Strategic Assessment of Passenger Electric Vehicle Market: Can EVs revive the auto industry?

Benny Daniel, Consultant Automotive & Transportation January 29, 2009

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to have high impact if successful Swap Stations Opportunities Low Medium High Frost & Sullivan Support Capabilities 2 . hospita ls • Wire and Cable Bas ic M aterials • Ele ctronics •Li-ion. r isks an d po tent ial rew ard s a re h igh . Diversified •Gara ges a nd service stations •Cha rging Stations •Parking Stations •Battery Swapping •Recycling New Business Models Voice of Customer Study. ho pin g for some to tur n ou t as su cce ssfu l bl ockb uster g ene rati ng hi gh r etur ns. homes.To be resilient before it makes profits Utilities Potential to generate revenue Battery Rejuvenation Fle et Businesses Leasing Bus ine sses Financial Medium Re cycli ng Servic e/ De alership Coach Bui lde rs Tele ma tic s Ma rketi ng Ins urance Low Tele com Innovative model but due to demographics it requires good EV penetration and customer utilization.FOCUS POINTS Unit Shipments (Thousands) 300 250 2565 200 150 1 00 630 1 60 2005 260 2006 2007 2008 100 50 0 2004 Market Overview and Forecasts EV Infrastructure Analysis 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 INDENTIFICATION OF ALTERNATE AND UNIQUE BUSINESS MODELS TO SUPPORT EV INFRASTRUCTURE *In du str ie s: Ide nti fied and se lected based on d efin iti on e xisti ng i n eq ui ty tra de mark ets **Sp end in g la rge a mou nts of mo ney i n o wn R&D. Copper and other battery packaging mtls. Insurance • Venture Capital Cons umer • Green Collared Jobs EV Industrial • Material Mining • Buildings. strategise to partner with OEMs New business opportunities for Utilities and Innovative financialleasing firms.Customer Feedback on EV High Potential for businesses to enter EV market with relatively low investment. Utilities •P ower Generation Co. •P artnership with Re newable Energy Providers •Energy Storage Governmen t •Carbon Trading •Tax Incentive s Technology •Smart Card •Te lematics •Mobile Se rvice Providers Financial • Banks. to find man y of the proje ct s i n dead -e nds. The mode l i s com mon ly u se d in in dustr ies wh ere deve lop men t co st s.

could be higher if states are allowed to set higher emission standards incentives and subsidies for EVs . no major safety issues. • Industry • High • Technological • Growth Source: Frost & Sullivan 500. moderate reduction in Li-Ion battery cost (no more than 33% reduction in 5 years 2010-2015). continuation of federal government incentives for EVs and expansion of state/city incentives. 2008-2015 800.Scenario Analysis – 700K Annual Sales Potential by 2015 in NA Regulations.500 for Chevy Volt. no battery supply constraints.000 3 . continuation of federal government incentives for EVs. no battery supply constraints.000 600. significant Li-Ion battery cost reduction (at least 50% reduction in 5 years .35 fleet mpg by 2020.$7. significant growth in charging and battery swap infrastructure. Frost & Sullivan Scenario: Relatively moderate fuel prices (averaging well below under $150/barrel). exemption from emission certification by some states. favorable field experience and no major safety issues. Loan Programs and Li-Ion Technology Advancement are Primary Drivers Electric Vehicle Market: Scenario Analysis (North America). free parking for EVs by many cities.000 700.000 300.000 200. slow growth in charging and battery swap infrastructure.000 Unit Shipment 400.000 100.2010-2015).000 0 2008 2009 2010 Optimistic 2011 2012 2013 2014 2015 Frost & Sullivan Cons ervative Key Drivers • CAFE regulations . HOV lane driving exemption for EVs with a single occupant aggressively pursuing HEV and EV strategy to secure $25B federal auto retooling loans and $17B+ TARP loans energy security concerns and energy independence goal of the Obama administration innovation and economies of scale have driven significant reduction in Li-Ion batteries in charging infrastructure and new business opportunities • Government Optimistic Scenario: Relatively high fuel prices (averaging well-over $150/barrel). Incentives.

