The Expectation of Electrification in the North …...The Expectation of Electrification in the North America Finding Our Place in an Electric Future Kevin Riddell, LMC Automotive

www.lmc-auto.com © 2018 LMC Automotive Limited, All Rights Reserved.

The Expectation of Electrification in the North America Finding Our Place in an Electric Future

Kevin Riddell, LMC Automotive 31st Annual Automotive Industry Outlook Conference, Detroit, January 14 2018

www.lmc-auto.com © 2018 LMC Automotive Limited, All Rights Reserved. 2

• Current Market Conditions

• Electrification

• Competing Technologies

• Summary


International Challenges

Electrek.co Nov. 27, 2016

CNBC.com Oct. 2, 2017

nytimes.com Oct. 2, 2017

cleantechnica.com Nov. 18, 2017

autonews.com Sep. 7, 2017

theguardian.com Jul. 25, 2017

economist.com Sep. 14, 2017

forbes.com Oct. 16, 2017


• No expectation of a dramatic jump in global oil prices

• No help to electrification from fuel cost perspective

Brent Crude Price per Barrel ($)

Source: World Bank

Oil Price Outlook


02468

10121416

Global EU Japan China

Mill

ions

xHEV BEV

0

0.5

1

1.5

2

2.5

3

Global EU Japan China

Mill

ions

xHEV BEV

2016 Electrified Vehicle Sales

Electrification Outlook for Key Regions 2023 Electrified Vehicle Sales

• Japan is early adopter in electrification penetration • China took BEV sales lead from US in 2015 • EU and US have similar volumes in 2016 but CO2 requirements push

EU to higher volumes in coming years


• Rules for 2022-2025 re-opened • Now including possible

changes in 2021

• California ARB has issued a resolution stating the regulations should remain*

Source: C2ES.org, google maps, Midterm TAR

• Likely to keep ZEV regulations regardless of National CAFE/CO2 outcome.

• California and the other ZEV states make up 25-30% of US vehicle sales.

Domestic Influences


California ZEV Changes Significant Differences Between

ZEV standards

Source: California Air Resources Board

PZEV: Partial Zero Emission Vehicle AT PZEV: Advance Technology Partial Zero Emission Vehicle TZEV: Transitional Zero Emission Vehicle

Year ZEV RequirementMinimum Actual ZEV

Requirement (for large mfgs.)

2012 12.0% 0.79%2013 12.0% 0.79%2014 12.0% 0.79%2015 14.0% 3.0%2016 14.0% 3.0%2017 14.0% 3.0%2018 4.5% 2.0%2019 7.0% 4.0%2020 9.5% 6.0%2021 12.0% 8.0%2022 14.5% 10.0%2023 17.0% 12.0%2024 19.5% 14.0%2025 22.0% 16.0%

- 2017 2018 +

PZEV yes noAT PZEV yes noTZEV yes yes

Small Mfg < 4,500 < 4,500Intermediate Mfg 4,500-60,000 4,500-20,000Large Mfg 60,001+ 20,001+

2018 legislation changes the way credits are calculated


• Current Market

• Electrification


• Summary


• Battery pack wholesale cost is reckoned to be circa $200/kWh in 2017 • Should reach IC parity by 2025, but BEVs may not be profitable by then

Pack

Who

lesa

le C

ost (

$/kW

h*)

BEV Battery Pack Price Outlook

$190 (McKinsey)

$100 (McKinsey) $100 (US DOE, Tesla)

* Price based on Li-ion battery pack produced at US-based large battery plant (3GWh)

$73 (Bloomberg NEF)

Future

LMCA

200 Incentives needed IC parity BEV profit


0

50

100

150

200

250

300

BEV Range Outlook Av

erag

e BE

V Ra

nge

(mi)

Without Tesla

• Increasing range has helped sales of existing BEV models • In the longer term, Tesla’s range advantage will narrow

Source: LMC Automotive, fueleconomy.gov


Electrification Snapshot - USA

2016

BEV

FCEV

HEV

48V HEV

PHEV

• Next generation of California ZEV laws start taking affect with 2018 MY

• Fuel Cell models targeted to California • Current models seeing very limited sales • Fueling infrastructure still miniscule

Source: LMC Automotive

2016 Sales 2023 SalesBEV 73,200 423,700

xHEV 424,900 1,945,200

16

26

43

30

10

20

30

40

50

BEV PHEV HEV FCEV

Num

ber o

f Mod

els

USA - Hybrid/EV Type Model Count

2017 YTD

https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiE5PeOqcvNAhWHyoMKHcd4DyMQjRwIBw&url=https://www.teslamotors.com/about&bvm=bv.125596728,d.amc&psig=AFQjCNGz5MFYbgSojyRjd8HkVeSyrGedmw&ust=1467223873945351

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjKoMe3pMvNAhVBxYMKHWs-BFYQjRwIBw&url=http://www.car-brand-names.com/subaru-logo/&psig=AFQjCNHZ3-hTIsg6bggDm7hTNPkWm7Sg7g&ust=1467222554537287

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjst9m7qMvNAhVH5IMKHRYACfwQjRwIBw&url=http://www.car-brand-names.com/honda-logo/&bvm=bv.125596728,d.amc&psig=AFQjCNFB4HROWu_YffxXsCishQf6_IZC-Q&ust=1467223714873871


