BMW i-8 Samsung NMC-LMO 26 BMW 8.5 26 327 Ford C-Max Sanyo NMC 24 Ford 7.6 24 317 Ford Fusion Sanyo NMC 24 Ford 7.6 24 317 Audi A3 Sanyo NMC 24 Sanyo 7.5 24 313 Honda Accord Blue Energy NMC 21 Honda 6.6 21 314 Daimler S class LEJ LFP 21 Magna 6.5 21 310 Toyota Prius Sanyo NMC 22 Toyota 4.5 21.5 209 Executive Summary 12

the driver or passengers, engineers in all fields keep making design decisions affecting safety that are tradeoffs between product requirements that allow only a small margin of cost increase or performance reduction to achieve their goal. Lithium ion is a high-energy, high-power, flammable, and easily ignitable power source. However, so is gasoline. There are good reasons to believe that safety can be engineered into the system, even if mistakes are occasionally made in the learning process. Given the very conservative approach of automotive engineers, it seems likely that future battery-related safety incidents, at least at established western automakers, will be rare and isolated cases. e. Technology Enhancement Roadmap these higher performance chemistries will be to ensure that they continue to provide an adequate life and in no way compromise safety. In recent years development work, largely supported by the U.S. government, has been directed at technologies that may supersede Li Ion, the most visible of which presently are the programs on lithium-oxygen. While some of these futuristic chemistries and approaches offer interesting prospects, replacing Li Ion with a battery of overall better value for the EV and PHEV market would be a formidable task. For the foreseeable future, it seems likely that the combination of high gravimetric and volumetric energy and power density with very high cycle life offered by the Li-Ion technology will remain unique. 5. xev Vehicle Market a. Market Drivers and Challenges for xevs Available with Report purchase This study revealed that PHEV-EV batteries through the end of the decade will all feature Li-Ion technology with further optimization of existing chemistries, and cell and pack designs. The largest step forward in performance will require the implementation of highervoltage cathodes and silicon-containing anodes. Such designs are expected to support a 50% improvement in performance coupled with potential for a substantial reduction in cost. However, the main challenge for The automakers motivation for developing hybrid and electric vehicles stems primarily from the following: i. The environmental driver: The ever-increasing pressure to reduce pollutant and CO 2 emissions that threaten the environment ii. The energy security driver: The concern about energy supply shortages and security iii. The customer s fuel-saving driver iv. The customer s ancillaries driver: The promise of enhanced and new (electrically powered) customer features that improve the vehicle s functionality/ efficiency and/or driving comfort v. Industrial competitiveness driver: The national and local governments drive to build technological competence and create jobs in future technology vi. The image driver: The desire to project a green and high-tech image to the buying public. Currently, the strongest global motivation to encourage the use of xevs is the drive to reduce CO 2 emissions from the transportation sector, and it is augmented, particularly in the U.S. and China, by concerns about energy security. Figure E.5.1 shows the historical and proposed Executive Summary 13

270 b. Market Forecast for xevs Grams CO2 per kilometer, normalized to NEDC 250 230 210 190 170 150 130 110 US Europe China Japan The estimated growth of the micro-hybrid market by geographical region is illustrated in Figure E.5.2. Market growth in Europe shows strong momentum, which is also expected to extend to Japan; for the U.S. and China, the situation is not as clear. 90 2000 2005 2010 2015 2020 2025 Available with Report purchase Figure E.5.1: Comparison of Global CO 2 Emission Regulations in g CO 2 /km for Passenger Cars (Test Conditions Normalized to the New European Drive Cycle (NEDC) (usually via legislation) CO 2 emissions standards in g/ km in the global passenger car market. It can be seen that the reduction is quite significant, particularly for the period 2015 through 2020. Meeting these requirements at the lowest possible cost determines the direction of xev-vehicle development at automakers. Available with Report purchase Strong and moderate (high-voltage) hybrids on the market since late 1997 showed a strong growth last year and reached market shares of 25% in Japan, and 3% in the U.S. While the global strong-hybrid market seems likely to maintain a steady growth, that of the mild-hybrid market is expected to accelerate later in the decade, predominantly in Europe and potentially at 48V, where it will be driven by the anticipated step-tightening of the CO 2 regulations in 2020. Figure E.5.3 provides historical and forecast figures for these markets by world region for the period between 2009 through 2020. PHEV sales by world region for 2012 and projections for 2016 and 2020 are illustrat- Figure E.5.2: Micro-Hybrid Market by World Region Executive Summary 14

