Strategic Assessment of Passenger Electric Vehicle Market: Can EVs revive the auto industry?

Benny Daniel, Consultant Automotive & Transportation January 29, 2009

2009 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.

FOCUS POINTS
Unit Shipments (Thousands) 300 250
2565

200 150
1 00 630 1 60 2005 260 2006 2007 2008

100 50 0

2004

Market Overview and Forecasts EV Infrastructure Analysis

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

INDENTIFICATION OF ALTERNATE AND UNIQUE BUSINESS MODELS TO SUPPORT EV INFRASTRUCTURE

*In du str ie s: Ide nti fied and se lected based on d efin iti on e xisti ng i n eq ui ty tra de mark ets **Sp end in g la rge a mou nts of mo ney i n o wn R&D, to find man y of the proje ct s i n dead -e nds, ho pin g for some to tur n ou t as su cce ssfu l bl ockb uster g ene rati ng hi gh r etur ns. The mode l i s com mon ly u se d in in dustr ies wh ere deve lop men t co st s, r isks an d po tent ial rew ard s a re h igh .

Utilities P ower Generation Co. P artnership with Re newable Energy Providers Energy Storage Governmen t Carbon Trading Tax Incentive s Technology Smart Card Te lematics Mobile Se rvice Providers

Financial Banks, Insurance Venture Capital

Cons umer Green Collared Jobs

EV

Industrial Material Mining Buildings, homes, hospita ls Wire and Cable Bas ic M aterials Ele ctronics Li-ion, Copper and other battery packaging mtls.

Diversified Gara ges a nd service stations Cha rging Stations Parking Stations Battery Swapping Recycling

New Business Models Voice of Customer Study- Customer Feedback on EV

High

Potential for businesses to enter EV market with relatively low investment; strategise to partner with OEMs

New business opportunities for Utilities and Innovative financialleasing firms- To be resilient before it makes profits
Utilities

Potential to generate revenue

Battery Rejuvenation Fle et Businesses

Leasing Bus ine sses Financial

Medium

Re cycli ng

Servic e/ De alership

Coach Bui lde rs

Tele ma tic s

Ma rketi ng

Ins urance

Low

Tele com

Innovative model but due to demographics it requires good EV penetration and customer utilization- to have high impact if successful

Swap Stations

Opportunities

Low

Medium

High

Frost & Sullivan Support Capabilities

Scenario Analysis 700K Annual Sales Potential by 2015 in NA Regulations, Incentives, Loan Programs and Li-Ion Technology Advancement are Primary Drivers
Electric Vehicle Market: Scenario Analysis (North America), 2008-2015
800,000 700,000 600,000 Unit Shipment 400,000 300,000 200,000 100,000 0 2008 2009 2010
Optimistic

2011

2012

2013

2014

2015

Frost & Sullivan

Cons ervative

Key Drivers
CAFE

regulations - 35 fleet mpg by 2020, could be higher if states are allowed to set higher emission standards incentives and subsidies for EVs - $7,500 for Chevy Volt, free parking for EVs by many cities, exemption from emission certification by some states, HOV lane driving exemption for EVs with a single occupant aggressively pursuing HEV and EV strategy to secure $25B federal auto retooling loans and $17B+ TARP loans energy security concerns and energy independence goal of the Obama administration innovation and economies of scale have driven significant reduction in Li-Ion batteries in charging infrastructure and new business opportunities

Government

Optimistic Scenario: Relatively high fuel prices (averaging well-over $150/barrel), continuation of federal government incentives for EVs and expansion of state/city incentives, significant growth in charging and battery swap infrastructure, significant Li-Ion battery cost reduction (at least 50% reduction in 5 years - 2010-2015), no battery supply constraints, favorable field experience and no major safety issues. Frost & Sullivan Scenario: Relatively moderate fuel prices (averaging well below under $150/barrel), continuation of federal government incentives for EVs, slow growth in charging and battery swap infrastructure, moderate reduction in Li-Ion battery cost (no more than 33% reduction in 5 years 2010-2015), no battery supply constraints, no major safety issues.

