APEC 2015 Assessing the North American Traction Drive Power Electronics and Motors Supply Chain A co-presentation by: Steven Boyd DOE Vehicle Technologies Office, Washington, DC & Chris Whaling Synthesis Partners, LLC, Reston, VA
Overview of Contents 1. The questions driving our work regarding the North American (NA) supply chain for power electronics (PE) and motors. (Steven Boyd/DOE) 2. Current view of trends and data regarding the questions we are asking about the NA PE and motors supply chain. (Chris Whaling/SP). 3. Selected next steps and discussion. (Combination). Note: Nothing stated in this brief is an official viewpoint of the US Department of Energy or any other official US government entity. This slide does not contain any proprietary, confidential, or otherwise restricted information 2
Why are We Here? Opportunity for a deeper dialogue between the private sector, government, academia and non-profits, regarding the following types of actionable questions: What core competencies are missing from the North American (NA) PE and motors technology supply chain? What might catalyze technology creation and job growth in the NA PE and motors supply chain? Is the NA technology supply chain prepared to support a significant increase in demand for multi-industry advanced power electronics (PE) and motors? Why or why not? What specific R&D and/or manufacturing support may be helpful to accelerate development of the NA PE and motors supply chain? This slide does not contain any proprietary, confidential, or otherwise restricted information 3
Key Questions Driving Our Work 1 Who in the US? is in the NA technology supply chain for advanced, traction drive PE and motors? 5 High skill job creation? How might all partners optimize US job creation in PE and motors over time? At what mfr. cost? Can NA PE and motors supply chain be globally competitive? 2 4 New Partners? With whom can government catalyze a more competitive US PE and motors supply chain? Sustainable competitive edge? How can the NA PE and motors industry thrive globally over time? 3 This slide does not contain any proprietary, confidential, or otherwise restricted information 4
Results Based on Integrated Analysis of Private and Public Data Private data employed: Synthesis Partners (SP) three-year interview archive. SP global network of experts. SP network of industry sources (330 companies). SP company-data and market datasets. Commercially available databases, extended and refined by SP. Public data employed: Company annual reports and public filings. Public market studies and literature. Internet search (English, some Chinese and Japanese). Conferences and seminars. Federal, state and local datasets. This work has been underway for several years under DOE-VTO sponsorship. This slide does not contain any proprietary, confidential, or otherwise restricted information 5
From Whom Do We Seek Input? To-date, 130+ in-depth conversations, executed over the last three years, with following types of organizations: Top global automotive OEMs 10s of global automotive Tier 1s 100s of automotive and related Tier 2-4s Universities and non-profit research organizations DOE National Labs (ORNL, NREL, Argonne, PNNL) USCAR Electrical and Electronics Tech Team (EETT) DOE and other USG executives Other experts Sample for illustration only: Have we spoken to you? If not, please contact cwhaling@synthesispartners and we will be happy to do so! This slide does not contain any proprietary, confidential, or otherwise restricted information 6
Bottom Line Up-Front OEMs Tier 1s Tier 2s Tier 3s Tier 4s and Below: Sub-components and engineered raw materials The N.A. PE supply chain is an unstable environment because it sits on an extremely narrow base, causing critical, single-string dependencies. This presentation does not contain any proprietary, confidential, or otherwise restricted information 7
