The Roadmap to an Electrified Car Market - LBMA

1 2017 LMC Automotive Limited, All Rights Reserved. The Roadmap to an Electrified Car Market How will Targets for the End of the Combustion Engine be Met? Al Bedwell, LMC Automotive LBMA/LPPM Precious Metals Conference Barcelona, October 16, 2017 2017 LMC Automotive Limited, All Rights Reserved. 2 European Electrification in a Global Context What s Driving Change in Europe Update on Current Situation Outlook Wrapping Up 2017 LMC Automotive Limited, All Rights Reserved. 3 0102030 ChinaJapanUSAE uropeBEVxHEV1,154,000 Battery Electric Vehicle % of New Car & US Light Truck Sales Source: LMC Automotive Global Hybrid & EV Forecast Regional Electrification 2016 Passenger Car and US Light Truck Market BEVs in use were just of pass cars & US light in 2016 (1mn of 1bn) After 10+ years of sales, only Japan has really embraced electrification China is unique due to 50% BEV share of Electrified sales World: Hybrid & EV Market 2016 440,000 512,000 500,000 All Hybrid Types 2017 LMC Automotive Limited, All Rights Reserved.

2 4 European Electrification in a Global Context What s Driving Change in Europe Update on Current Situation Outlook Wrapping Up 2017 LMC Automotive Limited, All Rights Reserved. 5 Europe UK: 2040, no IC-only car sales; Oxford 2020? France: 2040, no IC car sales (?); Paris 2030 Germany: No date; says UK/FR approach is right Norway: No ban, but sales by 2025 should be ZEV Austria, Denmark, Ireland, Netherlands, Portugal, Spain: EV targets Elsewhere India: 2030, all passenger cars to be battery electric (!?) Japan, Korea: No ban, EV targets set China: Studying timeline to IC ban US: No nationwide target, some states have EV targets World: Targets for Removal of IC Vehicles 2017 LMC Automotive Limited, All Rights Reserved. 6 0%1%2%3%4%5%6%40608010012014016018020019 9519961997199819992000200120022003200420 0520062007200820092010201120122013201420 1520162017201820192020202120222023202420 2520262027202820292030 CO2 fell less sharply in 2016: SUV boom & falling diesel share?

3 Post-2021 target announcement may be imminent Fleet CO2 (gm/km) YoY CO2 Reduction Rate Source: European Environment Agency, CCFA, JATO (2016) EU28 Passenger Car CO2 Emission Trend 95 50? 130 73? annual achievement YoY CO2 achieved Annual change Target (set) International comparison: China 2025 gm/km CO2: 93 US 2025 gm/km CO2: 100 super credits Target (likely) Europe: Update on CO2: Achievements & Targets 2017 LMC Automotive Limited, All Rights Reserved. 7 0123454246505458 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14 May-14 Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Max diesel >55%, now 43% W. Europe Passenger Cars: Diesel versus Electrification Diesel decline started in 2011 but accelerated after the VW problems Much diesel is being substituted by gasoline, but also by HEV (not by BEV) Share of all Electrified types reached in July of this year Diesel % of New Car Sales Source: National Sources Hybrid/EV % of New Car Sales VW dieselgate BEV xHEV Diesel Europe: A Move from Diesel to Electric?

4 2017 LMC Automotive Limited, All Rights Reserved. 8 Paris to phase out diesel cars by 2024 Olympics 12/10/17 Madrid vows to ban diesel-fuelled cars by 2025 2/12/16 Europe: The Pressure on Diesel Keeps Building 2017 LMC Automotive Limited, All Rights Reserved. 9 3035404550556020042006200820102012201420 162018202020222024 Diesel Market Evolution: W. Europe Cars, Base Case Great Recession, scrappage incentives Nervousness about investing in diesel is growing (for OEM and car buyer) But core strengths of diesel mean it will endure at least in some segments Diesel % of New Car Sales Source: LMC Automotive European LV Diesel Forecast. Includes DHEV RDE, Increasing after-treatment costs Substitution by gasoline MHEV, pre-EU6 city bans Urban diesel- free zones? gasoline engines, worse fiscal situation for diesel Dieselgate, image problems, falling residuals Europe: More Pain for the Diesel Car Market 2017 LMC Automotive Limited, All Rights Reserved.

5 10 0510152025303520072008200920102011201220 132014201520162017W. Europe Passenger Cars: Share of SUV/Crossovers The shift to crossover types seems relentless and has an impact on CO2 Example: Kia Stonic gas MT has FE/CO2 10% worse than Rio MT SUV % of New Car Sales Source: LMC Automotive Europe: Those Pesky Car Buyers Keep Choosing SUVs 2017 LMC Automotive Limited, All Rights Reserved. 11 European Electrification in a Global Context What s Driving Change in Europe Update on Current Situation Outlook Wrapping Up 2017 LMC Automotive Limited, All Rights Reserved. 12 -2002040608010012014016018001234567 BEVEREVFCEVFHEVMHEVPHEV Share reached a new peak in recent times on strong FHEV demand But for most car buyers the plug-in offer simply isn t compelling (yet) Source: LMC Automotive Global Hybrid & EV Forecast 5-year Monthly Hybrid & EV Share Sales pulled forward W.