Electrification Snapshot - Canada

2016

BEV

FCEV

HEV

48V HEV

PHEV

• Quebec has adopted ZEV regulations • Subsidies for plug-in vehicle purchase • Subsidies for 240v home charger installation

• Potential national ZEV policy will influence

future outlook

Source: LMC Automotive, JATO Dynamics

2016 Sales 2023 SalesBEV 4,900 19,800

xHEV 36,300 183,300

1119

26

00

10

20

30

40

50

BEV PHEV HEV FCEV

Num

ber o

f Mod

els

Canada - Hybrid/EV Type Model Count

2017 YTD


http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjKoMe3pMvNAhVBxYMKHWs-BFYQjRwIBw&url=http://www.car-brand-names.com/subaru-logo/&psig=AFQjCNHZ3-hTIsg6bggDm7hTNPkWm7Sg7g&ust=1467222554537287



Electrification Snapshot – Mexico

2016

BEV

FCEV

HEV

48V HEV

PHEV

• No large incentives

• Fewer brands offering electrics • Fewer models available per brand • Many brands only offer a single model


2016 Sales 2023 SalesBEV 200 400

xHEV 7,400 46,100

38 6

00

10

20

30

40

50

BEV PHEV HEV FCEV

Num

ber o

f Mod

els

Mexico - Hybrid/EV Type Model Count

2017 YTD




0

500

1,000

1,500

2,000

2,500

3,000

2012 2016 2020 2024

Sale

s (Th

ousa

nds)

Mexico Canada USA

0%2%4%6%8%10%12%14%

0

500

1,000

1,500

2,000

2,500

3,000

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Tech

nolo

gy Sh

are

Sale

s (Th

ousa

nds)

BEV FCEV HEV 48V HEV PHEV Electrified Share

North American Electrification Outlook

• The US and Canada will drive higher volumes of HEV/BEV/FCEV vehicle sales

• Mexico is expected to hold North American market share down slightly due to a much slower adoption rate


NA Advanced Electrification Vehicle Sales Advanced Electrification Vehicle Sales by Country


0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

BEV

Sale

s Vol

ume

US BEV Sales Forecast

LMC U.S. BEV Sales forecast

LMC California BEV Sales forecast

Actual California BEV Sales

BEV Sales Distribution

Source: LMC Automotive, drivingzev.com

• In the past couple years, California made up over 50% of US BEV sales but only accounted for around 10% of total US vehicle sales annually

• Charging network • High state

incentives • ZEV credits transfer

• Other states rolling out

strategies to improve BEV environment as sales have to spread more evenly

54%

41%


BEV Sales Distribution

Source: energy.ca.gov, google maps

Key challenge: California is still has the best charging network


Electrification Challenges • Competition for capital

• IC development, fuel cells • Autonomous development

• Electric grid capability

• Durability issues • Questionable battery longevity • Extreme climate performance

• Capability of cars within the next few years will exceed capability of most charging stations

• Lower residuals post lease leading to higher future leasing pricing

Autonomy FCEV


• Current Market

• Electrification


• Summary


• Nobody is marketing diesels right now

• Market is gradually recovering: • Chevrolet Cruze, Colorado, Equinox • GMC Canyon, Terrain • Ford Transit • BMW X5 35d, 328d, 540d • Jaguar XE, XF, F-Pace • Land Rover Discovery/Sport, Range Rover/Sport, Range Rover Velar

• Demographic is changing: • 2014 19% diesel sales were cars • 2016 1% diesel sales were cars

Any Room Left for Diesel?

Jaguar F-Pace

Ford F-150


How About Fuel Cells? • Significant progress in development

• Improved production processes decreasing costs • Decreased size • Improved stack efficiency • Increased competition • Toyota expects fuel cell car to carry same premium as an equivalent

hybrid by 2025

• Fleets are still primarily low-volume for research

• Retail fueling infrastructure in its infancy • Should not require upgrades to fuel pumps with advances in technology

• Durability?


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%20

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

1520

1620

1720

1820

1920

2020

2120

2220

2320

2420

2520

2620

2720

2820

2920

3020

3120

3220

3320

3420

3520

3620

3720

3820

3920

40

BEV experiencing stronger growth in later years as capabilities allow for extension into rural USA

% o

f New

Car

Sal

es

Source: LMC Automotive Forecast

32%

IC-only (diesel)

BEV PHEV

MHEV+FHEV

FCEV

10%

22%

7%

11%

IC-only (CNG/LPG)

MHEV(48V)

15% IC-only (gasoline/E85)

3%

North American 2040 Electrification/Diesel Outlook


• Current Market

• Electrification


• Summary


Limited money for investments needs to be balanced with IC in short term, fuel cells and autonomy further out Back to dual standard for CO2? Infrastructure ready outside of Cali? Will national incentives end too soon? Diesel strength in large/premium could slow hybrid gains in US sales Urban sprawl in the US requires a different electrification strategy than other global regions

Expectation Risk

Massive investments in electric development continuing on a global scale ZEV and fuel economy regulations will ensure an increasing demand for electrified models outside of California Diesel is a strong option for larger vehicles, fuel cells seen as longer-term goal Significant hurdles toward widespread BEV acceptance in US still to be overcome

BEV

In Summary BE

V O

ther

s BE

V

For any further questions, please contact: [email protected]


Focused › Smart Responsive Flexible › ›

Documents

The Expectation of Electrification in the North …...The Expectation of Electrification in the North America Finding Our Place in an Electric Future Kevin Riddell, LMC Automotive