Presentation: The Automotive Market & Composite Material Outlook Presented by: Marc Benevento, Industrial Market Insight

2015 Industrial Market Insight LLC. All Rights Reserved. Outline Ground Transportation Segments Light Vehicle Industry Drivers and Trends Automotive Material and Adhesive Trends Opportunities and Barriers for Composites Growing Composites and Adhesives

2015 Industrial Market Insight LLC. All Rights Reserved. 6 Light Vehicle vs Heavy Truck Consumer Product Industrial Asset Production Volume High ~70,000 Low ~10,000 Customer Consumer Companies Cycle time Short Long Materials of construction Body: Steel Cab: Composite, Al, steel Frame: Steel

2015 Industrial Market Insight LLC. All Rights Reserved. Light Vehicle Trends & Implications Trends Implications Global designs, local production Auto/Electronic Convergence Increasing regulatory hurdles Sustainable manufacturing Suppliers with global capabilities Ability to provide material properties and predict static and dynamic performance Efficient powertrain and lightweight materials Low lifetime environmental footprint Changing user needs and priorities

2015 Industrial Market Insight LLC. All Rights Reserved. Emissions Regulations EPA Fuel Economy Sticker Improvements for Light Vehicles Proposed Fuel Economy Improvements in Tractor-Trailers Car Tractors Pickup Trailers Source: US EPA, NHSTA Improvements in Powertrain, Aerodynamics, Rolling Resistance, and Weight will be required

2015 Industrial Market Insight LLC. All Rights Reserved. Conflicting Regulatory & Consumer Demands Comfort, Convenience, Capability Handling & Performance Safety Fuel Economy Trend Larger vehicles, more features & electronics Faster, sportier. Stiffer, more power/weight More energy absorbing capabilities Lighter, more efficient (34.1 MPG 54.3 MPG) Impact to vehicle weight

Light Vehicle Architecture Unibody Body-on-Frame http://flickr.com/photos/jrok/265838085/

Automotive Lightweight Material Options Source: ASC Grow the Vertical Report (Ground Transportation), Ducker Worldwide ASC Whitepaper: Adhesive Opportunities & Outlook in Light Vehicles

2015 Industrial Market Insight LLC. All Rights Reserved. Body Material Trends Mild steel losing share HSS gaining favor Aluminum making inroads Industrial Market Insight Analysis based on sampling of passenger cars as reported by OEM ASC Whitepaper: Adhesive Opportunities & Outlook in Light Vehicles

BMW i3 Production volume: Retail price: 30,000 units $45,000 USD Photo: BMW

Multi-Material Construction: BMW 7 Series Production volume: Retail price: 60,000 units $90,000 120,000 USD 145m of adhesives Photo: BMW

17 Benefits of Adhesives Adhesives help manufacturers: Build structures that are stronger, stiffer, lighter and better performing Make products quieter and more comfortable Solve difficult joining problems Source: General Motors

Weld Bonding 88 m of weld bonding in total 50% increase in torsional rigidity 6% lower mass than benchmark Carryover from prior model New Source: Steel Market Development Institute Great Designs in Steel

21 Shock tower Al casting replaces multi-piece stamped assembly Adhesive reduces stress on fastener and improves fatigue life Source: Steel Market Development Institute Great Designs in Steel Adhesive prevents galvanic corrosion in mixed material assembly

Source: Dow Automotive 22

Recent Composite Applications Lexus LC 500 Lexus LC 500 Acura NSX Source: Lexus Acura NSX Source: Honda Motor Co. Honda Ridgeline Honda Ridgeline BMW 7 Series Source: Industrial Market Insight BMW 7-Series Source: BMW 23

24 Lexus LC 500 Lexus LC 500 Steel unibody Al panels, bumper beam, shock towers CFRP roof, inner panels SMC decklid Source: Lexus

25 Acura NSX Acura NSX Source: Honda Motor Co. Aluminum spaceframe, hood, roof, door outer CRFP floor SMC fenders

26 BMW 7 Series BMW 7 Series

27 Challenge Delta Alpha Source: Sika

28 Mixed Material Bonding Technology Comparison Source: Sika

29 Honda Ridgeline Source: Honda

Metal bed Composite bed Production volume Tooling amortization Cycle time Other concerns Recycle / end-of-life Durability Value chain considerations 30

31 Weight Drivers Performance Fuel economy Barriers Design / simulation Cycle time Low tooling cost Part consolidation opportunities Corrosion resistance Cost (carbon fiber, infrastructure) Paint / Appearance Non-destructive evaluation Recycle / End-of-life Joining

32 Opportunities for Collaboration Potential for collaboration to address barriers facing both industries Design practices Simulation Non-destructive testing End-of-life

2015 Industrial Market Insight LLC. All Rights Reserved. Convergence of Trends Over Time Human Driving Assisted Driving Collision Free Autonomous Driving Mild steel HSS Multi-Metal Multi-Material Ultra-light composite Low VOC Coating Reduction Temp Reduction Paint free Past Now Next Future time Long-term trends favor increased composite use

34 In Conclusion Light vehicle represents a large (still) untapped market for composites Market forces and long-term trends favoring increased adoption of composites Potential to address challenges jointly to reduce risk and accelerate progress