ed in Figure E.5.4. By 2020, the PHEV market is projected to account for 750,000 units, or about 1% of the 000's of units 4500 4000 3500 3000 2500 2000 1500 1000 500 0 Figure E.5.3: Strong, Mild/Moderate Hybrid-Market Growth by World Region 2009 2012 2016 2020 anticipated global sales volume for that year. Continued growth in the U.S., still predominantly driven by the CARB mandate, will be augmented by more notable growth in Europe and China as carmakers take advantage of the CO 2 test-certification, and extra credits available to the PHEV as a means to meet tightening CAFE standards. vehicle manufacturers (with the exception of Tesla) have a limited range, typically 50 to 100 miles. This handicap effectively restricts their use to urban driving. Additionally, ROW strong these vehicles are typically of ROW mild the mini (city), subcompact, Europe strong and compact classes, which Europe mild limits their market to buyers of smaller cars. China strong China mild US strong US mild Japan strong Japan mild Figure E.5.5 shows the geographical distribution of EV sales in 2012 and forecasts for 2016 and 2020. The worldwide EV market is expected to grow from about 75,000 units in 2012 to 205,000 units in 2016 and 480,000 units in 2020, showing a projected average annual growth rate of 26%. The estimate for 2020 will account for only about 0.6% of the expected total market of 74 million new vehicles in that year. Figure E.5.6 shows historical and projected EV sales by automaker from 2009 to 2016. The Nissan-Renault alliance will continue to hold the largest share, but Note that for PHEVs as for conventional hybrids but not for EVs the technical and economic challenges are somewhat independent of vehicle size. In fact, a mid-size vehicle, or even larger, is potentially more attractive for a PHEV powertrain since it has more space available than smaller vehicles to accommodate the larger PHEV battery. Furthermore, since a U.S. subsidy is available and is a function of battery energy capacity and not of vehicle fuel economy, the tax credits for a given fuel-economy improvement or all-electric range capability are greater the larger the vehicle. Figure E.5.4: PHEV Market Growth by World Region Available with Report purchase All EVs under development at major electric- Executive Summary 15

000's of units 600 500 400 300 200 100 Other Japan US China Europe western governments, both federal and state, for economic, if not political reasons, may not be able to continue subsidizing vehicle electrification at the level required for them to compete with hybrids and other advanced-propulsion technologies. In fact, despite the sizeable subsidies and discounts provided by governments and carmakers respectively, PHEV and EV car sales over the past 24 months have fallen short of the carmakers plans. 0 Figure E.5.5: World EV Market Growth by Region its actual sales are likely to be a fraction of what had been anticipated. Chinese automakers, Mitsubishi Motors, luxury-car maker Tesla, and German automakers make up most of the rest of the market, while the other Japanese carmakers and the U.S. Big Three, whose interest in EVs is largely limited to meeting the CARB requirements, are not expected to promote them heavily outside the CARB-states. c. xev Market Conclusions HEVs are now mainstream products in Japan and are approaching unsubsidized commercial viability in 70 the U.S., while micro hybrids are strongly entrenched in 60 Europe. In the absence of a market-based value proposition for EVs and PHEVs, gov- 50 ernments are attempting to 40 advance these technologies 30 by issuing various mandates and subsidies (as discussed 20 in Chapter V). Unfortunately, Figure E.5.6: Historical and Forecast EV Sales by Automaker 2012 2016 2020 000's of units 10 In the long term, EVs are unlikely to account for more than a small percentage of the world s new-car market until well after 2020, and they will probably be used mainly in urban driving. Despite their relatively weak value proposition in comparison with ICE and HEV powertrains, PHEVs seem to be the second most realistic (after HEVs) of the four electrified-vehicle configurations (the others being BEVs and FCVs). The PHEV s limitations of higher vehicle cost and somewhat reduced cabin space are minor in comparison with the BEV s problems of limited range and slow re-fueling time. In contrast with fuel-cell-powered vehicles, PHEVs do not require heavy upfront investment in infrastructure. It stands to reason that if governments continue to promote and subsidize the mass introduction of vehicles electrified beyond the 0 2009 2010 2011 2012 2013 2014 2015 2016 Renault & Nissan Chinese automakers BMW Mitsubishi Tesla U.S. automakers VW Group Daimler Toyota and Honda Other Executive Summary 16