Industry High

Technological Growth

Source: Frost & Sullivan

500,000

Scenario Analysis - Market Entry Strategies of Top OEMs and Change in Congestion Charging Schemes Are the Top Influences
Electric Vehicle Market: Scenario Analysis (Europe), 2007-2015
700000 600000 Un it S h ipm en ts 500000 400000 300000 200000 100000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 Optimistic Conservative Frost & Sullivan
F&S SCENARIO - 2015
Start-Up OEs
21 % 8% 2% 7% 11% 8% 4% 7% 31%

Volumes by Small OEMs- Identical in all 3 scenarios

OPTIMISTIC SCENARIO - 2015

16 % 6% 3% 9% 9% 9% 4% 10% 34%

Start-up OE's BMW Honda Toyota Mitsubishi Daimler VW PSA Renault Nissan

BMW Honda Toyota Mitsubishi Daimler VW PSA Renault Nissan

Source: Frost & Sullivan

4

Volumes doubling due to early market entrants

EV Technology and Product Roadmap- Charging Times to Drop From 6-8 Hours to <15 Minutes By 2015; But All Fast Recharging to Be Made Off-board
Lead acid Advanced Lead acid Nickel Metal Hydride Sodium Nickel Chloride Phosphate based Manganese based Titanate based Silica based Zinc Air Permanent Magnet Asynchronous Switch Reluctance In wheel motors
Driving Distance/chargeup to 60 kms

Batteries

Lithium Ion

Electric Motors

Performance

Up to 200 kms < 1 hour Up to 50 kWh

300 + kms < 15 minutes 75 kWh + 70 kW 250 kW

Source: Frost & Sullivan 5

Charge Time 6 to 8 hrs Battery Capacity up to 16kWh Motor Power- Up to 70 kW

Infrastr ucture

Slow charging - onboard Fast charging mostly off board Battery Swapping

2005

2010

2015

Number Of Potential Customers* To Increase 5 Fold Post 2015 Across Prime W. European Markets As EV Range Extends to Reach Suburban and Adjacent Cities
Electric Vehicle Market: Range and spread of Electric Vehicles (Europe), 2007-2015 +150 Miles
Potential Customer = ~ 3.42Mn Key Markets = , Scandinavia, Switzerland Drivers: 150 + Miles to be standard with high technology batteries offering stronger storage capacity Environmental concerns to yield high adoption rate among potential customers

Cities + Sub-urban + Rural

100 Miles

201 1-

201 5

Potential Customers = ~876K Key Markets = , Scandinavian regions Cities + Sub-urban Drivers: Competition will see EV manufacturers increase distance, speed and charging time configuration Consumers to increasingly use EVs to commute from home (suburban) to work (urban)
+

20

09

-2

01 0

50 Miles

04 20

08 -20

Potential Customers = ~ 686K Key Markets = Cities Drivers : EVs limiting range restrict application to cities

50 Miles

100 Miles

+150 Miles Source: Frost & Sullivan

6

*Potential Customer Customers Very likely to purchase EV with present specifications . Likely purchase to actual adoption rate would depend on individual market developments

At least 13 Congestion Charging Cities to Be In Operation In Europe By 2013, All Key Cities Have Good EV Potential
Future Schemes at proposal stage, 2008-2015 Schemes with future potential, beyond 2013 Existing schemes

Charging Stations = 50 (400 planed) Key Players = Govt Highlights 1. Charging station network is a government initiative

PLANNED BY 2010
Others Switzerland 80 200 30 Others

Charging Stations = 100 (40+in London) Key Players = Government, EDF, Elektromotiv Highlights 1. Govt invested 90Mn to make Britain the Capital of Electric Vehicles 2. EDF has partnered with Elektromotive to build 250 stations in London

Austria

150 193

France

425

Paris

50

Norway

400 120 Bordeaux

Charging Stations = 200 (100 + in Paris & Suburbs) Key Players = EDF, Govt, VMs Highlights 1. Govt allocated 400M to develop charging network 2. EDF partnership with Renault & PSA to build charging stations Charging Stations = 1300 target for 2011 Key Players = Govt, Nissan

