Hybrids & Electric Vehicles Challenges and Opportunities

Pascal Colombani Chairman, Valeo

Sharing Knowledge Conference

Mövenpick Hotel by the Dead Sea, Jordan, March 1, 2010

Context and customer attitude

Hybrid worlds and technical considerations

Industrialization and markets

Infrastructures and new business models

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Environmental concerns, Security of Supply, CO2 Regulations

Source: International Energy Agency

L/ 100 km - g CO2/km

2018 2002 2004 2006 2008 2010 2012 2014 2016 2020

260

240

220

200

180

160

140

120

100

80

11

10

9

8

6

5

4

7

EUROPE

JAPAN

USA

Federal

California ?

CO2 Reductions driven by regulations AND enduser expectations

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Millions of electric vehicles ?

EV / PHEV / HEV experimentations in Europe

Nice to have or must have?

London Berlin

Strasbourg

Portugal Bregenz

Munich

Denmark Amsterdam

Milan, Pisa & Roma

Monaco Spain

"The future belongs to the electric vehicle – using electricity from the power plug"

Martin Winterkorn, CEO Volkswagen, 2008

"The Obama-Biden comprehensive New Energy for America plan will put 1 million plug-in hybrid electric cars on the road by 2015"

Barack Obama, President of the United States

"Millions of electric vehicles will be rolling on German roads within the next 20 years"

Jürgen Gro mann, CEO RWE

"Americans need one electric car per household. That's 100 million cars right there. And it can be done"

Shai Agassi, CEO Better Plance

Source: A.T. Kearney

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Automotive demand 2007 - 2008 Alternative Drive in the Future*

USA China

Which System would you prefer?

Natural gas drive

(combustion engine driven by natural gas)

Hybrid drive

(combination of electric engine and combustion engine)

Hydrogen drive

(combustion engine driven by hydrogen)

Ethanol drive

(combustion engine driven by ethanol respectively bi-fuel ,ethanol +

petrol)

Fuel cell

(hydrogen fuel cell supplying the electric engine with electricity)

Don't know

* Prospective Car Buyers, n = 2347

1,7%

34,5%

7,3%

5,7%

7,4%

20,1%

In %

Europe

Don‘t consid. Alt. drive 17,1%

*Brand new car Buyers : 782

4,1%

41,2%

3,1%

7,5%

3,4%

8,2%

15,7%

In %

21.0%

In %

8,5%

21,2%

8,8%

4,2%

29,1%

*Brand new car Buyers : 1790

20,9%

12,7%

Japan

* Prospective Car Buyers, n = 1.394

46,2%

In %

2.1%

12,5% 26,6% 37,1%

12,4% 8,6% 6,1%

9,2% 18,6% 2,1%

7,8% 6,3%

48,6% 34,3%

2007 2008

2008 2007

3,8%

4,7%

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EV technologies' CO2 equation is not obvious, depending on the power source and traditional engines improvements

Notes: (1) Gasoline hybrid assumed to have 25% lower fuel consumption in combined city and highway driving (2) 30% reduction in oil consumption in 2020 (3) 35% nuclear and renewables in 2009 Source: A.T. Kearney

CO2 emissions – well to wheel balance for an average car - CO2 g/km -

95% nuclear power and renewables

European average electricity mix(3)

Ele

ctr

ic d

rive

Well Tank Wheel

0% nuclear power and renewables

Fuel/Gasoline

Fuel/Gasoline – 2020 estimate(2)

Gasoline Hybrid(1)

*

*

*

*

145 - 205 * 120 - 180

90% reduction

~15% reduction

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Two hybrid worlds

Micro to Mild Hybrid World EV to Full Hybrid World

Hybridization aiming at assisting the combustion engine

Hybridization aiming at running the vehicle by electric propulsion

From 1995 to 2005, Valeo developed electric drivetrain systems for the French OEM’s Peugeot/Citroën and Renault

More than 12 000 EV vehicles, more than 1 billion km driven

Valeo launched their 1st Stop-Start in 2004 with Valeo’s StARS (belt drive) system on the Citroën C3. Reinforced starters have been added to complete our micro-hybrid offer

StARS ReStart

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Stop-Start Mild Hybrid Full Hybrid Plug-In Hybrid Full Electric

Stop & Start

Hybrid / Electrical Vehicles on the market

Smart mhd

BMW 1&3

Honda Insight

Toyota Prius3

Mercedes S400

Saturn Aura

Ford Fusion Toyota Prius 3

+ Kinetic Energy Recovery + Engine Assistance

+ Electric Take-off

+ Electric Drive

Smart

Saturn View

GM Volt

BYD F3DM

Renault ZE

iMiev

Nissan Leaf

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The Electric Vehicle landscape will be a continuum of powertrain solutions

Powertrain concept

Combustion engine

Primary and secondary powertrain

Electric vehicle

Hybrids (series / parallel)