Core Companies Involved in the NA Traction Drive PE* Supply Chain II-VI Advanced Materials Hitachi Automotive Systems America Alpha Advanced Materials (AAM) Hitachi Metals North Carolina, Ltd. Amphenol Interconnect Products Corp. Intersil Analog Devices, Inc. IXYS Corp. Arkansas Power Electronics International, Inc. Kemet Electronics Corp. Bicron Electronics Co. Kongsberg Automotive Bosch Rexroth Magmotor Calsonic Kansei North America, Inc. Magna International of America, Inc. FIAT (formerly Chrysler) Methode Electronics, Inc. Cree, Inc. Mitsubishi Electric USA Delphi Automotive LLP ON Semiconductor DENSO Manufacturing Tennessee, Inc. (DMTN) Positronic Industries Inc. Dow Corning Electronic Solutions Powerex Fabrico Rinehart Motion Systems Fairchild Semiconductor Rogers Corp. Ford Motor SBE, Inc. Freescale Semiconductor, Inc. Silicon Laboratories, Inc. Fuji Electric Corp. of N.A. Superior Essex, Inc. General Motors Tesla GeneSiC Semiconductor, Inc. Toshiba International Hitachi Cable America Inc. (HCA) * Focus is on automotive traction drive applications specifically. This supplier list is continuously revised and updated. This presentation does not contain any proprietary, confidential, or otherwise restricted information 8
Percent of All Traction Drive Inverters Installed by OEMs In xevs, By Location of Inverter Supplier s HQ: 2010-2014 China Korea USA Taiwan Canada England Germany Canada [0.2%] China [1.3%] England [near 0%] Germany [5.2%] Japan [87.1%] Korea [3.4%] Japan Taiwan [<0.01 %] USA [2.8%] SYNTHESIS PARTNERS Source: SP Global xev Database (Sept. 2014). 9
Ranking of Traction Drive Inverter Suppliers, Based on OEM Inverter Installations in xevs Sold Globally and Produced Globally, CY 2013 Traction Drive Inverter Supplier Location of Supplier's HQ Percentage of Global xevs Produced with Supplier s Inverter Toyota Japan 35.10% Denso Japan 21.90% Mitsubishi Japan 11.80% Toshiba Japan 5.70% International Rectifier (since acquired by, Infineon) USA 5.20% Hyundai Mobis Korea 4.40% Hitachi Japan 4.40% Continental Germany 3.30% Bosch Germany 1.80% Meidensha Japan 1.50% Calsonic Kansei Japan 1.10% Keihin Japan 0.70% Renault/Nissan Japan 0.70% Edrive China 0.70% Siemens Germany 0.40% Dajun China 0.30% BYD China 0.20% Zhongke Shenjiang China 0.20% Weiteli China 0.20% Unite China 0.10% Magna Canada 0.10% General Motors USA 0.10% Tesla Motors USA 0.10% LSIS Korea 0.10% Honda Japan 0.00% Delta Taiwan 0.00% Delphi USA 0.00% Nanche China 0.00% SYNTHESIS PARTNERS Source: SP Global xev Database (Sept. 2014). 10
Ranking of Traction Drive Inverter Suppliers, Based on OEM Inverter Installations in xevs Sold in the US and Produced in NA Plants, CY 2013 Traction Drive Inverter Supplier Location of Supplier's HQ Percentage of xevs Sold in US with Supplier s Inverter Percentage of xevs Produced in NA Plants with Supplier s Inverter Toshiba Japan 8.40% 34.80% Hitachi Japan 4.80% 26.60% Denso Japan 12.80% 25.10% Keihin Japan 0.90% 4.60% Renault/Nissan Japan 2.30% 3.00% Toyota Japan 20.70% 2.70% Bosch Germany 0.70% 1.20% Mitsubishi Japan 1.10% 0.90% Magna Canada 0.20% 0.60% Tesla Motors USA 1.80% 0.50% Hyundai Mobis Korea 3.50% 0.00% Continental Germany 0.40% 0.00% Meidensha Japan 0.10% 0.00% General Motors USA 0.10% 0.00% SYNTHESIS PARTNERS Source: SP Global xev Database (Sept. 2014). 11
Percent of All Traction Drive Motors, Installed by OEMs in xevs Sold Globally and Produced Globally, By Location of Motor Supplier s HQ: 2010-2014 China Canada England USA Korea Germany Canada [<0.3%] China [1%] England [<0.1%] Germany [6%] Japan [87%] Japan Korea [3%] USA [1%] SYNTHESIS PARTNERS Source: SP Global xev Database (Sept. 2014). 12
Distribution of Distribu Total on of Company Total Cost-Share Investments Investments Directly Related Directly Related to ARRA to and and DOE Funding, DOE Funding, By Company Type: 2010-2016 By Company Type: 2010-2016 (incl. estimates) Tier 2-3 12% Other 0% OEM 6% OEM Tier 1 Tier 2-3 Tier 1 82% Other Total: $161.52M (Not inflation adjusted.) SYNTHESIS PARTNERS Source: SP Global xev Database (Sept. 2014). 13