Million Units 10 9 8 7 6 5 4 3 2 1 0 EFLA VRLA Figure E.6.1: Estimated Unit Sales of EFLA and VRLA Designs (in Million Units) level of conventional HEVs, then PHEVs are relatively the best choice. Battery-powered EVs will remain nichemarket vehicles for urban usage, while fuel-cell-powered EVs may find application in buses and other large vehicles owned and operated by 2000 governments or corporations, which are in a 1800 position to install a refueling infrastructure. 1600 6. Battery Market for xevs a. Battery Markets for xevs through 2016 2012 2016 1400 1200 1000 800 600 400 i) Micro Hybrids The cost/performance trade-offs between 200 the two Lead-Acid technologies EFLA and 0 VRLA that share the micro-hybrid market today are reviewed in Chapters II and III, while their projected market shares are presented in Chapter VI. Figure E.6.1 provides a best estimate of the unit sales of these two designs for 2012 and 2016. In the former year the major customers were European manufacturers of high-end vehicles such as BMW, Mercedes, and Audi, which prefer VRLA. In the future, $ Million as main-stream car producers such as Toyota, VW, Ford, Honda, and others expand their micro-hybrid offerings in Europe and Japan, their preference for the EFLA battery will rapidly increase its volume and market share. ii) Strong/Mild HEVs Figure E.6.2 illustrates the growth of the HEV batterypack market over the past four years and includes a projection for the next four years. NiMH was the dominant technology until recently but it now seems that the NiMH HEV battery market has peaked or is about to peak. The corresponding historical and projected markets for Li-Ion HEV-cells by manufacturer are shown in Figure E.6.3. The data are based on the unit sales forecast presented in Chapter V, and combined with industry pricing information discussed in Chapter 2009 2010 2011 2012 2013 2014 2015 2016 Figure E.6.2: NiMH vs. Li-Ion HEV Battery-Pack Business ($ Million) Total NiMH Total Li-Ion Packs II. The total Li-Ion HEV cell business is estimated to grow from about $200 million in 2012 to nearly $570 million in 2016 a compound average growth-rate of 30%. Executive Summary 17

$ Million 200 160 120 80 40 Sanyo PEVE Blue Energy LG Chem Hitachi A123 Systems AESC JCI Figure E.6.3: Li-Ion HEV Battery-Cell Business by Cell Producer battery-pack business exceeding $2.3 billion in that year. Here again most automakers design and build their own packs. Chrysler-Fiat, for whom Bosch designs and builds battery packs, is an exception. 0 2009 2010 2011 2012 2013 2014 2015 2016 iii) PHEVs The PHEV battery-cell market, which is 100% Li Ion, is expected to increase from $9 million in 2010 to over $650 million in 2016. The corresponding PHEV battery-pack business is estimated to exceed $1 billion in 2016 (with most of the value added accruing to the automakers), since cells represent about 65% of PHEV battery-pack costs. iv) EVs The EV cell market also 100% Li Ion which grew from $41 million in 2009 to $768 million last year, is forecast to be over $1.7 billion in 2016, with the associated EV Available with Report purchase v) Combined Li-Ion Cell Markets Figure E.6.4 shows the combined Li-Ion automotive battery-cell market for HEV, PHEVs, and EVs by producer. This market, which was miniscule in 2009, grew to $1.23 billion last year and is expected to exceed $2.9 billion in 2016. The eleven listed suppliers, each with annual sales forecasts ranging from $60 million to over $500 million, are projected to account for about $2.64 billion, or 90% of the business. Note that the Other category includes some potentially significant future players, such as SK Innovation, Toshiba, JCI, Li-Tec Battery, and several Chinese producers. vi) Combined xev Pack Markets Figure E.6.5 summarizes the estimated $6.2 billion advanced automotive battery-pack market in 2016 by market segment. The NiMH HEV-pack market, the dominant segment in 2009-2010, is expected to maintain its $1.8 billion level through 2016, but represents only 29% of the business in that year. The more rapidly growing Figure E.6.4: Combined Li-Ion Automotive Cell Market for HEV, PHEVs, and EVs by Producer Executive Summary 18

