Serial Production of Fuell Cells - NOW: now-gmbh.de...…, but hydrogen fuel cell component suppliers should seize the opportunity of digitisation and industry 4.0 14.03.2016 Implications

Impact on Supplier Landscape

Serial Production of Fuell Cells

March, 10th 2016 Presentation Nationale Organisation Wasserstoff-

und Brennstoffzellentechnologie

Dr. Gerhard Nowak

Prepared for NOW Strategy& | PwC PwC Strategy&_NOW_Serienproduktion Brennstoffzelle_160310_Vf.pptx

Electric and hybrid engine types will double in production, however will remain below 7% of total engines produced

14.03.2016 2

Worldwide engine type production 2016 and 2021 (Million units)

2021

+16%

6,000

1,072

101,897

108,968

94,304

3,775

540

2015

89,989

Combustion

Electric

Hybrid

Hinweis: Weltweit

Quelle: Autofacts

7%


Realistic volumes of FCV for 2030 comprise

between 2 and 6 million vehicles produced per

year, with a center of gravity at approx.

4.7 million Fuel Cell vehicles

FCV – Volumes in Mio. FCV – Regions

The main FCV producing regions in 2030 are

expected to be EU (1.6 mill.), Japan (1.5 mill.)

and NA (1.3 mill.), followed by Korea (0.3 mill.)

and China far behind (11 k)

General consensus agrees that fuel cell vehicles will increase in market share, however to which level is hard to predict

14.03.2016 2

Hydrogen Fuel Cell Vehicles (FCV) Forecast 2030

Korea

Japan

32%

28%

6%

North

America

EU

China

0%

34%

3.0

2.0

5.0

1.0

4.0

0.0

6.0

2030 2015

FCV / yr.

Quelle: PwC Strategy& Research


The development of the market depends on key fuel cell market drivers

14.03.2016 3

Political & Legal incentives & regulations • Subsidies for green engines, bonus/malus

• Restrictions & quotas for ZEV/ICE production

and usage

• Vehicle emission regulations for CO2/Nox/PPM

Strong influence on production and sales

1

H2 infrastructure (PC) • Network density, distance to next station

• Investor into infrastructure

Major growth lever for PC & CV

PC-BEV breakthrough • Substantial range increase

• Significant cost reduction

• Breakthrough per segment

Potential show stopper

2

3

TCO PC strong fuel cell vehicle (SFCV) • Purchasing & operating costs, insurance,

MRO…

• Stated relative to existent products

High influence for CV/OHW

4

Perception • Image of FC / H2, perceived safety

• Perceived eco-friendliness

• Customer experience, trends

Major influence for PC

PC HFCV (Hybrid FCV) growth • FC as range-extender for BEV

• Impact/availability on market

Single growth lever or additional to FCV

5

6

The key drivers are the ones with the highest mutual affinities; they also cover a wide representativeness of the various influences on the market and offer strong leverage


Stack

• Cost decreases expected

– Decrease of catalyst load (down to 0.1 mg/cm² in 2030), use of cheaper

catalysts (e.g. noble metal alloys)

– Increase of power density (up to 1.5 W/cm² or higher) hence less MEA &

BIP area

– Optimization of BIP manufacturing and coating technologies

• Parts may be simplified (e.g. membrane technology for water separation) or

integrated, e.g. into the stack, like seen currently for the humidifier at Toyota’s

Mirai, yet no clear indication which components

• Application of components on basis of further optimized electrified auxiliary

units of ICE (e.g. ETC, electrified water pump, H2 recirculation,…)

• Cost decrease due to continuous optimization expected

• Global change towards 700 bar expected for higher fuel density/range

• Costs have to be reduced, yet approach unclear

• Cryo-compression is seen highly skeptical, attributed with high cost & weight

• Metal Hydrides interesting for material handling as counterbalance, not in other

segments

Future technology development is seen to be incremental rather than disruptive

4

Technology – System Design

Gas

storage

System

Source: PwC Strategy& Research, Expert Interviews

Experts do not expect disruptive breakthroughs in fuel cell technology but a continuous improvement of the current state of the art

