E-mobility opportunities & challenges st Green Manufacturing Summit Sectoral Case Automotive New Dehli, 8 March, 20
Electricity has a long history in car technology La Jamais Contente, 899 Toyota GM (Opel) VW (incl. Audi) Ford Hyundai PSA Honda Nissan Fiat Suzuki Renault Daimler (incl. smart) BMW 2 2 2 Ampera 5 C-Max PH -RC 2 BlueOn 5 2 2 E-tron spyder ion, EX, Survolt Full Range extend. Plug-in hybrid Hybrid ICE Fluence ZE, Kangoo ZE, Twizy ZE, DeZir ZE A-class E-Cell Just a hype or is it for real?... and what does it mean for the industry?
Bold statements regarding e-car ramp-up Aggressive volume plans...... with strong strategic ambitions >50 "We think that scale for us is between 500,000 and million cars a year." >50 >50 "Volkswagen will be the automaker to mass produce the electric car for everyone." >00 72 >80 >00 205 202 "This vehicle will change the auto industry we know today significantly." "We maintain our claim to be the worldwide market leader in e-mobility 2
Overall, we expect a multi-step path forward Electrification path Advanced ICE Mild Full Plug-in Range E-Car Hybrid Hybrid Hybrid Extender Prius PH Volt Leaf CO 2 reduction potential Advanced gasoline and diesel, Biofuels, CNG, H 2 Start stop, regenerat. braking, mild acc. assistance Acceleration assistance, electric launch, electric driving at low speeds Full hybrid Electric All necessary with larger vehicle with propulsion battery and ICE to energy is plug-in recharge the stored in the capability batteries battery Up to 5% 0-0% 0-0% 50-00% Clean energy sources Levers for CO 2 reduction Pumping losses Thermodynamic efficiency Idle losses Braking losses. Well-to-Wheel CO 2 reduction; calculations for European countries. CO 2 reduction potential measured in comparison with gasoline car with 76 g CO 2 /km, type Golf.6
Three drivers behind electrification trend CO 2 regulations World leaders committed to reduce CO 2 emissions Regulation requires partial electrification to meet targets 2 Innovation High interest and willingness to invest in alternative, green technologies Govtms thrive for reduced oil dependance Changing mobility patterns Free + access to restricted city centers highly attractive Admittance to car pool lanes as additional plus Market model Industry volume path Industry profitability
CO 2 reduction: benefit strongly depends on power mix WTW CO 2 emissions today... vs in 2020 250 Average CO 2 emission in g/km 250 200 50 00 50 20-59% 28 76 56 20 50 8 6 2 8 6 77 70 5 65 9 7 87 69 5 6 7 58 5 200 0% Biofuel 50 5-55% 9 9 2 6 00 8 50 65 6 60 27 0 09 5 9 78 60 56 5 9 9 0 0 8 97 0 C-segm. C-segm. C-segm. gasoline diesel hybrid DE 2 EU USA Japan China India 0 C-segm. C-segm. gasoline diesel C-segm. hybrid DE EU USA Japan China India Reference car gasoline Diesel & Hybrid Electric vehicle Well-to-tank CO 2 emissions China, India virtually no overall CO 2 benefit due to carbon intensive power generation. Reference vehicle for C segment (,6l gasoline engine w/ 75kW and 8 kg vehicle mass); 2. Avg. 5 kwh/00 km (tank to wheel) X CO 2 from respective power generation mix in g/kwh;. Assumption: 0% Biofuels addition to fossil fuels (80% CO 2 reduction with biofuels), 20% improvement of baseline gasoline ICE, 5% improvement of hybrid and 0% of diesel; 8% electricity losses and 7% upstream oil losses are assumed; Source: Company Websites; VDEW; EUCAR; European Commission; Concawe; WWF; BCG analysis 5
2020: Expect 25-0% electrified cars 5-6% pure s 58% % 2% 20% 6% x Expected market share 2020 2 60 Expected sales in M units 9 5 Technology challenge Gasoline Diesel CNG Hybrid e-cars (incl. Ttl Total electric range ext.) relevant vehicles market Optimized ICE Electrification 70-75% 25-0% 6
... with very different market penetrations by region Share of new car sales 2020 (%) WEU NOA Japan China Sum in 2020 (%) 00 80 60 0 20 0 2 5 7 2 0 2 7 8 26 2 5 9 8 5 8 0 5 6 26 7 2 6 2 5 86 87 7 75 62 52 52 2 2 7 7 69 6 8 29 0 9 69 2 CNG 0 20 6 RE 26 H Diesel 58 Gasoline 0 2 2 2 2 2 Scenarios Slowdown: Concern about climate change shrinks, oil price goes down, regulations are loosened 2 Steady pace: Increasing concern about climate change, oil price stays high, regulations follow agreed pattern Acceleration: Concern about climate change increases much, oil price hits records, regulations further tightened 7
Costs will need to drive down to ~5% of current level 20 2020(E) Cell Modul e Pack Battery Components Components Cell Modul e Pack Battery ($/KWh) ($/KWh) Markup (SG&A+P) Scrap R&D 50 50 290 60 50 70 990-,220 % % % % Depreciation Process Purchased parts Raw material % 75-85 ~20 60-0 0% 50-8080 % 2% 6% 200 250 % % 20-5 2% 6% 2%. Including process, depreciation, R&D and scrap of active material and component suppliers; DOD = depth of discharge Note: 90 Wh cell; annual production 7M cells; Assumes 0.% scrap rate; Rounded numbers 8
Despite prudent projections, huge battery market evolves Revenues US $ B 5 7 9 7 2 GWh 7 Announced capacity build up of top battery players (~7GWh) already satisfies PC demand until 206 7 00 75 0 5 55 7 7 28 9 29 0 PH H 200 20 202 20 20 205 206 207 208 209 2020. Based on BCG's steady pace scenario; note: assumed battery sizes: H KWh, PH 0 KWh, full- 20 KWh 9
http://ed.smart.com All need to agree on go-to-market model jointly! Should we offer power contracts? P F Do we need any specific FS offer? (e.g. battery lease) C How do we provide optimal charging solutions? With which partners? W M How do we enable our dealer network? What should our PoS offer look like? C B R What kind of premium services can we offer? What is the residual value of the battery? 0
Some key take aways for all players Deal with new uncertainties Act as an entrepreneur: apply trial & error approach to better understand customer e-mobility requirements Limit own risks related to unclear battery durability while keeping prices low for customers Be agile to react to changes in regulation/incentive schemes Acquire new capabilities Integrate vehicle periphery into existing processes Use new technologies to level out e-car-related related inconveniences Profit form changing market environment Leverage new market entrants as value-adding gpartners Selectively explore new profit pools Secure customer interface Governmental/municipal i l authorities and regulators as well as industry asociations will play a crucial role