Download - Dyer at kearny presentation
Dr. Stephen W. Dyer Partner A.T. Kearney (Shanghai) Management Consulting Co., Ltd.
October 2012
China-U.S. Clean Truck and Bus Summit
The future of commercial vehicle powertrains
Global trends and China situation
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This document is exclusively intended for selected client employees. Distribution, quotations and duplications – even in the form of extracts – for third parties is only permitted upon prior written consent of A.T. Kearney.
A.T. Kearney used the text and charts compiled in this report in a presentation; they do not represent a complete documentation of the presentation.
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Agenda
• Global trends in clean commercial vehicles
• China clean commercial vehicle situation
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Converging interests of multiple stakeholders are driving the development of the alternative energy automotive industry
EV/HEV customer buying criteria and key influencing stakeholders and drivers
Source: China Consumer Surveys; A.T. Kearney analysis
Customer decision
Safety (11-13%)
Functional Perform-ance (17-
26%)
Convenience (9-11%)
Total Cost of Ownership
(15-35%)
Image (13-20%)
Reliability (13-17%)
Vehicle manufacturing
players
Government
Energy Providers
Stakeholders Description / role Needs / motivation Key drivers
• Governments have actively promoted alternative powertrain, especially for electric vehicles
• Energy security • Environment protection • Industry/ economic
leadership
• Financial/non financial subsidies (purchase, R&D, infrastructure)
• State owned enterprises
• It includes energy companies and infrastructure operators (e.g. grid)
• Driven by market opportunities and Government pressure, they are heavily investing in EV/HEV business
• Profit • Sustainable business • Image/ political
• Energy cost • Infrastructure availability
• It includes all companies operating on the EV/HEV value chain: vehicle OEM and all upstream suppliers
• Profit • Sustainable business • Image/ political
• Technology performance • Technology cost/ price • Production capacity
(%) represent “% importance” for passenger car
buyers
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72
75
151
122
Maximize the accuracy of fuel consumption monitoring 122
Minimize the unpleasant odor in new vehicles 122
Minimize necessity to replace complete assemblies 123
Maximize f reshness of air in vehicle interior 123
Maximize accuracy of monitoring fuel / operating costs 125
Minimize time for fault diagnostic and repairs 125
Minimize accoustic noise in vehicle interior 126
Minimize cost of periodic maintenance 128
Maximize the predicability of component failure 132
Minimize labor and parts cost of repairs 138
Maximize useful life of brake system 141
Minimize fuel consumption
Minimize chance of luggage compt. door handle failure
Maximize alignment of luggage compartment doors
…
Minimize time to evacuate vehicle during emergency 116
Minimize the chance of A/C ducts leaking water out 119
Maximize the useful life of tires 120
Minimize corrosion of vehicle chassis 120
Minimize vehicle skidding or loss of control
Commercial vehicle buyers have a much more clear and rational focus on TCO than passenger car buyers
Source: quantitative survey results; A.T. Kearney
Innovation opportunity scores for long-distance coach purchaser desired outcomes Desired outcome opportunity map
72
75
116
119
120
120
122
122
122
123
123
125
125
126
128
132
138
141
151 >150
101-120 <100
121-150
Recent VOC case example
Over-delivered
desired outcomes
(cost reduction
opportunities)
Under-
satisfied
desired
outcomes 0
10
20
30
40
50
60
70
80
90
100
Importance (%)
100 90 80 70
Satisfaction (%)
60 50 40 30 20 10 0
Minimize labor and parts cost of repairs
Maximize useful life of braking system
Minimize fuel consumption
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A recent global A.T. Kearney study assessed the future of alternative powertrains for commercial vehicles
Approach
• Global study on the future of commercial vehicle powertrains
• Conducted by A.T. Kearney • > 70 interviews with fleet customers, OEM,
suppliers and associations • Supported by TCO calculations, third party
data research, etc.
