Will electric car rule the future?

Will electric car rule the future? Nicolas Meilhan Senior Consultant, Frost & Sullivan April 2012

3 major challenges we have to take into consideration to develop a Climatic changes End of fossil r e s o Air pollution u sustainable car : climatic changes, end of fossil fuels and air r c e Sustainable car = same performance, autonomy and cost as an ICE s Perform Autonomy Infrastructure Cost pollution a n c e Climatic changes End of fossil resources Air pollutionChallenges • CO2 emission at highest level • 97% of road transportation • With the rural exodus and in the last 800,000 years use fossil fuels development of mega cities, air pollution has reached • More than 2° expected by 2100 • Oil, which is the main driver unprecedented levels with drastic consequences if of our economy, might have nothing is done disappeared by the end of • Serious health diseases to the century multiply drastically Sustainable car KSF = same performance, autonomy and cost as an ICE Performance Autonomy Infrastructure CostsConstrains • Efficiency • Distance without • Investment required • Total cost of • Acceleration charging to update existing ownership • Time to recharge infrastructure and/or • Retail • Top speed build a new one • Storage weight • Recharging • CO2 emissions • Standards across all • Air pollution countries • Maintenance 2

Up to 1910 and the Ford T revolution, most vehicles were running electrically. Since then the batteries have never been able to fill the gap with ICE and offer decent autonomy at a reasonable costPowertrain technologies • Car park is mainly • Massive • First research on automotive • Multiple trials for • Refocus on full electric development of applications of fuel cells electric cars both in EV with Li-ion car with the Ford EU (PSA) and USA batteries • First car to reach • Works on In-wheel motors T – 550$ for (GM) but with no performance 100km/h was from 1980 brutally stopped in 70km/h vs. 2000$ success improvement electric in 1899: la 1995 for 40km/h with “jamais contente” • Significant investment electric vehicles • Legislation in 1990 in in fuel cell research • First in-wheel California to reduce • Large availability motor by Ferdinand atmospheric pollution and of cheap oil Porsche introduce 2% of EV by 1998 1900 1910 1960 1970 1995 2005 2010 Henry FordExternal drivers start mass production of Oils rises at ICE Ford T 150$ a barrel First research on fuel Hydrogen cells for aerospace perceived at he applications best alternative First Oil shock Apollo 13 to fossil fuels need for alternative to fossil fuels arise Source : Rouler sans pétrole, Pierre Langlois 3

The reason why electric vehicles never met the gap until now is that fossilfuels have the best energy density, both in mass and volume, than any otherenergy vector - Energetical density of energy vectors used in transport - Fossil fuels have a mass density 100 times as high as batteries  1kg of fossil fuel contain as much energy as in 100 kg of batteries Source : Pierre-René BAUQUIS 4

If anthropogenic contribution to climate change is still being Climatic changes End of fossil r e s o Air pollution u debated, global warming is happening with up to 5°C increase by r c e Sustainable car = same performance, autonomy and cost as an ICE s Perform Autonomy Infrastructure Cost 2100 in the worst case scenarios with drastic consequences a n c e - 800,000 Year Record of CO2 Concentration - - Projected temperature up to 2100 - •The amount of carbon dioxide in the atmosphere is 30% higher than at any time in measurable history •It is predicted to reach from 550 to 900 ppm by 2100 – 85% to 200% increase compare to highest concentration observed in the last 800,000 yearsSources: Global change.gov 5

Knowing whether we’ll still have fossil fuel in 2100 is not key – the Climatic changes End of fossil r e s o Air pollution u critical issue is how long we will have affordable oil to fuel our r c e Sustainable car = same performance, autonomy and cost as an ICE s Perform Autonomy Infrastructure Cost economy and our cars a n c e Evolution of Oil & Gas production 1930-2030 Production in thousand barrels of (Base case:2008) oil equivalent per day Expensive oil (extraction cost) Expensive oil (retail price) Fossil fuels reserves – From 40 to 80 years of fossil fuels left Proven reserves Consumption Consumption Reserve in years Reserve in years (Gtoe) (Mtoe) average growth (constant (growing 2000 2010 2000 2010 since 2000 consumption) consumption) Coal 505 442 2,400 3,556 4% 125 45 Oil 177* 212* 3,571 4,028 1.2% 53 41 Natural gas 143 173 2,176 2,858 2.8% 61 36 Total Fossil 825 827 8,147 10,442 2.5% 80 42Source: Colin Campbell & ASPO, 2008, BP Statistical review, June 2011* Including oil sands 6

