Increased cooperation for the future of electrification

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1 Increased cooperation for the future of electrification Robert Eriksson Hans Göran Milding Swedish Hybrid Center Conference Roads To The Future Robert Eriksson, Hans Göran Milding Volvo Car Corporation

2 automotive industry in sweden generate s 11% of the total Export Employs direct and indirect 11% of the total Industrial Investments 25% of the Research and Development Robert Eriksson, Hans Göran Milding Volvo Car Corporation

3 VCC Electrification plan/ World leading PHEV VCC s history and Future regarding Electrification Efficiency in focus for 40 years Hybrid and Plug-In Hybrid vehicles studied and implemented World first Diesel PHEV BEV Test Fleet cars, C30 Electric We plan for massive renewal of our product program with Electrification as a key ingredients Robert Eriksson, Hans Göran Milding Volvo Car Corporation

4 The Future of Electrification Volvo Cars have showed ability to develop and manufacture efficient cars matching high expectations from the customers. With the world first Diesel Plug-In Hybrid, Volvo Cars is now leading this segment. A massive effort in renewing the product portfolio with electrification as a cornerstone and a important step in the right direction towards sustainable individual Transportation. This has been done because it is an area of strategic importance and this without knowledge about the long term business environment Robert Eriksson, Hans Göran Milding Volvo Car Corporation

5 Electrification market is at a critical transformation point Current market is pushed by legislation We have passed the period of Believer and Non Believers Legal demands supported by incentives are pushing for efficiency and electrification, e.g.: China via e.g. the NEV, New Energy Vehicle definition Long Term this should be driven by a Pull rather than a Push by US via the e.g. ZEV Credit legislation delivering values appreciated by the Market EU via the CO2 legislation Robert Eriksson, Hans Göran Milding Volvo Car Corporation

6 Factors for success, needs three corner stones We have seen a lot of initiatives in the past Initiated by various reasons with different technical challenges and all with a massive problem with their business case. We believe that we are here due to the combination of Technical Matureness and Market Prerequisites Feasible Possible to develop Viable Ability to generate and sustain profits Desirable Delivering value Robert Eriksson, Hans Göran Milding Volvo Car Corporation

7 example of success One example of what can happen when these three factors are in place: The increase of Diesel sales for Volvo Cars in Europe Viable Ability to generate and sustain profits Feasible Possible to develop Desirable Delivering value Robert Eriksson, Hans Göran Milding Volvo Car Corporation

8 Key learnings Customer experience Electric drive is appreciated BUT Customers are reluctant to pay extra Want's to interact without complexity between car-driver Appreciates the new attributes that comes with electrification Want s improvements regarding mileage and availability in winter driving Charging Infrastructure Users are plugging In but cordless charging is highly wanted Access to charging poles is limiting full use of the PHEV potential. Range anxiety is real BUT Question of matureness, not a relevant debate with a Plug-In Hybrid. Data verifies that most travels are short Robert Eriksson, Hans Göran Milding Volvo Car Corporation

9 Key Learnings Usage profiles Data from more than 2400 vehicles 20 Mio km in total Average 8300 km/vehicle 45% pure electric drive Typical driving cycles < 20 min V60 Plug-In Hybrid -Distribution of Charge Depletion and Charge Sustain Driving 100% 90% Charge Sustain 80% Charge Depletion 70% 60% 50% 40% 30% 20% 10% 0% Market 1 Market 2 Market 3 Market 4 Market 5 EU Average Source Volvo Cars Robert Eriksson, Hans Göran Milding Volvo Car Corporation

10 Key learnings Market & Business opportunities The biggest Challenge with Electrification is to make the business case Viable High cost for New technology Society view needs changing When comparing vehicle models with and without Electrification we have not yet seen any trend of being able to charge extra for the Electrification, and the attributes connected. Changed customer demand needed (Diesel) Viable Ability to generate and sustain profits Feasible Possible to develop Desirable Delivering value Examples of traditional ways to handle this: Profit decrease Price increase More cost efficient technical solutions New business models Increase Volumes Robert Eriksson, Hans Göran Milding Volvo Car Corporation

11 Products are perfect, but yet demand is low VCC Learnings With the chosen configuration it seems that our customers appreciates EV driving Plug-In hybrids seems to be attractive among customers Sales are disappointingly low on markets without incentives Customer are today mainly driven by economical incentives It is to early to tell about customer demands in a long term perspective Connectivity development increases integration between customers, cars and infrastructure Acceptance of new technology develops in evolutionary steps Typical lead times for major changes in automotive industry 20 years Robert Eriksson, Hans Göran Milding Volvo Car Corporation