Scope
• Vehicle segments: Truck (LD, MD, HD), Bus (LD, MD, HD)
• Technologies: Diesel, Gasoline, HEV, HHV, CNG
• Regions: Europe, NAFTA, Japan, China • Timeframe: Today - 2020
Results
• Forecast of global powertrain shares per vehicle segment in 2020 (scenario based)
• Description of the related key drivers: customer demand (e.g. TCO, functionality, image), OEM perspective, technology development and regulation
Study approach and results
1) GVW: >15t 2) GVW: 9-15t 3) GVW: 6.4-8.9t 4) GVW: 2.7-6.3t Source:; A.T. Kearney
Long-haul
HD Distrib.
Garbage
Construction
Coach
MHD Distrib.2)
MLD Distrib.3)
City Bus
LD Truck
Small Bus
Truck
Bus
LD MD HD
Focus
segments
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Factors and scenarios impacting the 2020 powertrain landscape
We applied a scenario based-approach using customer and OEM strategies to model future powertrain developments
Customer
needs What do
customers want?
• Total costs of
ownership
• Functionality
• Image
OEM
strategies What do OEMs
plan to offer?
• Technology
strategy
• Development
status
• SOP/ramp-up
planning
Regula
-tion
Tech-
nolog
y
Fuel
prices
Boundary conditions How do macro parameters impact
powertrain developments?
1. Example MD Upper Distribution profile 2. Only vehicle technology related reduction; additional targets might include biofuels, speed limitation, etc. Source: A.T. Kearney
Perspective Parameter
Scenarios
“Low” “Mod-erate”
“High”
Customer
Fuel price increase, e.g.
• Crude oil price 2020
[$/barrel]
Limited
70
Moderate
140
Signif-
icant
210
OEM Component cost reduction,
e.g.
• HEV Li-ion battery cell
costs 2020 [$/kW]
Limited
26
Moderate
18
Aggre-
ssive
9
Technology OEM‟s drive to introduce
alternative powertrains, e.g.
• Avg. SOP HEV for HD
Long-haul, Europe
Limited
2018
Moderate
2016
Strong
2014
Regulation Maturity of new drivetrain
technology, e.g.
• HEV battery lifetime 2020
[years] 1)
Low
4
Moderate
6
High
8
Focus of this presentation
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Fleet customer‟s evaluation TCO 2020 (Europe)
TCO p.a. [k €]
Mileage p.a. [k km]
TCO
• Clear TCO advantage of HEV for most usage profiles
Functionality
• Additional volume of alternative powertrains critical (could lead to passenger loss if top-load is not possible)
• Limited e-only driving capability (1-5 km) of HEV is beneficial
Image
• HEV is seen as the "greenest" of all available powertrains
50
60
70
80
90
40 45 50 55 60 65 70
HEV ser. CNG Diesel
€ 5,800 p.a. TCO advantage
for HEV vs. Diesel
Average mileage
~60% of all vehicles
1. 2020 HEV data: 210 kW e-engine, 14 kWh battery; avg. fuel saving cp. to Diesel: 23%; only powertrain related TCO considered Source: Fleet customer interviews,, A.T. Kearney
City Bus: Customer need
Due to comparably high annual mileage with major urban driving share, City Bus HEV has a strong TCO case
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• MB Citaro • (Small) series
City bus will be the segment with the overall highest HEV shares in 2020
• MAN Lion‟s City • (Small) series
1. Avg. OEM perspective based on current status and strategy (example Europe) Source: OEM interviews, third party publication research,, A.T. Kearney
Expected portfolio penetration1): • Avg. SOP: 2012-2014
Expected portfolio penetration1): • Avg. SOP: in series
City Bus: OEM strategy
Almost all OEMs globally show clear plans towards HEV City Bus – including China
CNG HEV
• Orion VII • In series
• Hino Blue Ribbon • In series
• Dongfeng EQ6122 • (Small) series
• New Flyer C30LF • In series
• FUSO Aero Star • (Small) series
• King Long CNG bus • (Small) series
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Customer„s evaluation TCO 2020 (Europe)
TCO p.a. [k €]
Mileage p.a. [k km]
TCO
• Solid TCO advantage of Hybrids for customers with average mileages (but lower than for HD Long-haul)
Functionality
• Limited weight impact of Hybrids due to downsizing of ICE (+80 kg); CNG weight more critical (+350 kg)
• Limited e-only driving capability (1-5 km) of HEV is beneficial
Image