14.03.2016


Third party market interviews further point at weak market disruption from FCV by 2030

14.03.2016 5

Key findings from the third party market interviews

• From 2020-25 or 2nd/3rd generations Mirai/IX35, most OEMs will have an FCV in their portfolio, increasing subcontracting, raising competition and decreasing costs

Market OEMs

• According to a general consensus, the FCV market will grow, no doubt, but slowly until 2025, moderately between 2025-30 and more strongly from 2030 onwards

Regulations Competition

• Government push are critical for market activation: in the short term, subsidies at the end of the value chain are strongly needed to make up for high FCV selling prices

• Initially the main competition for FCV until 2025-30 are PHEV, not BEV. The use case for BEV is seen as urban/LD only with little overlap with FCV

In all likelihood, the 2030 market will comprise a variety of powertrains with increasing importance of FCVs, and regulations on a tank-to-wheel basis. I.e., full FCV breakthrough until 2030 is unlikely from today’s perspective


The FCV powertrain contains several distinct components

14.03.2016 6

Powertrain Components

Internal Combustion Fuel Cell

Tank • Steel or aluminium • Plastic (high density polyethyle)

• Type 4 compressed gas tank @ 700 bar • Carbon-fiber-reinforced plastic (CFRP)

Engine • Cylinder block • Crankshaft • Cylinder Head • Camshaft • Connecting rod

• Housing • Rotor • Stator • Axle • Commutator

Transmission • ATM • Sequential transmission

• Max. 2-step transmission

Axle • Drive axle • Axle

• Drive axle • Axle

System/Control -/-

• Compressor, H2 recirculation/injection/sensor, intercooler, humidifier, cooling

Battery -/- • Lithium ion battery

Fuel Cell

-/-

• PEMFC (Proton Exchange Membrane Fuel Cell) • Catalyst: Platin (0,2mg/cm²) • Power: ~ 100 kW


The supplier landscape for both technologies has limited overlaps and will therefore only effect specialized suppliers

14.03.2016 7

Components Suppliers of ICE components Suppliers of FCV components

Fuel Tank

Engine OEMs OEMs

Transmission

OEMs -/-

Axle OEMs OEMs

System/Steering1)

Battery -/-

Fuel Cell -/-

Supplier landscape ICE versus FCV

NOT COMPREHENSIVE

1) Also partial coverage

Source: PwC Strategy& Research, Company website, annual reports, Bloomberg, international press


Impact for traditional suppliers remains limited, however digitization will become a topic of importance

8

• The market development is strongly dependent on internal

(technology development) as well as external (regulations,

break throughs in BEV or PHEV technology, perception)

drivers

• Realistic volumes of FCV for 2030 comprise between 2 and 6

million vehicles produced per year, with a center of gravity at

approx. 4.7 million Fuel Cell vehicles

• Strong competition from PHEV

• Many of the current suppliers will still play a fundamental

role in the market of FCV

• Integral components as the fuel cell will most likely stay in the

control of the OEMs

…, but hydrogen fuel cell component suppliers should seize the opportunity of digitisation and industry 4.0

14.03.2016

Implications for automotive suppliers

Market prognosis Powertrain

Influence of fuel cell serial production on current suppliers is limited due to rather small market share and powertrain similarities…


Production processes and FCV components can participate at the advantages of further digitization efforts

14.03.2016 9

Production and Product Digitization

Production Process A FCV components B

FCV could play an important role in digitization of powertrain production processes and products towards new business models for both supplier and machine tool manufacturers


Digitization asks for extended functionality in next generation of fuel cell component production

14.03.2016 10

Examples of Impact of Digitization on fuel cell component production

Open control

architecture to

integrate with

multiple systems

Motors

(Servo, Linear &

Torque, Spindle)

Drives

(e.g. Servo Drives) Converters

(Basic to

High Performance)

Spindle

(e.g. motorized

core spindles)

Integrate smart sensor data,

e.g. to measure tool

consumption vs. power input Increase flexibility and

performance for multiple-

axis / spindle applications

Significantly

increase

computing power

of the controller

Enable digital

connection to MES

system and other

machines Include data security

and protection

solutions against

cyber attacks

Optimize HMI

design to ease user

requirements

Integrate Quality

Control (material

and work quality)

during work cycle

1 3

5

7

8

9

10

Predictive maintenance for machine center / systems using

big data analytics

4

Optimize sensor-

based machine

monitoring for OEE,

quality etc.