100

60

Denmark Charging Stations= 20K plan Key Players = Better Place, Dong Energy

UK

250

Italy Germany

90

47 15

Lyon Strasbourg

500

200 200

20

Charging Stations = 60 Key Players = VMs, Utilities Highlights 1. VW & E-ON 2. Daimler & RWE Charging Stations = 20 (400 planned) Key Players = Daimler, ENEL

Synergies and initiatives from several industries will see the penetration rate of charging station increase dramatically The above forecast could prove conservative Source: Frost & Sullivan

Strong correlation exists between regional markets adoption of congestion charging (and other green initiatives) and uptake of charging stations, e.g. London and Norway Pioneering efforts from relevant industries could facilitate faster expansion of infrastructure

Shift From Dumb Grid to Smart Grid Will Support the Development of EV Infrastructure
T op

Tim

eF

ics

Utility Power Generation Infrastructure Conventional Grid and Infrastructure

Power Station

Implications on Utilities

EV Support Capability

ROI Opportunities

ram

Office Building Houses Factory

Centralised power stations Centralised power generation resulting in substantial power and transmission losses

Pre 2008

Limited to grid and utility industry

Transformation of` Conventional Grid Energy Internet

80 % developmen t
Smart Grid Control Centre Hospital

Solar Power

Wind Power

Energy Storage

Decentralized Generating facilities wind, solar Offices, hospitals selling excess energy back to grid EV as generators when not in use Increased efficiencies

40 % developmen t Own Generation

Smart House with EV car generator

Low High

UTILITY Consumers Utility Bills Partnership with renewable energy generators Charging Stations Parking Space Govt - Carbon Trading Venture Capital Garage and Stores Support EXTERNAL Battery Manufacturers Telecom Providers Smart Card Banks, insurance etc. Green Collared Jobs Recycling Battery Servicing - Swapping

2008 - 2015

Innovative Business Opportunities Arise from Partnership Formed Between Diverse Industries in Order to Expand Infrastructure in Time for the EV Boom
Identification Of Alternate And Unique Business Models To Support EV Infrastructure
*Industries: Identified and selected based on definition existing in equity trade markets **Spending large amounts of money in own R&D, to find many of the projects in dead-ends, hoping for some to turn out as successful blockbuster generating high returns. The model is commonly used in industries where development costs, risks and potential rewards are high.

Utilities Power Generation Co. Partnership with Renewable Energy Providers Energy Storage Government Carbon Trading Tax Incentives Technology Smart Card Telematics Mobile Service Providers

Financial Banks, Insurance Venture Capital Consumer Green Collared Jobs

EV

BLOCK BUSTER BUSINESS MODEL** New Business Models that will address additional Electric Vehicle (EV) energy requirements will be formed at the intersection of several diverse and cross functional industries

Source: Frost & Sullivan 9

Industrial Material Mining Buildings, homes, hospitals Wire and Cable Basic Materials Electronics Li-ion, Copper and other battery packaging mtls.

Diversified Garages and service stations Charging Stations Parking Stations Battery Swapping Recycling

Battery Leasing Best Returns: Future Leasing Models To Sell 75% Of EVs; The Rest 25% Sold Traditionally
Business Model 1 TYPE COVER Energy Package Battery lease + Electricity Monthly Bill NA NA Up to $200 Business Model 2 Maintenance Package Energy Package+ Insurance+ Maintenance Flat: Max 2000km/month NA NA Up to $400 Business Model 3 Part Subsidy Maintenance Package+ Discount Flat: 25,000km/year 4 years 50% car price $700- $1,000 Business Model 4 Full Subsidy Maintenance Package+ 100% Discount Flat: 30,000km/year 7 years Free car ~ $1,200- $2,000

ENERGY CONTRACT SUBSIDY MONTHLY LEASE

Future

Leasing EV batteries will be the likely option to continue beyond 2020. The leasing model might possibly be the main driver of how vehicles will be sold in the future. The immense engineering behind the batteries will only increase the cost and the performance. A strong option to amortize this is through the leasing models. Reduction of the product cost is to promote market penetration. In the same direction the future belongs to several ways of separating the energy from the battery.

