Electromobility Regulations, Vehicles, and Markets Mainz, 30 January 2 February 2017
Roland Berger 2 Contents Page A. Current xev market and forecast: 3 Sales of BEVs and PHEVs reached almost 700,000 units by Nov 2016 China will become largest global market by 2020 and drives domestic market aggressively B. Lithium-Ion battery market and supply structure: 11 Automotive LiB market increased with almost 80% y-o-y since 2011 Supply market will further consolidate, with overcapacity also for next years C. Implications: 15 Automotive OEMs need to ensure they are "ready" for emobility This document shall be treated as confidential. It has been compiled for the exclusive, internal use by our client and is not complete without the underlying detail analyses and the oral presentation. It may not be passed on and/or may not be made available to third parties without prior written consent from.
SourcePress Research; Roland Berger 3 A xev market Till November 2016 global BEV and PHEV sales totaled to around 690,000 units, about 60% thereof being BEVs Global passenger cars BEV/PHEV sales volume [000 units] 688 530 298 323 433 BEV 4 1 3 55 45 9 122 67 55 209 119 90 181 117 207 254 PHEV 2010 2011 Note: China/Japan sales data includes only domestically produced xevs 2012 2013 2014 2015 2016 Jan-Nov.
Source: Press Research; Roland Berger 4 A xev market In Japan/Korea and China is BEV technology preferred, while in EU and USA PHEV/EV sales are equally distributed Global passenger cars xev sales volume by region, Jan-Nov 2016 [000 units] 189 133 304 24 37 RoW 50% 53% 74% 78% 50% 47% 26% 22% BEV PHEV 1) China/Japan sales data includes only domestically produced xevs
Source: Press Research; Roland Berger 5 A xev market In 2016, Nissan Leaf was the best-selling BEV model globally, BYD Tang the bestselling PHEV Best-selling BEVs and PHEVs globally (Jan-Nov. 2016, thsd. units) BEV Total: 433 PHEV Total: 254 Nissan Leaf 46.8 BYD Tang 29.9 Tesla Model S 43.3 Mitsubishi Outlander 24.5 BMW i3 1) 22.8 Chevrolet Volt 2) 24.3 Renault Zoe 19.0 BYD Qin 21.0 BAIC E-Series EV 18.6 1) incl. REEV 2) incl Chevrolet Volt I and II, Holden Volt, Opel and Vauxhall Ampera
Source: Press Research; Roland Berger 6 A xev market In China, with central and local governments' favored policy, Chinese OEMs are dominating both the BEV as well as the PHEV market Best-selling BEVs 1) and PHEVs in China (Jan-Nov. 2016, thsd. units) BEV Total: 226 PHEV Total: 83,7 BAIC E-Series EV 18.6 BYD Tang 29.9 BAIC EU260 18.5 BYD Qin 21.0 BYD e6 18.1 SAIC Roewe 550 14.5 Zotye Cloud EV 14.8 Chery eq 14.1 1) Excluding microcars (e.g. ZD D1)
A xev market China announced ambitious EV/PHEV plans and pushes for domestic EV and cell manufacturing Current activities in China Target sales of EV/PHEV [% of total sales] Core activities EV/PHEV vehicle park [m vehicles] 0.5 >5 >20 >80 40-50.0% 15-20.0% 7-10.0% 1.5% > Subsidies Direct EV subsidies Vehicle registration process > Push domestic EV/PHEV vehicles OEM specific CO2e targets Likely add. OEM specific NEV targets 1) > Drive domestic battery cell production White list of battery cell supplier whose cells are eligible for NEV subsidies currently exclude Korean cell manufacturer Very likely Korean cell manufacturer will be added within 6-12 months 2015 2020 2025 2030 1) Currently under discussion, decision expected in 2017 Source: MIIT; Roland Berger 7
Source: Press research; ICCT; Roland Berger 8 A xev market Emission regulations force automotive OEMs to introduce an increasing share of xevs from 2020 onwards in major regions changes in US regulations likely Passenger car GHG emissions/fuel consumption [g/km] and toxic emission regulations GHG emissions/fuel consumption (CO 2 ) Toxic emissions (NO x, PM, HC, ) > CO 2 emissions target 1) 127-25% 95 68-78 > CAFE 2) > Additional ZEV regulation CARB 159-21% 125? 97 > Fuel efficiency targets 3) 121-5% 115 > CAFC 4) (ph. IV) > Add. potential fleet xev target share 171-32% 117 95 2014: Euro 6b 2017: Euro 6c w/ RDE, additionally WLTP 2015: CARB LEV III 2017: EPA Tier 3 Standards (Likely to be postponed ) 2009: Post new long-term JC08 mode cycle 2018: Post-PNLT (PPNLT) tbd tbd 2016: China 5 and Beijing 5 '13 '21 '25 '13 '20 '25 '12 '20 '25 '13 '20 '25 1) Weight-based corporate average 2) Footprint-based corporate average; converted to NEDC 3) Weight-class based corporate average; showing JC08 4) Weight-class based per vehicle and corporate average
Source: Roland Berger 9 A xev market Global PHEV/BEV sales will increase from 0.7 m units (2016) to 12.8 m units in 2025 China becomes the largest market PHEV/BEV market forecast by region, 2016-2025 [000 units] For 2025 7.6 m BEV and 5.2 m PHEV sales forecasted 5,400 RoW 4,000 2,750 189 94 95 BEV 1,480 759 721 PHEV 2,500 1,500 133 62 71 390 330 60 1,480 680 800 304 226 78 2,200 1,200 1,000 2,650 24 5 18 130 15 115 '16 1) '20 '25e '16 1) '20 '25e '16 1) '20 '25e '16 1) '20 '25e '16 1) '20 '25e 1) January - November 2016 575 75 500 37 14 23 410 360 50 1,340 1,100 240