• HEV is seen as the "greenest" of all available powertrains 22
24
26
28
30
32
34
36
38
35 40 45 50 55 60 65
CNG HEV / HHV Diesel
€ 950 p.a. TCO advantage for
Hybrids compared to Diesel
~60% of all vehicles
1. 2020 HEV data: 60 kW e-engine, 72 kW battery; avg. fuel saving cp. to Diesel: 12%; only powertrain related TCO considered Source: Fleet customer interviews, A.T. Kearney
MHD Distribution: Customer need
High urban driving share and comparably high annual mileage also leads to a winning HEV TCO case for MHD distribution
Average mileage
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Examples
Example
Example
Expected portfolio penetration1): • Avg. SOP: 2015-2017
Expected portfolio penetration1): • Avg. SOP: 2014-16
1) Avg. OEM perspective based on current status and strategy (example Europe); Source: OEM interviews, desk research, Bosch, A.T. Kearney
• International Durastar CNG • Prototype
• FCCC HHV Walk-in Van Chassis (MT55)
• Initial prototypes
Expected portfolio penetration1): • Avg. SOP: 2014-2016
• Mercedes Atego HEV • 5 vehicles in first trial; second
trial will be started end of 2010
• Hino Ranger HEV • In series
• Peterbilt Model 335 HEV • Early fleet testing
MHD Distribution will see the highest Hybrid shares of all truck segments in 2020
MHD Distribution: OEM strategy
MHD Distribution is currently the top focus focus segment for hybridization of powertrains
CNG HEV
HHV
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Long-haul
85%
15%
Upper MD
73%
5%
22%
Van
78%
5% 15%
2%
City bus
45%
20%
35%
Heavy Duty Medium Duty
Light Duty Bus
Heavy Duty
• Hybrids will find inroads into all HD segments except construction
• CNG will gain some share in HD niches
• Garbage with highest HD Hybrid and CNG shares
Medium Duty
• MHD Distribution (9-15t) with higher alternative powertrain shares than MLD Distribution (6.4-9t)
Light Duty
• Broadest spectrum of powertrains
• Alternative powertrains mainly for customers with high mileages and image driven purchase decision
Bus
• City bus with significantly higher share of alternative powertrains than coach
Diesel CNG Hybrids EV
Market summary Europe 2020: Powertrain shares
In Europe, hybrids will likely capture share up to 22% in truck segments and up to 35% for buses
Key findings Powertrain market shares [%]
Source: A.T. Kearney
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Market summary NAFTA 2020: Powertrain shares
21%
Upper MD
77%
2%
Van
35%
43%
4%
16% 2%
City bus
58%
7%
35%
Heavy Duty
• Similar alternative powertrain shares as in Europe
• Higher annual mileages but less recuperation opportunities during long distance driving (more constant driving) and lower Diesel fuel costs
Medium Duty
• Slightly lower alternative powertrain shares than in Europe as low Diesel costs impact Hybrid and CNG TCO negatively
Light Duty
• Gasoline remains the dominating powertrain, however Diesel and other alternatives gain share
Bus
• Similar Hybrid share as in Europe
• CNG as niche application
Hybrids EV CNG Diesel Gasoline
In NAFTA, Hybrids will gain shares up to 21% in truck segments and up to 35% for buses in 2020
Key findings Powertrain market shares [%]
15%
Long-haul
85%
Heavy Duty Medium Duty
Light Duty Bus
Source: A.T. Kearney
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89%
8% 3%
Upper MD
Van
100
66%
20%
5% 8% 1%
55%
20%
City bus
25%
Heavy Duty
• Overall low share of alternative powertrains for HD as focus remains on optimizing conventional Diesel engines
• Some CNG share for HD Distribution, Construction and Garbage
Medium Duty
• Increasing share of CNG applications and some first Hybrids
Light Duty
• Some Hybrid penetration in the LD segment supported by hybridization and full-electrification trend in the passenger car segment
Bus
• Strong drive towards Hybrids and CNG for city buses to support inner-city emission reduction
Diesel Gasoline CNG Hybrids EV
Market summary China 2020: Powertrain shares
In China, Hybrids will gain share up to 8% in truck segments and up to 25% for buses by 2020
Key findings Powertrain market shares [%]
Heavy Duty Medium Duty