Identical in all 3 scenarios OPTIMISTIC SCENARIO .2015 Start-Up OEs 21 % 8% 2% 7% 11% 8% 4% 7% 31% Volumes by Small OEMs.2015 16 % 6% 3% 9% 9% 9% 4% 10% 34% Start-up OE's BMW Honda Toyota Mitsubishi Daimler VW PSA Renault Nissan BMW Honda Toyota Mitsubishi Daimler VW PSA Renault Nissan Source: Frost & Sullivan 4 Volumes doubling due to early market entrants . 2007-2015 700000 600000 Un it S h ipm en ts 500000 400000 300000 200000 100000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 Optimistic Conservative Frost & Sullivan F&S SCENARIO .Scenario Analysis .Market Entry Strategies of Top OEMs and Change in Congestion Charging Schemes Are the Top Influences Electric Vehicle Market: Scenario Analysis (Europe).

Up to 70 kW Infrastr ucture Slow charging .onboard Fast charging – mostly off board Battery Swapping 2005 2010 2015 . But All Fast Recharging to Be Made Off-board Lead acid Advanced Lead acid Nickel Metal Hydride Sodium Nickel Chloride Phosphate based Manganese based Titanate based Silica based Zinc Air Permanent Magnet Asynchronous Switch Reluctance In wheel motors Driving Distance/chargeup to 60 kms Batteries Lithium Ion Electric Motors Performance Up to 200 kms < 1 hour Up to 50 kWh 300 + kms < 15 minutes 75 kWh + 70 kW – 250 kW Source: Frost & Sullivan 5 Charge Time – 6 to 8 hrs Battery Capacity – up to 16kWh Motor Power.EV Technology and Product Roadmap.Charging Times to Drop From 6-8 Hours to <15 Minutes By 2015.

Scandinavia. Scandinavian regions Cities + Sub-urban Drivers: • Competition will see EV manufacturers increase distance. European Markets As EV Range Extends to Reach Suburban and Adjacent Cities Electric Vehicle Market: Range and spread of Electric Vehicles (Europe).Number Of Potential Customers* To Increase 5 Fold Post 2015 Across Prime W. Switzerland Drivers: • 150 + Miles to be standard with high technology batteries offering stronger storage capacity • Environmental concerns to yield high adoption rate among potential customers + + Cities + Sub-urban + Rural 100 Miles 201 1- 201 5 Potential Customers = ~876K Key Markets = . 2007-2015 +150 Miles Potential Customer = ~ 3. speed and charging time configuration • Consumers to increasingly use EVs to commute from home (suburban) to work (urban) + 20 09 -2 01 0 50 Miles 04 20 08 -20 Potential Customers = ~ 686K Key Markets = Cities Drivers : • EV’s limiting range restrict application to cities 50 Miles 100 Miles +150 Miles Source: Frost & Sullivan 6 *Potential Customer Customers “Very likely” to purchase EV with present specifications . •Likely purchase to actual adoption rate would depend on individual market developments .42Mn Key Markets = .

Charging station network is a government initiative PLANNED BY 2010 Others Switzerland 80 200 30 Others • Charging Stations = 100 (40+in London) • Key Players = Government. EDF partnership with Renault & PSA to build charging stations •Charging Stations = 1300 target for 2011 •Key Players = Govt. VW & E-ON 2. Dong Energy UK 250 Italy Germany 90 47 15 Lyon Strasbourg 500 200 200 20 •Charging Stations = 60 •Key Players = VM’s. London and Norway • Pioneering efforts from relevant industries could facilitate faster expansion of infrastructure 7 . Daimler & RWE •Charging Stations = 20 (400 planned) •Key Players = Daimler. EDF has partnered with Elektromotive to build 250 stations in London Austria 150 193 France 425 Paris 50 Norway 400 120 Bordeaux •Charging Stations = 200 (100 + in Paris & Suburbs) •Key Players = EDF. Elektromotiv • Highlights 1.At least 13 Congestion Charging Cities to Be In Operation In Europe By 2013. Govt allocated €400M to develop charging network 2. Govt invested £ 90Mn to make Britain the “Capital of Electric Vehicles” 2. Utilities •Highlights 1. Nissan 100 60 •Denmark •Charging Stations= 20K plan •Key Players = Better Place. All Key Cities Have Good EV Potential •Future Schemes at proposal stage. ENEL •Synergies and initiatives from several industries will see the penetration rate of charging station increase dramatically •The above forecast could prove conservative Source: Frost & Sullivan • Strong correlation exists between regional markets adoption of congestion charging (and other green initiatives) and uptake of charging stations. 2008-2015 •Schemes with future potential. VM’s •Highlights 1. beyond 2013 •Existing schemes •Charging Stations = 50 (400 planed) •Key Players = Govt •Highlights 1.g. EDF. Govt. e.