6

A

2


The machine tool ecosystem has yet mature players with own solutions for a digitized production process

14.03.2016 11

Machine Tool Ecosystem

Robots

Communication

Provider

Manufacturing Site

Operators

Communication

Service Provider

Raw Material Supplier

Industrial Site

Builders

Logistics Provider

Machine Tool

System

Machine Center

Motors & Drives Tools

MRO Provider

New Market

Entrants

Components

A


Digitization provides vast opportunities in production automation along the entire supply and value chain

12

Maintenance • Capacity

• Spare parts

Tool management system

MES

MIS

Warehousemanagement-

system (WMS)

Logistic system (e.g. AGV)

ERP

Data Mining/Analytics

Va

lue

Ad

d S

tru

ctu

re

• Component geometry • Process parameter • Material specifications • Process parameter • ...

Customer System Environment

Production Network

Process Chain

Single Unit Machine

Components

B2B 3D-Printing

of spare parts

Cloud

Database

• Service equipment packages/ component

Capacity platform Machine capacities Tools and fixtures

Cyber Security

Collaborative

engineering

Capacity Planning Max.

Mo. Di. Mi. Do. Fr. Sa. So.

intern

Machine Tool OEM • Digital Clone

• HMI (Human Machine Interface)

DMC

…

• Order Modification/ Transparency

• Multi channel order interface

• Districted order tracking(DMC, RFID, DMG)

Statistic Process Control (SPC)

MTS

14.03.2016

A


Example: multiple growth / value capture opportunities for Fuel Cell components supplier

14.03.2016 13

MES and

integration

Digitised single

machines

Automation &

embedded systems

Sensors &

electrical actuators

Data and planning

management

Integrated mfg. &

logistics systems

End-to-end digital

engineering/planning

ERP and business

software Big Data Management

• Data management

• Data analysis

Security solutions

• “Security as a Service”

• Forced-entry tests

Cloud services

• Infrastructure

• Implementation

Control tower

• Building automation

• Access controls

Engineering services

• Product development

for small lot sizes

Manufacturing Execution Systems (MES)

• Integration

• Data and process management

Supply Chain

Digitalization

• Sensors and

Automation

• Integrated

manufacturing and

logistics systems

• 3 D Printing

RFID data transmission

• Hardware

• Implementation services

Horizontal and vertical integration

• IT Architecture

• MES and ERP / business solution integration

• Hardware and Integration

Supply chain/

logistics

Manufacturing/

Production

Planning Product

Development

A

EXAMPLE

Vertical and Horizontal Integration


• Focusing on making and selling

hardware, albeit with extensive

networking capabilities

• Marketing hardware as a part

of larger ecosystem by

partnering with other product

and service providers (e.g.

mobile platform providers)

• Capturing data and customer

access data from the several

sources (e.g. sensor, usage,

performance data)

• Leveraging data for direct

monetization (selling to

advertisers) or for data service

provision (e.g. cloud data

service)

• Create new business models

based on unique customer

and hardware data and insight

• Develop completely new

products and services based

on access to data and

technology

Beyond the production related digitization we see three basic positioning options for component manufacturer

14

Three Basic Positioning Options - Corresponding Ecosystem Business Models

Become an

aggregator of (big) data

Innovate around

hardware infrastructure

Transform into

service business

“Hardware Provider” “Data Aggregator” “Solution/Service Provider”

Options are complementary and not mutually exclusive –

Companies may pursue all the options at a time

New Digital Business Models

14.03.2016

B


The development from a hardware provider to a data aggregator and solution/service provider is an opportunity

