Electric Vehicles: Empowering the Market? Tom De Vleesschauwer Associate Director, Automotive Consulting

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1 Electric Vehicles: Empowering the Market? Tom De Vleesschauwer Associate Director, Automotive Consulting

2 Thursday 17/09/09 When Petrol cars were invented there were no filling stations As Honda s President said in June 2008 at the launch of the Clarity, while these vehicles are just the start of an emerging technology, there is a long way to go before they will be able to offer a high-volume, economic and affordable alternative. We are not trying to save the world, we are making money. When BYD Auto launches one of China's first mass produced fully electric sedans later this year, it will be trying to conquer the world rather than save it. But such is the explosive growth of China's car market and thirst for petrol that the two goals are likely to become ever more synonymous. The plug-in five-seater will reportedly be able to travel 400km on a single charge and reach a top speed of 160km/h. "We are trying to make an electric car that people can use like a normal car," says Henry Li, the head of BYD Auto's export and trade division, as we drive around the company's car park in the BYD's other new breakthrough vehicle, the F3DM. In many ways, the Chevrolet Volt is GM's own moon launch NEWS Bob Kruse, executive director of vehicle engineering for hybrids, electric vehicles and batteries at General Motors Co., said GM is committed to electric cars. "In many ways, the Chevrolet Volt is GM's own moon launch," Kruse said of the sedan that will be able to travel up to 40 miles on a single battery charge and is due out in late Electrified Vehicles, Sensible or Not, Are Coming! OEMs may have to sell them to meet CAFÉ, but Washington did not tax gasoline, so will long-term OEM returns in NA decline? Mr HIMANSHU PATEL MD JP Morgan Securities

3 Current EV hype, but It feels a little bit like the Wild West right now JB Straubel, CTO Tesla Die Zukunft gehört den Elektroautos Dr. Martin Winterkorn, CEO VW Bernd Bohr, CEO Bosch Die Euphorie um das Elektroauto ist schädlich Pictures courtesy of manufacturers

4 How Real is This Opportunity? Given the current 'hype' about electric vehicles (EVs), it is easy to lose sight of the real issues, and how real this opportunity is. Electric vehicles flourished when they offered convenience and mobility superior to competitive offerings in the early 1900s But as soon as gasoline vehicles became affordable, reliable, easy to start and a re-fuelling infrastructure evolved, the electric could not compete, largely due to characteristics of the battery resulting in non-competitive: Range and Recharge Time

5 Fast-Forward to Today s EV Many OEM activities throughout the last few decades Sources: Respective OEMs

6 Current EV Offering Selection of current EV vehicles on sale Source: EDF

7 And Growing Support Momentum Sources: RWE, better place, gas2.org, Elektromotive, climateprogress.org, cres-energy.org, BEE Automotive

8 Will the Consumer Plug-in to EVs? Some Asian EV s rushed to the market? Will they trust Chinese cars now? COUNTRY 2007 SALES EU Domestic Share Foreign Share GERMANY 3,477, % 14.8% UNITED KINGDOM 2,774, % 20.8% ITALY 2,743, % 14.9% LUIS free From EUR FRANCE 2,531, % 11.2% SPAIN 1,896, % 17.8% AUSTRIA 338, % 21.7% GREECE 305, % 40.1% PORTUGAL 266, % 19.3% DENMARK 228, % 31.8% FINLAND 152, % 39.0% BYD E6 Pictures courtesy of LUIS AG & BYD Source IHS GLOBAL INSIGHT

9 How Quickly Can it Be Established? What does it take to market a vehicle? +10 year cycle Design / R&D Engineering / Manufacturing Testing / Pre-production Production Sales Support / Service End-of-life Recover / Recycling

10 The Road to Empowerment: Filled with Obstacles

11 Battery: Shorting Market Success? Battery technology remains underdeveloped and fear of raw material shortages Prohibitive battery cost Search for the right business model Lease battery? Swap battery? Source: BEE Automotive

12 Legislative Support: Adding Sparks? Legislators have the potential to be both an enabler/barrier to EV market success Some form of incentives required Clear legal view with regards to vehicle/technology type-approval, testing and infrastructure is required. Source: KBA

13 Power Utility Sector: Sufficient, Clean? Can the global Power Generation capacity support the EV future? Is it clean power generation? Source: icleanenergy.org Is the power distribution network able to cope with localised demand spikes? Black-outs? Source: LIFE Magazine

14 Cost: Range, Life or Change? Overall Electric Vehicle cost remains un-competitive Leasing models could provide solace, but residual value remains questionable Trade-off required between range, life and cost Smaller battery, lesser cost Bigger battery, longer range Source: SB LiMotive Co. Ltd

15 Safety: Float or Sink? Safety concerns regarding high-voltage and battery stability Emergency services training Water-testing Source: Mitsubishi Overcharging? Thermal runaway? Source: ExtraEnergy e.v.

16 Infrastructure: Chicken or Egg? Sufficient infrastructure PARIS : EV Charge Points Map Acceptable charging times Fast chargers Charger and connector standardisation Source: SAE

17 Consumer: Lead or Follow? Consumer acceptance still questionable Limited product choice Early-adopter cost Reliability unproven Range Anxiety Source: TESLA

18 Global EV Production Mid-Term Outlook (-2015) Vehicles 180, , , , ,000 80,000 60,000 40,000 North America Production Europe Production Asia Production Supply based forecast e.g. known approved programs Conservative! Demand based forecast beyond 2014 currently under study 20, Very much dependent on battery cost and government incentives

19 EV Long-Term Outlook (+2015) There appears to be consensus in the industry that the general trend is toward the electrification of the automobile. However there remains uncertainty as to the timing, the technologies and the system designs. The successful roll-out of EVs and PHEVs will require a large number of stakeholders to work together for the first time, for example policy makers, OEMs, local authorities and utilities/energy providers. It will be important that all stakeholders understand the issues associated with these vehicles so that they can be addressed in a coherent manner. The widespread roll-out and uptake of EVs and PHEVs beyond 2015 would require increased consumer confidence and education; improvements in battery performance and cost; charging infrastructure which keeps pace with demand; and stimulation of the market through appropriate incentives to encourage market uptake. Without these a Business as Usual scenario would prevail.

20 Thank You! Tom De Vleesschauwer Associate Director, Automotive Consulting