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While Customer Awareness of EV Limitations are High, their Suggestions and Opinion on Incremental Improvements in EV are of High Interest to OEMs
Electric Vehicle Market : Ideal Characteristics of an EV consumer (United Kingdom), 2008
OWNERSHIP & MAIN USAGE Driving the vehicle to work is his main priority ~40% of the market Av miles per trip 16 (London), parking duration 7 hours 60% of these commuters do inner city commute Shopping during weekends. Differentiate between weekday and weekend usage average only twice a month - 100 miles or more

DEMOGRAPHICS Male/female falling under the age group of 26-45 yrs Has a university degree Earning between $30K - $655K Resides in London / Greater London Flat /semi-detached house residence FEEDBACK ON LEASING BATTERIES Prefer to lease battery than source it directly from manufacturer Efforts to dispose and effect on environment key reasons

Male/Female (26-45 yrs)

MOTIVATING FACTORS Contribution to environment Reduced fuel cost Savings on tax and other Govt subsidies Free from congestion charging Compact and ease in parking

NEEDS Reliability, price and fuel economy were the most important issues considered while purchasing EV Improved charging capability, provision of fast charger kits and maintenance free motors were features that consumers would consider to boost chances of EV purchase

SUGGESTIONS ON EV IMPROVEMENT Reliability and after-sales service Latest battery to aid in greater distance travelled Improved and increased access to charging stations Improved interior designs for greater experience Navigation tools to improve access to POII*
Source: Frost & Sullivan

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Electric Vehicle Market to Create Opportunities and Attractiveness for Industries such as Telematics, Mobile Phones, Fleet Businesses
Electric Vehicle Market- Opportunity assessment for various businesses, 2012-2015

High

Potential for businesses to enter EV market with relatively low investment; strategise to partner with OEMs

New business opportunities for Utilities and Innovative financialleasing firms- To be resilient before it makes profits
Utilities

Potential to generate revenue

Battery Rejuvenation Fleet Businesses

Leasing Businesses Financial

Medium

Recycling

Service/ Dealership

Coach Builders

Telematics

Marketing

Insurance

Low

Telecom

Innovative model but due to demographics it requires good EV penetration and customer utilization- to have high impact if successful

Swap Stations

Low

Medium Effort required to develop EV business

High

: Size of the bubble represents the impact on EV market

Source: Frost & Sullivan

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Our EV Global Research Program

Strategic Assessment of European Passenger Electric Vehicles Market - May 2008

Published Research

Strategic Analysis of European Market for Electric Corner Modules - Oct 08 Strategic Analysis of Global Market for Fuel Cell Electric Vehicles - Aug 2008 World Hybrid/Electric Vehicle Battery Markets -Jun 2008 Strategic Analysis of In Car Green Technologies - Jun 2008 Advances in Hybrid Electric Vehicles (Technical Insights) Global Market Analysis of Plug in Hybrid Electric Vehicles Dec 2007 European Consumers Attitudes & Perceptions Towards Sustainability, Environment
1. 2.

and Alternate Power-trains - Includes Vehicles Strategic Review of New EV Businesssection Modelson in Electric the Automotive Industry Q1, 2009 Analysis of Electric Vehicles Infrastructure for Automotive Applications in Europe and Revenue Generation Opportunities for Utilities Q1, 2009 Strategic Analysis of the Fleet Market Opportunity for Electric Vehicles in Europe Q2, 2009 Asia Pacific Market Analysis for Electric Vehicles for Fleets and Private Consumer Q1, 2009 North American Market for Electric Vehicles for Fleets and Private Consumer Q2, 2009 Analysis of Hybrid Vehicle Systems and Technologies in North America Q2, 2009 VOC Study on EVs Customers Interest in Electric Vehicles and Acceptability to New Business Models The Generation Y Consumer : Future Vehicle and Features Choice and Brand Marketing Positioning Study Consumer Study to have section on EVs Q2, 2009 VOC Study on Sustainability and Alternate-Fuel Vehicles and Technologies in USA Strategic Profile and Business Model Assessment of (Project) Better Place Q3, 09
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In Process Research

3. 4. 5. 6. 7. 8.

9. 10.

Note : new titles and schedule is subject to change and is not guaranteed. Titles for second half of 2009 are still to be confirmed. Suggestions are welcome

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