E-mobility

y opportunities & challenges

g
1st Green Manufacturing Summit – Sectoral Case Automotive

New Dehli, 18 March, 2011

Electricity has a long history in car technology

La Jamais Contente, 1899

2 1
Full EV
Toyota
Range extend.
GM (Opel) 4 1 Ampera
Plug-in hybrid
VW (incl. Audi) 5 1 1 E-tron spyder
Hybrid
Ford 2 1 C-Max PHEV ICE
Hyundai 3 1 BlueOn

PSA 4 2 3 iOn, EX1, Survolt

Honda 1 1 3-RC

Nissan 2 2

Fiat 1

Suzuki 1
Fluence ZE, Kangoo
g ZE, Twizy
y
Renaultl
R 3 4
ZE, DeZir ZE
Daimler 5 1 A-class E-Cell
(incl. smart)
BMW 2

Justt a h
J hype – or is
i it for
f real?
l?
... and what does it mean for the industry?

BCG-CII-New [Link] 1
Bold statements regarding e-Car ramp-up

Aggressive volume plans ... ... with strong strategic ambitions

"We think that scale for us is between

>150
500,000 and 1 million cars a year."

>150
"Volkswagen will be the automaker to mass
>150 produce the electric car for everyone."

>100

"This vehicle will change the auto industry

>100
we know today significantly."
significantly.
>80

2015 "We maintain our claim to be the worldwide

72 market leader in e-mobility
e mobility
2012

BCG-CII-New [Link] 2
Overall, we expect a multi-step path forward

Mild Full Plug-in Range E-Car

E Car
Advanced ICE
Hybrid Hybrid Hybrid Extender
Electrification
path

Prius PHEV Volt Leaf

Advanced gasoline Start stop, Acceleration Full hybrid Electric All necessary
and diesel, regenerat. assistance, with larger vehicle with propulsion
Biofuels, CNG, H2 braking, electric battery and ICE to energy is
mild acc. launch, plug-in recharge the stored in the
assistance electric capability
p y batteries batteryy
driving at low
speeds
CO2 reduction
Up to 35% 10-30% 30-40% 50-100%
potential1

Clean energy sources

Levers for CO2 Braking losses
reduction
Pumping losses
Thermodynamic efficiency
Idle losses
1. Well-to-Wheel CO2 reduction; calculations for European countries. CO2 reduction potential measured in comparison with gasoline car with 176 g CO2/km, type Golf 1.6
BCG-CII-New [Link] 3
 Three drivers behind electrification trend
1
CO2 regulations
• World leaders committed to
reduce CO2 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

3
Changing mobility patterns
• Free EV+ access to restricted
city centers highly attractive Market model
• Industry volume path
• Admittance to car pool lanes
• Industry profitability
as additional plus

BCG-CII-New [Link] 4
CO2 reduction: EV benefit strongly depends on power mix

WTW CO2 emissions today ... vs in 2020

Average CO2 emission

in g/km
250 250

204 -59% 10% Biofuel

200 200
28
171
156 13 153
150 145 -55%
150 20 11 150
18 19
119 123 119
16 14 9 104
100 94 100 8
83 7 84
176 70 69
6 158 65 6
136 132 5 141 60
5 127 5 49
50 50 104 109 4 110
87 4 97
77 78
65 64 60 56 45
0 0
C-segm. C-segm. C-segm. EV EV EV USA EV EV EV India C-segm. C-segm. C-segm. EV EV EV USA EV JapanEV China EV India
gasoline1 diesel hybrid DE2 EU Japan China gasoline1 diesel hybrid DE EU

