DUCKER WORLDWIDE SETTING THE STAGE FOR THE …€¦ · 24/10/2018 · capabilities, Ducker develops sound strategies to win in existing and new markets Ducker’s transactionadvisors

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DUCKER WORLDWIDECRITICAL THINKING FOR CRITICAL DECISIONS.

SETTING THE STAGE FOR THE LIGHTWEIGHTING OF PASSENGER CARS AND LIGHT TRUCKSPrepared for SAA Lightweighting Conference October 24, 2018 | Detroit, Michigan

CRITICAL THINKING FOR CRITICAL DECISIONS

TRANSACTION ADVISORY GROWTH CONSULTINGMARKET RESEARCH

Ducker gathers unique market, customer and competitive insights

when others cannot. Leveraging industry expertise and research

capabilities, Ducker develops sound strategies to win in existing and new

markets

Ducker’s transaction advisors assist clients with searching and

researching acquisition targets, and provide best-in-class diligence to de-risk M&A transactions. It's a

natural extension of our consulting and research services

With a dynamic fact-based and advanced business analytics, Ducker works with management to develop

actionable strategies and detailed go-to-market plans that represent best-

fit solutions

Confidential © Ducker Worldwide 2

Confidential © Ducker Worldwide

SINCE 1996 A TRUSTED SOURCE FOR UNBIASED LIGHTWEIGHT MATERIAL MARKET INTELLIGENCE

5

1996 2006 2015 2016

ALTG Aluminum

Content

Castings/Alloys

Development

Casting & Forging Research

Steel Stamping

Tool & Die

Rod & Bar

Analysis

RIM for Auto

Application

SMDI Steel Content

ALTG Aluminum Content

SMDI Steel Content

SMDI Steel

Content

Aluminum Sheet Recycling

SMDI Steel

Content

Steel Roll-Forming

Auto Extrusions Research

Auto Castings Research

AEC Research

Program

AEC Research Program

Composite & Plastics Analysis

360 Degrees of Auto

Lightweighting

Materials

2014

EU Aluminum Content Study

100+ Bespoke Supplier Studies

2016 EU Aluminum Content Study

European Aluminum Association

2017

2017 NA Aluminum

Content Study

NA Aluminum Association

2016 18 + Bespoke Supplier Studies

NA, EU, APAC

S. Africa

2015 30+ Bespoke Supplier Studies

NA, EU, APAC, S. Africa

2018

SMDI Steel Content

2017 22 + Bespoke Supplier Studies

NA, EU, APAC


SETTING THE STAGE


SETTING THE STAGE

7

Several different yet related factors impact OEM decisions to go forward with the significant light weighting of vehicle components. Regulations, competition, cost, capital, timing and other alternatives for achieving the OEM’s business goals all come into play

VEHICLE

LIGHTWEIGHTING

Fuel Economy Regulations &

Incentives Acceleration, Ride & other

Drivers for Mass

Reduction

Competitive Pressures &

Program Cost Targets

Weight Savings from

Design & SubstitutionDirect

Material Costs per Pound of Weight Saved

Assembly, Joining &

Capital Costs

Electrification & other

Improvement Technologies

Launch Cadence &

Supply Chain

Source: Ducker Analysis


SETTING THE STAGE

8

Even though the U.S. regulations beyond 2020 are in a state of uncertainty, there is a tailwind behind emission and fuel economyimprovements that will continue well into the next decade

13.1

19.221.3 21.2 20.5 19.8 19.9

22.624.8

30.0 30.032.0

34.0

38.0

0

5

10

15

20

25

30

35

40

Adjusted (Real World) Fuel Economy in MPGfor U.S. Light Vehicles

681

466417 429 434 450 447

394361

296 296 278 261 233

0

100

200

300

400

500

600

700

800Adjusted (Real World) CO2 g/mile

for U.S. Light Vehicles

Source: EPA 2018 Trends Report and Ducker Analysis


SETTING THE STAGE

9

The ability of a variety of old and new materials to reduce vehicle weight without sacrificing safety and performance is not a mystery. There is no doubt that we know how to save weight!

Specific Strength Versus Elongation With Equal Thickness

Source: GM

Commonly Accepted Auto Material Substitution Ratios

Source: Toray, Ducker Analysis


SETTING THE STAGE

10

The 7% mass reduction by 2025 spelled out by NHTSA and the EPA in the 2016 Technical Assessment Report can be achieved with materials currently available. Adding nearly 270 pounds of new steels with tensile strengths over 590 MPa and 179 pounds of structural aluminum

over the 2015 mix can save 220 pounds per mass per vehicle.