Figure E.6.5: Advanced Automotive Battery-Pack Business ($ Million) Li-Ion battery businesses 3500 account for the rest. The 3000 Li-Ion EV-pack business 2500 is estimated to exceed 2000 $2.3 billion in 2016, with 1500 Li-Ion HEV and PHEV packs topping $1 billion 1000 each. These estimates 500 do not include any aftermarket and replacement 0 business or any possible micro-hybrid Li-Ion battery-pack business, which is generally expected to be still quite small in 2016. b. xev Battery Market to 2020 After 2016, the growth rate of the Li-Ion HEV and PHEV battery business is expected to exceed that of the other two segments and change the relative magnitudes of the four market-segment categories. Table E.6.1 provides a projection for the 2020 world Li-Ion automotive battery market. All key assumptions are indicated in the table, including unit sales, based on data from Chapter V, average battery capacity in kwh, cell-costs per kwh, and battery-pack cost for each market segment, derived from the analyses in Chapters II & IV. It is too speculative to suggest which battery companies will share this significant and growing market. Nevertheless, the companies with the largest shares in 2016, shown in Figure E.6.5 are the favorites, provided their cash flow turns positive by that time. Otherwise it seems clear that those which $ Million 5000 4500 4000 2009 2010 2011 2012 2013 2014 2015 2016 also have a significant business in consumer (portable) batteries, such as Sanyo, LG Chem, Samsung, and two or three Chinese players, will have a built-in advantage as suppliers to the demanding automotive market, because of their experience in the cost-effective manufacturing of reliable products. A factor that will greatly impact the position of some early entries, including LG Chem and AESC, is the degree to which the pouch-cell technology will be accepted by automakers that have so far avoided it. As noted in Table E.6.1, the total automotive Li-Ion battery production is projected to exceed 20,000 MWh in 2020. The dollar values of the key xev-cell materials corresponding to this estimate are shown in Figure E.6.6. c. Industry Overcapacity Generous government subsidies have triggered the rapid and apparently premature construction of PHEV Available with Report purchase Li Ion Total Li-Ion EV NiMH HEV Li-Ion HEV Li-Ion PHEV Table E.6.1: 2020 Automotive Li-Ion Battery Market Executive Summary 19