Distribution of Total Company Investments Not Directly Distribu on of Total Company Investments Related to ARRA Not Directly and Related DOE to ARRA Funding, and DOE By Company By Company Type: 2010-2016 Type: 2010-2016 (incl. estimates) Other 0% Tier 2-3 ~1% OEM 40% OEM Tier 1 Tier 1 60% Tier 2-3 Other Total: $2,492.62M (Not inflation adjusted.) SYNTHESIS PARTNERS Source: SP Global xev Database (Sept. 2014). 14
Comparison Comparison of of Domes Domestic c vs. Transplant vs. Total Transplant NA PE Company Investments, Total NA PE Company Investments, By Total Iden By fied*, Total By Year Investments Identified*, By Year (incl. estimates) $ Millions (not adjusted for infla on) 450 400 419.33 416.83 396.83 350 300 294.92 250 203.75 206.24 254.98 210.45 204.52 Transplants 200 150 Domes cs 100 50 40 0 4.52 1.77 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Synthesis Partners, LLC (2014) * Investments include both ARRA/DOE-related company cost share and non-arra/doe company investments, with estimates for 2015 and 2016. This data covers aggregate NA investments by the core NA PE companies, and does not identify the level of investment in traction drive PE activity specifically. Estimates for part of 2014 and through 2016. SYNTHESIS PARTNERS Source: SP Global xev Database (Sept. 2014). 15
Topics for Discussion Based on this Ongoing NA PE and Motors Supply Chain Analysis Nothing stated herein is an official viewpoint of the US Department of Energy or any other official US government entity. This slide does not contain any proprietary, confidential, or otherwise restricted information 16
Topics for Discussion (1) Analysis regarding DOE-Vehicle Technologies Office (VTO) option space, given analysis of market data and 130+ indepth interviews regarding supply chain gaps and constraints shows: Most important constraints (available separately from SP) are driving the market responses to any new technology adoption or transition, and thus are critical drivers of VTO technology transition success; Most important constraints have the least adequate solution-sets provided by sources, and are likely to be a permanent fixture for VTO planners; and It is highly recommended that VTO seek approaches to constraint proof any gap-filling plans and investments (easier said than done). Practically speaking: How will a new NA investment plan survive the constraint test? This slide does not contain any proprietary, confidential, or otherwise restricted information 17
Topics for Discussion (2) Current awareness about the most important gaps (available from SP separately) provide a data-driven basis for: Recurring roundtables to address: What might be done to fill a gap; How, When, Why and by Whom? Working with new partners, particularly those with a lot of skin in the game. Opportunity to evaluate the likelihood that a VTO R&D effort will transition, based on constraint-proofing and gap-relevance testing. We are at a threshold re: NA PE and motors supply development because we clearly see gaps, constraints and solution specifics, meaning: We see strong interest by NA domestic and transplant sources to engage in specific ways on addressing gaps. Opportunity to leverage quantified data in a measurable way, including by VTO regarding executing solutions to specific gaps. Significant and growing understanding about partners ideas, interests and objectives with regard to future work that might catalyze the NA PE and motors supply chain. This slide does not contain any proprietary, confidential, or otherwise restricted information 18
Thank you. We look forward to answering your questions. Steven Boyd Vehicle Technologies Office, U.S. Department of Energy, Washington, DC Chris Whaling Synthesis Partners, LLC, Reston, VA 19
APEC 2015 Appendix Additional North American Power Electronics and Motors Supply Chain Rankings and Results Please contact: Chris Whaling Synthesis Partners, LLC 11250 Roger Bacon Drive, Suite 2, Reston, VA 20190 E: cwhaling@synthesispartners.com SYNTHESIS PARTNERS, LLC