Extended Fuel Cell Components Supplier business fields

15 14.03.2016

Advanced

Algorithms

Vehicle

Component

Sensors Technology

Cloud

PDM

Production

B


Diagnose services during

vehicle operation and

combination with information of

the traditional use cases

Enhancement of the traditional use case by aspects of digitization during the vehicle operation

Complementary use cases

3

1 Control of material flow and value creation

2 Tracking of parts / Traceability

3 Vehicle operation

Traditional use cases in

industrial controlling and

automation of production

processes

1 2

Traditional use cases Extended use cases

16 14.03.2016

B


FC suppliers may seize digitization to significantly extend their traditional use case of production control

14.03.2016 17

Optimization potential through interconnectivity of powertrain data

Current data interconnectivity Potential optimized data interconnectivity

• Insights on cause and

effect relationships enable:

• Optimization of production

processes

• Product quality

improvements

• Fleet-wide real-time

analyses of vehicle data

allows:

• Early failure detection

• Deviation analysis

• Increased diagnostic

capabilities of workshops

• Diagnostics efficiency

• Reduction of repair times

• Customer information, e.g.

onvehicle details, needs-

based inspection intervals,

and repair time

Production

site

Vehicles Workshop

OEM

3

2

Production and vehicle operation

information

1 1

2

4

3

Workshop

Traditional vehicle diagnostic Digitalization of vehicle diagnostic Potential SIEMENS USP

Production

site Vehicle

OEM

Production

information

Vehicle operation

information

1

2

Inefficiencies to date:

1. Data analysis only during workshop

activities

2. No real-time data analysis – Simple error

algorithms with notifications (yellow/

read) inside the vehicle

1

4

End customer

Data cloud

PDM

Product cloud

B


Types of failure patterns and opportunities for detection and early feedback

Digital applications for failure detection

Failure status

Breakdown

Time

or distance

Warning

level

red

Warning

level

yellow

Internal

warning

level

Tolerance

level

Customer-

relevant

Intern

OEM

A

C

Point in time car Point in time customer

B

Onboard notification

(HMI) Typical failure patterns (examples)

Engine failure with out prior notice

Engine failure with increasing failure

pattern

Continuous failure without

relevance

Error occurrence and detection

18 14.03.2016

B


The extension of the traditional business models facilitates benefits for FC component suppliers and customers

Use case overview

Deviation analysis Early failure detection Return information &

regress

A B C

De

scrip

tio

n

• Extension of the traditional production related business model to a digital ecosystem

• Addition of integral solutions and digital services to the traditional hard- and software business

• Fuel cell component suppliers as data aggregator to gather and analysis data along the product life

cycle

Be

ne

fits

• Early interaction by detection of abnormities during driving mode

• Detection of failure patterns and deduction of counter measures to be implemented in serial production

• Systematic increase of product quality

• Facilitate component traceability

• Increased car availability and tailored and user specific services

Custo

mer

&

OE

M

19

FC

com

ponent

supplie

r

14.03.2016

B


• Fuel Cell components

suppliers will have a promising

way to play and growth

opportunity by exploiting

advanced production

technologies in combination

with digitization

• Setup of advanced business

models by extending the own

production process tracking

capabilities to future product

performance tracking

capabilities and therefore

providing additional services to

OEMs and final customer

• The FCV market will increase

its share significantly, but in the

overall picture remain a “small

player” for the years to come

• Thus the supplier landscape

will not feel any drastic

changes in the near future

• The development of FCV brings

the opportunity of pushing

digitization and industry 4.0 for

powertrain production

processes and products towards

new business models for

suppliers

FCV market development will have limited impact on traditional suppliers but provides several opportunities around digitization for FC components suppliers

14.03.2016 20

Summary Outlook


Contact

21

Partner

München

Operations/ Engineered Products & Services

T: +49 89 54525 530

M: +49 172 2719 205

Gerhard.Nowak@ strategyand.de.pwc.com

Dr. Gerhard Nowak

13.10.2015


Strategy Impact

February 2016 22 Confidential Property

Documents

Serial Production of Fuell Cells - NOW: now-gmbh.de...…, but hydrogen fuel cell component suppliers should seize the opportunity of digitisation and industry 4.0 14.03.2016 Implications