Light Duty Bus
Long-haul
99%
1%
Source: A.T. Kearney
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Agenda
• Global trends in clean commercial vehicles
• China clean commercial vehicle situation
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The Chinese government desires to develop clean energy automotive to address industry development and energy issues
Source: A.T. Kearney
China Government Objectives
Develop the domestic automotive
Industry (Increase global
competitiveness)
Protect the environment (decrease
“well-to-wheel” emissions)
Achieve energy security (increase
use of energy efficient technology and
local renewable energy sources)
Stimulate clean
energy automotive
development and
usage
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Sales of city buses, the top commercial vehicle candidates for clean energy powertrains in China, will likely remain flat mainly due to subway expansion plans
‟14F
420 410
‟12F
399
‟13F
389
‟11
379
‟10
375
‟09
371
‟08
372
‟07
342
‟15F
431
‟16F
442
‟17F
+2.61%
+2.61%
China‟s City Bus Ownership Projection (‟11-‟17F) („000 units in operation)
1. 중국 교통운수협회 도시 지하철 교통 전문 위원회 책임자 인터뷰 Source: China Statistics Year Book, Media Search, JAMAM, A.T. Kearney Analysis
Key Growth Drivers
Increase of Alternative Transportation Means in China Rural Areas
Fast growth in mini truck and SUV, driving capabilities in bumpy roads surfaces (CAGR 34% over the next 5 years)
The largest motorcycles market in global is still a good source of transportation (23.4M units in ‟11)
2
Beijing subway carries 650K citizens daily, creating the infamous rush-hours nightmares (e.g. 19lines in Beijing and 13 lines in Shanghai in „12)
The government has a plan to expand its subway line with additional 96 lines through 166B KRW investment1
Metropolitan Public Transportation Policy by the Chinese Government
1
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HEV city buses will increase share in China in the medium term due to increasingly mature technology and TCO advantages
Source: China Statistics Year Book, Media Search ,Dongxing Securities, . Kearney Analysis
99 98 96 94 9085
77
66
7
5
7 2
‟13F
100
‟15F
2
‟12F
100
3 1
‟11
100
2 0
‟10
100
1
‟17F
100
28
‟16F
100
18
5
100
12
3
‟14F
100
0
China‟s City Bus xEV Penetration Projection (‟11-‟17F) (Unit: %)
HEV BEV ICE and Others
CAGR (‟12F-‟17F)
49.9%
-4.8%
58.3%
HEV City Bus Key Growth Drivers
Strong Commitment by Central/Local Government for
Green City Bus Policy
1
xEV city bus penetration in top 10 cities ranges from 8% through 27% in ‟12
Clear TCO advantage for HEV Bus
3
Competitive TCO perspective with payback period for HEV buses will become popular as it does not require massive charging infrastructures
Immaturity of EV Ecosystem and Battery Technology
2
Neither of battery charging method provides an ultimate solution for BEV bus due to immature battery technology in China
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HEV models have TCO advantages and equivalent payback periods for bus fleet operators with government incentives
1. Net purchase cost includes no purchase tax due to city bus exempt from tax, 2. Total energy cost is calculated based on assumption a 8-year lifetime with 240Km daily driving range that is applied 0.3L/Km with 7.46RMB per liter 3. Total maintenance cost is based on an industry expert and media search 4. HEV Premium is a difference that exceeds ICE purchase costs and HEV requires additional maintenance given the current technology maturity 5. //// 6. Payback period is calculated based on assumptions that a city bus carries 500 passenger per day with 1RMB fare under 365 operation days per year Source: Department of Commerce of China, Media Search, ATK Project IC, Industry Expert Interview, A.T. Kearney Analysis
Payback Period (‟12)6 (Unit: years)
HEV TCO Perspective (‟12) (Unit: „000 RMB)
ICE HEV BEV
: With Incentive
: Without Incentive
627 -25%TCO
Saving
1,602
16
550
1,569
2,135 64 30
Net Purchase
Cost1
Total Energy Cost2
Total Maint3.
ICE 8-year TCO
HEV 8-year TCO
HEV Premium4
HEV Add‟l Maint4.