Reference car gasoline Electric vehicle

Diesel & Hybrid Well-to-tank CO2 emissions

Chi
China, IIndia
di virtually
i t ll no overall
ll CO2 benefit
b fit due
d tot carbon
b
intensive power generation
1. Reference vehicle for C segment (1,6l gasoline engine w/ 75kW and 1181 kg vehicle mass); 2. Avg. 15 kWh/100 km (tank to wheel) X CO2 from respective power generation mix in g/kWh; 3.
Assumption: 10% Biofuels addition to fossil fuels (80% CO2 reduction with biofuels), 20% improvement of baseline gasoline ICE, 5% improvement of hybrid and 10% of diesel; 8% electricity losses
and 17% upstream oil losses are assumed; Source: Company Websites; VDEW; EUCAR; European Commission; Concawe; WWF; BCG analysis
BCG-CII-New [Link] 5
 2020: Expect 25-30% electrified cars – 5-6% pure EVs

58% 14% 2% 20% 6%

3 60
x Expected market share 2020 12

Expected sales in M units

9 1

35

G
Gasoline
li Di
Diesel
l CNG Hybrid
H b id e-cars (incl.
(i l Total
T t l
electric range ext.) relevant
vehicles market
Technology
Optimized ICE Electrification
challenge

70-75% 25-30%

BCG-CII-New [Link] 6
... with very different market penetrations by region

Share of new car sales 2020 (%)

WEU NOA Japan China Sum in 2020 (%)

100 4 5 4 1 2 1 1 4 3 2
3 6 1 2 3 CNG
3 3
3 5 9 1
3 10 2 11
10 3 12 18 5
5
18 10 EV
16 13
17 6
80 17 7 26 4 20 RE
7 4 8 19
32 7
42
18
6 23
14 26 HEV
60 29
32 5 3
26
11 Diesel
86 87 4
40 74 75
69 69
62
52 52 58
20
44
40 40 44 Gasoline
33

0
1 2 3 1 2 3 1 2 3 1 2 3 1 2 3

Scenarios

1 Slowdown:
Sl d Concern
C about
b t climate
li t change
h shrinks,
h i k oilil price
i goes ddown, regulations
l ti are lloosened
d
2 Steady pace: Increasing concern about climate change, oil price stays high, regulations follow agreed pattern
3 Acceleration: Concern about climate change increases much, oil price hits records, regulations further tightened

BCG-CII-New [Link] 7
Costs will need to drive down to ~35% of current level

2011 2020(E)

Compo- Modul Compo- Modul

Cell Pack Battery Cell Pack Battery
nents e nents e

($/KWh) ($/KWh)
Markup (SG&A+P)
Scrap
R&D

50–70 990-1,220 Depreciation

290–360 Process
13% Purchased parts
4% Raw material
14%
450–540
14%

11%
75-85 ~20 360-440
150 180
150-180 13% 0%
32% 6%
200–2501 13% 11%
120-1451 36%
12% 21%

1. Including process, depreciation, R&D and scrap of active material and component suppliers; DOD = depth of discharge
Note: 90 Wh cell; annual production 73M cells; Assumes 0.1% scrap rate; Rounded numbers
BCG-CII-New [Link] 8
 Despite prudent projections, huge battery market evolves

Revenues
3 4 5 7 9 13 13 17 23 31 41
US $ B

137
GWh

Announced capacity build up 100 103

of top battery players
(~47GWh) already satisfies 73 75
EV
PC demand until 2016
53 55

39 40
28 29
PHEV
17
11
4 7
3 HEV

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

1. Based on BCG's steady pace scenario; note: assumed battery sizes: HEV 1 KWh, PHEV 10 KWh, full-EV 20 KWh
BCG-CII-New [Link] 9
 All need to agree on go-to-market model – jointly!

Do we need any
Should we offer specific FS offer?
power contracts? (e g battery lease)
(e.g.
P F

C
M How do we
How do we provide enable our dealer
optimal charging network?
solutions?
With which ppartners? [Link]

What kind of
What should our
C premium services
PoS offer look
R can we offer?
like? B

What is the residual

value of the battery?

BCG-CII-New [Link] 10
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
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 e-car-related
car related inconveniences

Profit form changing market environment

• Leverageg new market entrants as value-adding
gppartners
• Selectively explore new profit pools
• Secure customer interface

Governmental/municipal
G t l/ i i l authorities
th iti and d regulators
l t as well
ll
as industry asociations will play a crucial role

BCG-CII-New [Link] 11