Figure E.6.6: xev Key Cell Material Business ($ Million) and EV battery plants. In the 500 U.S., grants awarded by the federal and several state 400 governments as part of the 300 2009 economic stimulus package covered 50 to 80% 200 of the cost of new plants 100 located in the automotiveindustry states of Michigan 0 and Indiana. Other grants and preferred-terms loans (in particular to Nissan-Renault) were awarded in France, the U.K., Portugal, China, and the U.S. Table E.6.2 details i) the plant capacities announced by major battery makers and scheduled to become operational by 2014, ii) Company $ Million 700 600 Planned Capacity for 2014 Fully Installed Estimated 2013 Status Forecasted Production Capacity Utilization MWh MWh MWh % AESC, Japan 2200 2200 500 23% Nissan, U.S. 4000 1100 200 18% Nissan, U.K. 2000 1100 100 9% LG Chem, Korea 3500 2200 600 27% LG Chem, U.S. 1200 600 150 25% BYD, China 4000 1000 100 10% Lithium Energy Japan, Japan 2300 1100 350 32% Lishen, China 1400 500 150 30% JCI, U.S. 1200 600 40 7% Panasonic-Sanyo Electric, Japan 1000 1000 300 30% SK Innovation, Korea 1000 500 30 6% Dow Kokam, U.S. 600 600 20 3% A123 Systems, U.S. 500 300 100 33% Samsung, Korea 500 500 125 25% Hitachi, Japan 200 100 35 35% EnerDel, U.S. 300 0 0 0% Blue Energy, Japan 200 200 40 20% Li-Tec, Germany 300 300 80 27% Other, China 2000 800 200 25% Toshiba, Japan 300 300 80 27% TOTAL 28,700 15,000 3,200 21% an assessment of the actual installed capacity as of Q1 2013, and iii) the expected production level this year (2013). As the table indicates, the likely production volume this year will be a little over 3,000MWh, which is only 11% of the proposed 2014 plant capacity and about 21% of the capacity installed to date. This extreme overcapacity is the main reason why many xev-battery manufacturers submit product quotations at or below cost. While the automakers benefit from lower pricing in the short term, a problem may develop in the long run since a healthy industry requires a profitable supply chain. While some plants will undoubtedly close, another likely outcome of this overcapacity is industry consolidation via mergers. Table E.6.2: Estimated Globally Installed and Utilized xev Li-Ion Cell Manufacturing Executive Summary 20

The Author Dr. Menahem Anderman, President Total Battery Consulting, Inc. Menahem Anderman has directed development programs for high-power nickel-based and Li-Ion batteries as well as electrochemical capacitors. His corporate experience ranges from materials research, cell design, and product development, to battery-product application, market development, technology and business assessment and general management. He holds a PhD with honors in Physical Chemistry from the University of California, and founded Total Battery Consulting in 1996 to offer consulting services in lithiumand nickel-based battery development and application, intellectual property issues in battery-related markets, and investment assessment. Dr. Anderman provides technology and market assessments to international clients and government agencies including the U.S. Senate, the California Air Resources Board, the National Research Council, the U.S. Department of Energy, and others. As the world s leading independent expert on advanced automotive batteries, Dr. Anderman is routinely quoted in news and business journals including The Wall Street Journal, The Washington Post, and The New York Times.

The Vision Reducing the harmful impact of vehicles on the environment is a vital task for the industrial world. With the introduction of advanced electrical and hybrid functions in vehicles, the automotive industry is now approaching cost-effective ways to reduce fuel consumption and emissions. Energy storage technology is the key to the commercial success of these advanced vehicles. The objective of the Report is to make available to industry professionals around the world information that will help them focus their financial and human resources on the most technologically viable and economically affordable solutions to the future needs of automotive energy storage. It will thus contribute to the development and support of more eco-friendly vehicles, a cleaner environment, and more responsible usage of our planet s resources. Advanced Automotive Batteries In 2000, Dr. Anderman founded Advanced Automotive Batteries (AAB) to provide up-to-date technology and market assessments of the rapidly growing field of energy storage for advanced automotive applications. Advanced Automotive Batteries published the 2002 and 2007 Advanced Automotive Battery Industry Reports, the 2005 Ultracapacitor Report and the 2010 Plug- In Hybrid and Electric Vehicle Opportunity Report. Advanced Automotive Batteries also organizes the main international event in the industry: the Advanced Automotive Battery Conference (AABC), with Dr. Anderman serving as Chairman. For over a decade, the annual AABC has attracted professionals from the hybrid and electric vehicle world and the three tiers of the battery supply chain. Renowned as a global meeting place, AABC features presentations and discussions that address the most pivotal issues affecting the technology and market of advanced vehicles and the batteries that will power them. In 2010, to keep pace with the rapidly expanding technology and market development, AAB started hosting two conferences annually, in the U.S. and Europe, which together attracted over 1,500 participants. AABC Europe 2013 will take place in Strasbourg, France, June 24-28, and the International AABC 2014 will be held in Atlanta, Georgia, February 3-7. advanced automotive batteries tel: 1 (530) 692 0140 fax: 1 (530) 692 0142 industryreports@advancedautobat.com www.advancedautobat.com