Source: Roland Berger BEV PHEV BEV PHEV BEV PHEV 10 A xev market The xev share in all major markets will grow significantly after 2020 High uncertainty about long term regulation requires scenarios Powertrain split, 2025 [% of sales] North America Europe China High xev scenario ICE 1) 12% 14% 73% ICE 1) 15% 9% 76% 10% 8% ICE 1) 82% Baseline scenario 93% 4% 10% 6% 85% 7% 8% 85% 3% Low xev scenario 0% 1% 99% 5% 6% 88% 7% 5% 89% Current (2016) 0% 1% 99% 1% 1% 99% 1% 1% 98% RB preferred scenario 1) Including full, mild and micro hybrid vehicles
Source: Roland Berger 11 B LiB supply chain Samsung SDI and LG Chem dominate the non-captive market for Automotive Lithium-Ion cells, which has grown by nearly 90% y.o.y. xev LiB supply by cell manufacturer 2011-2016 [GWh p.a.] 87% CAGR 16.1 0.6 0.9 0.2 2.2 0.4 0.8 0.1 0.4 0.7 0.1 5.0 0.2 2.0 0.8 1.3 5.8 0.9 0.6 0.5 1.4 0.4 2.0 11.3 2.8 1.1 0.7 1.2 1.4 4.0 3.8 2.0 0.8 2.9 6.6 Other, incl. ATL/ CATL, SK, Lishen LG Chem Samsung SDI AESC: Captive supply to Renault-Nissan BYD: Captive supply, also includes major ESS 1) business Panasonic / Sanyo: mostly supply to TESLA 2011 2012 2013 2014 2015 2016 1) (Stationary) Energy Storage Systems
B LiB supply chain Whilst market outside China is heavily dominated by Panasonic, LGC and SDI, Chinese market highly requires local tier 1 cell supply Automotive xev global market share 2018 1) Projected global market share, 2018 2) 3) 33% Mid-term outlook Highly dependent on TESLA, since discussion with other OEMs have not been successful as of today (no major contracts), lost some orders to Samsung SDI for Tesla ESS solutions 18% Aggressively moving in end markets such as ESS and Industrial forklifts, captive supply 4) 6% 9% 17% Aggressive growth plans with significant win of contracts in the past additionally majority of AESC supply for Nissan was shifted to LG Chem Strategic take-over of Magna Steyr battery systems seems to pay of as future Land Rover ipace likely to be equipped with a Samsung SDI battery pack. Additionally refreshment of BMW i3 battery pack and future xev releases by VW and BMW will boost sales again Strong market position in China for supply of local OEMs (e.g. BAIC) as well as JV-OEMs (e.g. BMW-Brilliance X1 PHEV) and currently large capacity expansion in China 5% Increase market share due to strong focus on supply of Chinese OEMs, esp. Zyote and SAIC, but from technological perspective likely not as strong as CATL and Lishen Other relevant players (<5%) SK with recent orders will gain market share 1) Only supplier for automotive LiB cells Calculation based on sales forecast with acc. battery pack capacities 2) Based on projected market share in GWh 3) Including Primearth's market share 4) Assuming LG Chem will take over most of AESC market shares Source: Roland Berger 12
Source: Roland Berger 13 B LiB supply chain While there is a continued growth of LiB demand with approx. 35% p.a. until 2025, capacity expansion plans may result in overcapacity in 2020 timeframe Automotive LiB demand 1) Capacity forecast [GWh p.a.] 419??? 73 14 10 4 2015 114 21 92 2020e 60 346 2025e 180 53 2015 291 2020e 2025e 2020 capacity expansion plans exceed >200% of demand! PHEV BEV thereof China 1) BEV and PHEV demand only
Source: Roland Berger 14 B LiB supply chain Capacity increase has strong consequences on price level, supply risk and supply structure Implications on Automotive LiB supply chain 1 2 3 Pressure on cell prices will continue, together with the already clear advancements in volumetric energy density this can lead to significant further cost reductions well below currently expected 150 EUR / kwh on pack level in 2020. At the same time, supply risks, especially for battery grade Graphite and Cobalt increase significantly. In 2020, Automotive cell supply will most likely be dominated some large players who can afford the necessary investments in capacity expansion and research on new cell generations: LG, Samsung SDI, Panasonic and CATL as well as captive player BYD. Others (SK, GS Yuasa, ) heavily impacted by ability to invest in necessary R&D and process innovation. 4 Post 2020, Chinese based battery cell manufacturer may become even more dominant, if current ramp-up of domestic industry in China continues
Source: Roland Berger 15 C Implications Automotive OEMs need to ensure they are "ready" for emobility Five action areas for Automotive OEMs 1 2 3 Supply chain strategy incl. raw material risk management, e.g. through off-take agreements with mining companies Clear strategy regarding cell formats (pouch vs. prismatic) a perspective taking into account optimized module designs is necessary Converged connectivity strategy to ensure optimized operating strategies for the electric vehicle and a superior user experience 4 Cross-OEM cooperation to ensure availability of interoperable charging infrastructure: private, destination, metropolitan and highway charging needed esp. for Europe and China 5 Revised Core-/Non-Core-strategy to cope with other technological challenges ahead at same time.