12 Compare with success in the safety area The Volvo Safety History Why did this work? OEM promoted Technology Customer Demand Society Wanted it But it took 50 years and required COOPERATION Volvo Safety Milestones 1944 Safety cage 1944 Laminated windshield 1959 Three-point seat belts in the front 1960 Padded dashboard 1964 Prototype of the first rear-facing child seat 1966 Energy-absorbent crumple zones at both front and rear 1967 Seat belts in the rear 1968 Head restraints in the front 1969 Three-point, inertia-reel seat belts in the front 1970 Establishment of the Volvo Accident Research Team 1972 Three-point seat belts in the rear 1972 Rear-facing child seat and childproof locks in the rear 1973 Collapsible steering column 1974 Energy-absorbent bumpers 1974 Fuel tank located ahead of rear axle 1978 Child booster seat 1982 Anti-submarining protection in the front and rear seats 1982 Wide-angle door mirrors 1984 ABS (Anti-lock Braking System) 1986 High-level brake light 1986 Three-point seat belt in the center rear seat 1987 Driver airbag 1990 Integrated child booster seat 1991 SIPS (Side-Impact Protection System) 1991 Automatic height adjustment of the front seat belts 1993 Three-point, inertia-reel seat belts standard in all seats 1994 SIPS bags (side-impact airbags) 1997 ROPS (Rollover Protection System) (convertible models) 1998 WHIPS (Whiplash Protection System) 1998 IC (Inflatable Curtain) 2000 Inauguration of Volvo Cars Safety Center in Gothenburg 2000 ISOFIX attachment system for all child seats 2000 Dual-stage inflation airbags 2001 Volvo Safety Concept Car (SCC) 2002 Extended rollover protection system (ROPS) 2002 Development of the virtual pregnant crash test dummy 2002 RSC (Roll Stability Control) 2003 IDIS (Intelligent Driver Information System) 2003 Rear seat belt reminders (in S40 and V50) 2003 New, patented, front-end structure reduces collision forces 2003 Inauguration of Volvo's Traffic Accident Research Team in Bangkok 2004 WRG (Water Repellent Glass) 2005 Introduction of DMIC (Door Mounted Inflatable Curtain) on the All-New Volvo C70 Viable Ability to generate and sustain profits Feasible Possible to develop Desirable Delivering value Robert Eriksson, Hans Göran Milding Volvo Car Corporation

13 Do not underestimate the power of incentives or support FUEL MIX IN SWEDEN ON VOLVO CARS, FROM PETROL TO DIESEL A dramatic shift from Petrol to Diesel, with a short interim of Ethanol Regulators control the market Huge shift over small time One car lifecycle is 7-9 years Compare a control system with delays Often leads to over/under shoots PETROL E85 E85 DIESEL DIESEL Robert Eriksson, Hans Göran Milding Volvo Car Corporation

14 Factors To success Desirable Good enough Attributes Changed Society/ Customer mindset Feasible Mature enough Technology Viable Possible business for all involved actors Viable Ability to generate and sustain profits Feasible Possible to develop Desirable Delivering value Due to that electrification will be a qualifier rather then competitive driven it will open up for various partnerships. Clear long term directions and support from the authorities needed. A good dialogue with all concerned parties. (Authorities, Industry and Academies) Robert Eriksson, Hans Göran Milding Volvo Car Corporation

15 With Help from academy research The Academies have an important role with their independence, to lift the view to a higher level regarding how we as a society should shape our common future including the values Electrification brings to the society. Business supporting activities Understand enhanced values Business models Customer behaviour / needs Driving patterns/ Driving behavior Customer interface, e.g. User experience Technologies Cost efficient solutions Cordless charging Energy storage capability Technologies for increased performance in cold climate Robert Eriksson, Hans Göran Milding Volvo Car Corporation

16 the future - How can we build it together Changed Mindset Legislation Support Society Dialogue Dialogue Citizens/ Customers Academies Research Dialogue Industry (OEMs) R&D Products Robert Eriksson, Hans Göran Milding Volvo Car Corporation

17 Increased cooperation IS Needed to shape the future of electrification Feasible Possible to develop Society Viable Ability to generate and sustain profits Desirable Delivering value Citizens/ Customers Academies Industry Robert Eriksson, Hans Göran Milding Volvo Car Corporation

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