Shift From “Dumb Grid” to “Smart Grid” Will Support the Development of EV Infrastructure T op Tim eF ics Utility Power Generation Infrastructure Conventional Grid and Infrastructure Power Station Implications on Utilities EV Support Capability ROI Opportunities ram e Office Building Houses Factory • Centralised power stations • Centralised power generation resulting in substantial power and transmission losses Pre 2008 • Limited to grid and utility industry Transformation of` Conventional Grid Energy Internet 80 % developmen t Smart Grid Control Centre Hospital Solar Power Wind Power Energy Storage • Decentralized • Generating facilities – wind. hospitals selling excess energy back to grid • EV as generators when not in use • Increased efficiencies 40 % developmen t Own Generation Smart House with EV car generator Low High UTILITY • Consumers – Utility Bills • Partnership with renewable energy generators • Charging Stations • Parking Space • Govt .Swapping 2008 .Carbon Trading • Venture Capital • Garage and Stores Support EXTERNAL • Battery Manufacturers • Telecom Providers • Smart Card • Banks. insurance etc.2015 8 . • Green Collared Jobs • Recycling • Battery Servicing . solar • Offices.

risks and potential rewards are high. Utilities • Power Generation Co. The model is commonly used in industries where development costs. hospitals • Wire and Cable Basic Materials • Electronics • Li-ion.Innovative Business Opportunities Arise from Partnership Formed Between Diverse Industries in Order to Expand Infrastructure in Time for the EV Boom Identification Of Alternate And Unique Business Models To Support EV Infrastructure *Industries: Identified and selected based on definition existing in equity trade markets **Spending large amounts of money in own R&D. homes. • Partnership with Renewable Energy Providers • Energy Storage Government • Carbon Trading • Tax Incentives Technology • Smart Card • Telematics • Mobile Service Providers Financial • Banks. Copper and other battery packaging mtls. to find many of the projects in dead-ends. Insurance • Venture Capital Consumer • Green Collared Jobs EV BLOCK BUSTER BUSINESS MODEL** New Business Models that will address additional Electric Vehicle (EV) energy requirements will be formed at the intersection of several diverse and cross functional industries Source: Frost & Sullivan 9 Industrial • Material Mining • Buildings. Diversified • Garages and service stations • Charging Stations • Parking Stations • Battery Swapping • Recycling . hoping for some to turn out as successful blockbuster generating high returns.

000km/year 7 years Free car ~ $1.$1.200. The Rest 25% Sold Traditionally Business Model 1 TYPE COVER Energy Package Battery lease + Electricity Monthly Bill NA NA Up to $200 Business Model 2 Maintenance Package Energy Package+ Insurance+ Maintenance Flat: Max 2000km/month NA NA Up to $400 Business Model 3 Part Subsidy Maintenance Package+ Discount Flat: 25.$2. The leasing model might possibly be the main driver of how vehicles will be sold in the future. The immense engineering behind the batteries will only increase the cost and the performance.000km/year 4 years 50% car price $700. A strong option to amortize this is through the leasing models. 10 .000 Business Model 4 Full Subsidy Maintenance Package+ 100% Discount Flat: 30.Battery Leasing Best Returns: Future Leasing Models To Sell 75% Of EVs. • Reduction of the product cost is to promote market penetration. In the same direction the future belongs to several ways of separating the energy from the battery.000 ENERGY CONTRACT SUBSIDY MONTHLY LEASE Future • Leasing EV batteries will be the likely option to continue beyond 2020.