6 Europe Passenger Car Market Electrified % of New Car Sales Annualised Monthly Growth (%) YoY (right axis) Europe: Hybrid & EV Market - Share 2017 LMC Automotive Limited, All Rights Reserved. 13 01234567891020132014201520162017 YTD Aug303540455055 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Transparent incentive schemes that mitigate higher prices work best Inconsistent/poorly communicated ones = boom & bust/little impact Electrified % of New Car Sales Source: LMC Automotive Global Hybrid & EV Forecast Norway hybrid/EV Circa 50% hybrid/EV Hybrid & EV Trend by W. Europe Market Aug-17: incentives Europe: Well Structured Incentives = Solid Growth 2017 LMC Automotive Limited, All Rights Reserved. 14 01020304050607080non plug-inplug-in SP + IT: Weak infrastructure, unstable incentives = low plug-in sales Norway s big incentives lead, but only ZEV schemes will endure Electrified New Car Sales ( 000s) Source: LMC Automotive Global Hybrid & EV Forecast Electrified Sales by Market & Macro-Type, YTD Aug 2017 Europe: Support for Plug-ins Varies Hugely Strong support Weak support 2017 LMC Automotive Limited, All Rights Reserved.

7 15 01234567 HyundaiBMWG eelyR-NDaimlerVWPSAH ondaTataFord2016h12017h1 Hyundai has hits with the Niro & Ioniq (but hard to make money) VW has seen its Electrified share fall further this year Electrified % of New Car Sales Source: LMC Automotive Global Hybrid & EV Forecast Hybrid & EV Trend by OEM, W. Europe Car Sales 0204060 ToyotaElectrified % of New Car Sales Europe: OEM Hybrid & EV Profile has a Big Range 2017 LMC Automotive Limited, All Rights Reserved. 16 Europe: Few new BEVs, but Current ones Improving 2017 LMC Automotive Limited, All Rights Reserved. 17 European Electrification in a Global Context What s Driving Change in Europe Update on Current Situation Outlook Wrapping Up 2017 LMC Automotive Limited, All Rights Reserved. 18 Europe: OEMs are Racing to Meet Expected Demand OEMS trategy OverviewHEV + BEVBEVBMW group15-25% of sales Electrified by 2025.

8 Mix of standalone & bespoke BEVs??12 by 2025 DaimlerElectrified versions of all M-B range by 2022, Smart all BEV 'at some point'50 by 2022>10 by 2022 FCAHalf of FCA fleet Electrified by 202250% by 2022??Ford13 new Electrified vehicles globally in next 5 years13 by 20221st dedicated BEV 2020 Hyundai-KiaElectrify core models, plus standalone BEVs31 by 20208 by 2020 JLRNew models all hybrid or EV from 2020At least 1 by 2020 PSAE lectrify core models, no standalone BEVs11 by 20234 by 2023R-NNew common Electrified Electrified platforms12 ZEV by 2022 ToyotaHybrid remains core tech, BEV mass production from 2020 Several by 2020 VolvoAll new models hybrid or EV from 2019, no IC-only by circa 20245 by 2021 VWAt least 1 Electrified version of all models by 203080 by 202550 by 2025 Minimum 100 new BEVs by 2017 LMC Automotive Limited, All Rights Reserved. 19 Europe: ..and so are Others 2017 LMC Automotive Limited, All Rights Reserved.

9 20 0100200300400500600700140180220260300340 380420460500claimedreal world0100200300400500600allfaste-Range (km) e-Range: average max e-Range of mass- Market EV Claimed range of mass Market cars rose by average 40% for 2017MY Battery pack wholesale cost is reckoned to be circa $200/kWh in 2017 Battery cost dropped 80% over 6 years, $100/kWh possible by 2020? Charge point infrastructure problems include investment & grid issues 390km 430Km Typical BEV battery pack cost ($/kWh) W. Europe public charge points ( 000s) 640 70 Chargers ( 000s) Battery pack ($/kWh) lift-off? lift-off? lift-off? Europe: Evolution of Key BEV Enablers 2017 LMC Automotive Limited, All Rights Reserved. 21 010203040506020152018202120242027 BEVEREVFCEVFHEVMHEVPHEVPFCEVMHEV (48V)% of Car Sales Source: LMC Automotive Global Hybrid & EV Forecast Outlook for Electrification by Technology Europe + CIS Passenger Cars sales 60%!

10 New generation hybrids start to achieve real volume from 2018 BEVs accelerate from mid-2020s, reaching 15% of Market by 2027 Fuel cells remain niche over this time period Europe: Hybrid & EV Base Case Forecast (July 2017) 2017 LMC Automotive Limited, All Rights Reserved. 22 0102030405060708090100W. Europe Car Market IC-only (gasoline) IC-only disappears well before 2040! FCEV gets in to the picture % of New Car Sales Source: LMC Automotive Forecast 28% IC-only (diesel) BEV PHEV MHEV+FHEV FCEV 5% 50% 15% 0% IC-only (CNG/LPG) MHEV(48V) 2% Europe: 50-Year Fuel & Technology Picture 2017 LMC Automotive Limited, All Rights Reserved. 23 Europe Electrification in a Global Context What s Driving Change in Europe Update on Current Situation Outlook Wrapping Up 2017 LMC Automotive Limited, All Rights Reserved. 24 Source: LMC Automotive 0123456201420152016201720182019202020212 02220232024202520262027 BEV car sales (mn) Jan-17 8% Jul-17 16% car sales (mn) Jan-17 Jul-17 NEV cap and trade scheme will be introduced from 2019 after a 1 year delay OEMs will have to achieve a NEV score of 10 points in 2019, 12 in 2020 OEMS selling at least 30,000 cars will have to comply, buy credits or face fines China: NEV Quotas will Push Global EV Spend LMC Automotive China NEV Forecast Revisions 2017 LMC Automotive Limited, All Rights Reserved.