HEV Energy
Cost Saving5
9.32
3.84
5.84
3.183.01
2.30
5.48
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China xEV bus market has evolved through the government-driven public project with local OEMs
1. There are 65 bus company operating in Shanghai city in „12 Source: China Statistics Year Book, Media Search, A.T. Kearney Analysis
Major City xEV Bus Market Penetration
300,429 (77%)
88,614 (23%)
389,043
5.0% 2.4% 4.9% 7.1% 13.9% 9.3% 26.9% 10.4% 16.8%
The “10 city – 1,000 units project” was a pilot project developed through local relationship, leaving closed sourcing system in China bus market
:Penetration
China Major City xEV Bus Market (July ‟12)
9,949
8,7206,726 5,177 4,535 2,647 2,795 3252,003
Shanghai
450
6,012 5,000
Wuhan Hangzhou
515 465
Guangzhou
835
7,241
3,620 3,120
Xiamen Zhengzhou
973
Changsha
9,170
Shenzhen
11,952
411
25,368
24,098
1,270
17,131
16,720
Beijing
China Total City Bus Ownership
Major 10 cities account for 23%
of total bus ownership
7%
Sunwin BAIC Wuzhoulong … GAIC … DFM King-Long
14% 18%
5% 4%
Yutong
5% 12%
Bus OEM-based in 10 cities – 1,000 units Pilot Project
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Major cities‟ xEV bus Parc1 & proportion of local sourcing (Units, %)
Major cities‟ xEV taxi Parc1 & proportion of local sourcing (Units, %)
Xiamen 325
Shanghai 411
Guangzhou 450
Zhengzhou 465
Wuhan 515
Hangzhou 835
Changsha 973
Beijing 1,270
Shenzhen 2,003
Proportion sourced locally2
10
20
20
20
27
50
Baoji
Zibo
Yinchuan
Chengdu
Haikou
Shenyang
Xinxiang 100
Hangzhou 200
Beijing 450
Shenzhen 800 100%
100%
100%
100%
93%
100%
100%
0%
Proportion sourced locally2
100%
100%
1. Calculated by the number of xEV models in operation as of July, 2012 2. Manufactured locally, or from OEMs with local facilities manufacturing other models 3. Major supplier King-Long has >50% market share in ICE buses in Hangzhou Source: D1EV, A.T. Kearney Analysis
Local sourcing status for top public xEV vehicle fleets
100%
97%
100%
1%3
100%
99%
100%
100%
100%
Governments tend to source locally to support local OEMs and drive GDP growth by developing new energy auto industries
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But, there exists a slight push to shift to from closed local sourcing to more open sourcing
Implications
China xEV Bus Sourcing Change
The current local designation of critical components have not contributed to local bus OEM‟s technological improvement, instead causing HEV integration issues
An integration of engine controlling, transmission/E-motor controllers, BMS, and power management system into one HEV single system is defined as state of arts
Chinese xEV buses have precedent cases of safety incidents: –A BEV bus of Shanghai caught
on fire in 2011 – An HEV bus of Urumqi caught
on fire while parking in 2010
HEV Integration Issue
Key Issues Faced by China xEV Bus Market
Public Safety Issue
Changes in Government Stance
In Favor of Component Designation
Local protection ―Through such practice, the
governments can effectively protect the market for their local companies and enhance local GDP
Open Sourcing Policy
Ministry of Industry and Information Technology & Ministry of Public Security have issued banning orders on changing core parts of buses on Sept.,2010
Source: Media Search, A. T. Kearney Analysis
Chinese OEMs have need to work with superior battery suppliers
The global players to address many issues and possess competitive advantages:
―Enhanced vehicle performance
―Reduced security risks
―Increased service life
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China will clearly follow or lead global trends toward clean commercial vehicle usage, especially for city buses
Consistent trend toward clean
commercial vehicles Clear and rational focus on minimal TCO by commercial vehicle buyers
Current local sourcing trend may open up in future
City buses and MHD distribution truck applications have strongest TCO case
HEV bus applications in China will grow share quickly China will
experience similar clean vehicle share by 2020
Strong China government support for clean energy vehicles will continue
Source: A.T. Kearney
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