their Suggestions and Opinion on Incremental Improvements in EV are of High Interest to OEMs Electric Vehicle Market : Ideal Characteristics of an EV consumer (United Kingdom).100 miles or more DEMOGRAPHICS • Male/female falling under the age group of 26-45 yrs • Has a university degree • Earning between $30K . 2008 OWNERSHIP & MAIN USAGE • Driving the vehicle to work is his main priority • ~40% of the market • Av miles per trip – 16 (London). provision of fast charger kits and maintenance free motors were features that consumers would consider to boost chances of EV purchase SUGGESTIONS ON EV IMPROVEMENT • Reliability and after-sales service • Latest battery to aid in greater distance travelled • Improved and increased access to charging stations • Improved interior designs for greater experience • Navigation tools to improve access to POII* Source: Frost & Sullivan 11 .$655K • Resides in London / Greater London • Flat /semi-detached house residence FEEDBACK ON LEASING BATTERIES • Prefer to lease battery than source it directly from manufacturer • Efforts to dispose and effect on environment key reasons Male/Female (26-45 yrs) MOTIVATING FACTORS • Contribution to environment • Reduced fuel cost • Savings on tax and other Govt subsidies • Free from congestion charging • Compact and ease in parking NEEDS • Reliability.While Customer Awareness of EV Limitations are High. price and fuel economy were the most important issues considered while purchasing EV • Improved charging capability. parking duration 7 hours • 60% of these commuters do inner city commute • Shopping during weekends. • Differentiate between weekday and weekend usage – • average only twice a month .

to have high impact if successful Swap Stations Low Medium Effort required to develop EV business High : Size of the bubble represents the impact on EV market Source: Frost & Sullivan 12 .Electric Vehicle Market to Create Opportunities and Attractiveness for Industries such as Telematics.Opportunity assessment for various businesses. 2012-2015 High Potential for businesses to enter EV market with relatively low investment. Mobile Phones. strategise to partner with OEMs New business opportunities for Utilities and Innovative financialleasing firms. Fleet Businesses Electric Vehicle Market.To be resilient before it makes profits Utilities Potential to generate revenue Battery Rejuvenation Fleet Businesses Leasing Businesses Financial Medium Recycling Service/ Dealership Coach Builders Telematics Marketing Insurance Low Telecom Innovative model but due to demographics it requires good EV penetration and customer utilization.

2009 Strategic Analysis of the Fleet Market Opportunity for Electric Vehicles in Europe – Q2. Environment 1. 2009 VOC Study on EVs – Customers Interest in Electric Vehicles and Acceptability to New Business Models The Generation Y Consumer : Future Vehicle and Features Choice and Brand Marketing Positioning Study – Consumer Study to have section on EVs – Q2. 2009 North American Market for Electric Vehicles for Fleets and Private Consumer – Q2. 2009 Analysis of Electric Vehicles Infrastructure for Automotive Applications in Europe and Revenue Generation Opportunities for Utilities – Q1. Titles for second half of 2009 are still to be confirmed. 7. 2. 2009 VOC Study on Sustainability and Alternate-Fuel Vehicles and Technologies in USA Strategic Profile and Business Model Assessment of (Project) Better Place – Q3. 10. and Alternate Power-trains . 2009 Asia Pacific Market Analysis for Electric Vehicles for Fleets and Private Consumer – Q1.May 2008 Published Research Strategic Analysis of European Market for Electric Corner Modules . Suggestions are welcome . 4.Jun 2008 Advances in Hybrid Electric Vehicles (Technical Insights) Global Market Analysis of Plug in Hybrid Electric Vehicles Dec 2007 European Consumers’ Attitudes & Perceptions Towards Sustainability. 2009 Analysis of Hybrid Vehicle Systems and Technologies in North America – Q2.Includes Vehicles Strategic Review of New EV Businesssection Modelson in Electric the Automotive Industry – Q1.Aug 2008 World Hybrid/Electric Vehicle Battery Markets -Jun 2008 Strategic Analysis of In Car Green Technologies .Our EV Global Research Program Strategic Assessment of European Passenger Electric Vehicles Market . 8.Oct 08 Strategic Analysis of Global Market for Fuel Cell Electric Vehicles . 5. 9. Note : new titles and schedule is subject to change and is not guaranteed. 09 13 In Process Research 3. 6.

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