Plug-in Hybrid

Future Passenger Car powertrain Portfolio

Source: A.T. Kearney

Fuel cells

Gasoline / Diesel

Electromotor

Medium size electromotor

Medium size gasoline / diesel

Fuel cell

Conventional tank

Large size battery

Small battery

Medium size battery

H2 tank

Primary and secondary energy storage

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Lithium-ion battery, a major building block of EV

Battery pack

End product of VC step:

• Intermediate pro-ducts between raw materials (often from mining), e.g. cobalt metal, lithium, and active materials

• Powder form

• Active material ready-to-use for cathode production at cell supplier

• Powder form

• Electrolytes ready-to-use for cell manu-facturing

• Powder form or liquid

• Separators ready-to-use for cell manu-facturing

• Polyolefin-based film/ semi-permeable membrane or polymer-matrix incl. ceramics

• Complete cells based on electrodes,separators and electro-lytes

• Complete battery pack consisting of cells, battery management system, cooling system and housing

• Raw materials and waste after deconstructing the battery pack

Example:

• CoO2 • LiCoO2 • 3M's flourinated lithium salts

• LG Chem's 'Sa-fety Reinforced Separator' coated with ceramics

• A123's high power "AHR32113 M1Ultra" cell

• Valence's automotive battery pack

• Various metals, e.g. cobalt

• Active material ready-to-use for anode production at cell supplier

• Powder form

• Graphite

Source: A.T. Kearney

Recycling Precursors Cell materials

Cathode active mat.

Anode active mat. Electrolytes Separators

Within the Lithium-ion battery value chain, initial steps are material driven, later ones are mechanics & electronics

Cells Electrode

base material Electrode

processing Cells Battery pack Electronics

Lithium-ion battery production & assembly value chain

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Asian suppliers dominate battery markets – OEM have struck alliances on cells and packs with key suppliers

Recycling Precursors Cells Battery pack Cell materials

Key player groups entering automotive LIB market and profit pool - Estimated margin and turnover 2020, bn$, % -

86,7 51,4 18,7

9,1

*

0-5%

*

5-10%

*

6-12%

*

10-15%

*

6-10%

Source: A.T. Kearney

Margin

Market size, bn$

0,6

Today's player groups

Raw materials comp.

Chemical companies Cell & pack manufacturers

New Player groups

Chemical companies Raw materials comp.

Cell & pack manufacturers

OEM suppliers

OEMs

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Longer term considerations

Lower cost Li-Ion batteries

Optimization of engine electronic management

Optimization of comfort, security, lighting (LED), thermal equipment, solar panels

More radical solutions with a rethinking of vehicle architecture

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Keio University Prototype

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Constraints remain battery cost, autonomy, and infrastructure for charge

Battery cost will decrease but remain high

Fast recharge of battery

Fast change of battery

Deployment and cost of infrastructures

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World Powertrain Market 2008-2020 Hypothesis: Oil barrel ~$100 2012, $120 2015, $150 2020, Battery: 400 /kWh 2012,300 /kWh 2020

Source: PTE Hybrid Database – Release July 2009 Extract from PTE TDP 2010-2020

Emergence of StopStart Emergence

of Electric

95%

5%

CONVENTIONAL

Stop-Start MILD

FULL EV

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New EV-mobility business model will arise, e.g. Renault & Better Place or Bolloré concept

"Raw" vehicle (without engine)

10-15 000

Battery ~10 000

Power supply & assistance

50 km

Political support

Optimal geography

Partnerships

The Renault-Better Place project (Israel) The Bolloré concept

Partnerships

• Leasing

• Battery swap • Fast charging • Normal charging

Technology Sourcing

• No specific infrastructure

Source: A.T. Kearney

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Other players can be attracted by new business models in the EV-mobility market

• Pro's: diversification & image, control of distribution turnover erosion

• Con's: resale of electricity with limited added-value

• Possible mandatory pressure of public authorities to install charging stations to get additional concessions

Source: A.T. Kearney

Distribution of electric cars Charging of electric vehicles

• Use of commercial presence

• Knowledge of automotive market, as well as maintenance capacities

• Possible "dual" offering: EV-week & petrol-weekend

Own maintenance

network

Network of ~ 500 agencies

Charging Infrastructure

Fuel Distribution

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A wide range of stakeholders will be shaping the EV landscape

Automotive players

(OEMs & suppliers)

Energy companies

Equipment providers

Users

Public authorities

Source: A.T. Kearney

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Major actors as well as new entrants have a potential to occupy the EV landscape

Automotive players

Energy companies

Equipment providers

Users

Public authorities

Communication

Petroleum Companies

Infrastructure Utilities

Municipalities and governments Regulative / tax / subsidies

Electronics

Chemical companies

Battery suppliers

Consumer associations

Fleets

Leasing and financing companies

Source: A.T. Kearney

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