287

179

40 21 16

-716

-55-42

-270

-800

-600

-400

-200

0

200

400

FR Steel=>590 Mpa

TS

Aluminum Polymers CFRPComposites

Magnesium FR Steel <590 Mpa TS

Other Steel&Iron

Glass NetReduction

Po

un

ds

per

Veh

icle

2015 to 2025 Changes in Average Light Vehicle Material Mix

Aluminum51%

FR Steel = >590 Mpa TS

31%

CFRP Composites

7%

Other Polymers

8%

Magnesium3%

Sources Of Weight Savings

Achieving a 270 pound 7% Mass Reduction Requires a Multi-material Approach

270 Pounds Saved



SETTING THE STAGE

11

This results in some significant mix changes. Total aluminum content would go from 10% to 16% and total ferrous content would gofrom 64% to 55%. AHSS and UHSS sheet, however, would go from 8% to 16%; while polymers would grow from 8% to nearly 12%

Aluminum10%

Mild Steel Sheet 18%

Bake Hard Steel Sheet

2%

HSS & HSLA Sheet13%

AHSS Sheet6%

UHSS Sheet2%

All Other Steel15%

Iron8%

Magnesium0%

Other Metals4%

Polymers8%

Conventional SMC0%

Glass3%

Other Materials 11%

Aluminum16%

FR Steel <590 Mpa TS

16%

FR Steel = >590 Mpa TS

16%All other Steel15%

Iron8%

Magnesium1%

Other Metals5%

Conventional Polymers

10%

CFRP SMC >1.2 SG<1%

CFRP Epoxy <1.2 SG<1%

Glass1%

Other Materials12%

2025 3565 Pounds

2015 3835 Pounds

Material Mix Changes for a Curb Weight Reduction of 7% or 270 Pounds



SETTING THE STAGE

12

Determining the direct costs per pound of weight saved excluding assembly and capital costs can be estimated from this diagram. Our estimate is less than a $600 dollars per vehicle penalty to save 7% or 270 pounds with a direct cost of $2 per pound saved. $2 per pound saved may not be the

lowest cost solution, but it is very close



SETTING THE STAGE

13

How much CO2 will 7% save? The answer is 16 to 17 adjusted grams per mile or 1.2 to 1.5 adjusted miles per gallon. That is the equivalent of an EV penetration of 4% to 5%. At current battery costs, saving weight is more cost effective than electrification

11.9

23.1

33.5

43.3

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

0 5 10 15 20 25

Gra

ms

of

CO

2 p

er M

ile

Mass Reduction Percent

CO2 Reduction from Mass Reduction

The Relationship Between CO2 Emissions, Fuel Economy, and Mass Reduction


16.4 Grams

7% MR

-100 Kg=-8.3 g/Km CO2


SETTING THE STAGE

14

Mass savings will play a significant role along with conventional powertrain improvements, significant EV penetration, 48volt systems, conventional hybrids, drag and friction reduction to save over 100 grams of real world CO2 emissions from 2018 to sometime next decade

11.1%

15.1%

14.1%

19.8%

20.0%

44.3%

Cylinder Deactivation

Stop/Start

CVT

Seven Speed or >Transmissions

Turbocharging

Gas Direct Injection

2018 - 2025 Penetration Increase

60, 51%

32, 27%

16.4, 14%

10, 8%

Powertrain Technologies other then EVs

Electric Vehicles PHEV 2.8%, BEV 5.7%

7% Mass Reduction

48 Volt & Other Technologies

119 CO2 g/mile Saved 2018 - 2025 60 CO2 g/mile Saved 2018 - 2025


SETTING THE STAGE I will end on an interesting note. If and when the penetration of battery electric vehicles and plug in hybrids reach 15% of sales, the need for

additional weight savings other than those to overcome safety and performance creep will be superfluous. A 15% penetration for electric vehicle sales is far into the future in the U.S, but in China it could occur next decade

60, 51%

32, 27%

16.4, 14%

10, 8%

Powertrain Technologies other then EVs

Electric Vehicles PHEV 2.8%, BEV 5.7%

7% Mass Reduction

48 Volt & Other Technologies

60, 51%59, 49%

Increased Penetration of PowertrainTechnologies other than EVs

Electric Vehicles PHEV 5% BEV 10.3%

8.5% EV and 7% Curb Weight Reduction 15.3% EV with No Curb Weight Reduction Required

CO2 g/mile Saved 2018 - 2025CO2 g/mile Saved 2018 - 2025

Only 2% of sales in 2018

15


THANK YOU.This concludes our presentation. Today’s presentation was prepared by Ducker Worldwide LLC. Opinions and estimates constitute judgment as of the date of this material and are subject to change without notice. Any interpretations derived from this document are the sole responsibility of the client. Reproduction without the explicit consent of Ducker Worldwide LLC is strictly prohibited.

For more information regarding our Market Research, Transaction Advisory, or Growth Consulting expertise or to learn how Ducker Worldwide can help you, please contact one of our team members at 248-644-0086 or visit our website at www.ducker.com.

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DUCKER WORLDWIDE SETTING THE STAGE FOR THE …€¦ · 24/10/2018 · capabilities, Ducker develops sound strategies to win in existing and new markets Ducker’s transactionadvisors