Air pollution is one of the key driver for city to adopt EV cars, Climatic changes End of fossil r e s o Air pollution u especially in China. Diesel emissions (particles & NOx) are r c e Sustainable car = same performance, autonomy and cost as an ICE s Perform Autonomy Infrastructure Cost particularly unhealthy although CO2 emissions are lower a n c e - Particles (PM) emissions in Paris - - NOx & CO2 emissions by engine technology -14th of June 2004, 10h, atmo index « Bon 3 » Downsized Diesel PM10 = 20 µg/m3 100 Diesel 2005 Diesel NOx emissions Gasoline 80 60 +DPF 40 DPF + NOx trap DISI CAI HCCI+DPF 20 DPF+SCR DISI NOx PFI 20059th of juin 2004, 10h, atmo index « Mauvais 7 » D Hybrid trap PM10 = 80 µg/m3 SI Hybrid DISI turbo PFI adv + VVT 0 60 70 80 90 100 110 CO2 emissions 19,000 people killed every year in Europe because of particles from diesel cars Source: Frost & Sullivan analysis 7

A major issue with ICE is their energy inefficiency as 80% of energy Changements climatiques Épuisement des énergies fossiles Pollution atmosphérique in tank is lost; parallel diesel hybrid is twice as a efficient , Extended- Performance Autonomie Infrastructures Coûts Range EV 3 times and full EV 4 times as efficient - Tank to wheel energy efficiency of ICE and electrified vehicles - - ICE car - - Hybrid car - 18% energy efficiency 30% energy efficiency Gasoline Diesel Extended-Range EV Extended-Range EV Battery Gasoline Diesel hybrid hybrid 30 km autonomy * 60km autonomy ** electricTank to wheel energy 18% 23% 30% 35% 50% 60% 70%efficiency 1 1,3 1.7 2 2.8 3.3 4 * 60% des trajets en mode électrique, 40% des trajets en thermique ** 80% des trajets en mode électrique, 40% des trajets en thermique Source: Hybrid Cars Now, Fuel Cell Cars Later, 2004 8

Climatic changes End of fossil Air pollution r e s o uExtended-Range EVs offer the best trade-off between petroleum r c e Sustainable car = same performance, autonomy and cost as an ICE s Perform Autonomy Infrastructure Costconsumption and Well-to-Wheel Emission a n c e - Fuel Consumption and Well-to-Wheel GHG Emissions for Future (2035 Cars) - Extended-Range 30 miles Source: More Sustainable transportation: The Role of Energy Efficient Vehicle Technologies, Sloan Automotive Laboratory (MIT), April 2008 9

Climatic changes End of fossil Air pollution r e s o uCountry electricity mix can have a huge impact on CO2 r c e Sustainable car = same performance, autonomy and cost as an ICE s Perform Autonomy Infrastructure Costemissions of electric vehicles a n c e- CO2 emissions intensity (gCO2/kWh) - - Well to wheel emissions of a battery vehicle - Emissions intensity % of CO2 Emission Well to wheel gCO2/kWh g/km free intensity emissions of electric electricity (gCO2 / kWh) vehicle* (g/km) Wind 5.5 0.9 France 90% 75 12 Nuclear 15 2.4 Canada 59% 267 43 Hydro 18 2.9 California 44% 470 75 Natural Gas - CC 461 74 US 31% 710 114 Natural Gas 653 104 China 20% 950 160 Coal 1075 172 * Equivalent to an intermediary ICE car = 9l/100 km => 244g/km •Carbon capture and storage is key to reduce transportation emissions in the long term as most of electricity form the USA (50%) and China (80%) is made out of coal •Nuclear and renewable energies (including hydro) are the best alternatives to produce CO2 free electricity Source: Rouler sans pétrole, Pierre Langlois, 2008 10

Climatic changes End of fossil Air pollution r e s o uWith 78% of electricity out of nuclear, France is one of the best r c e Sustainable car = same performance, autonomy and cost as an ICE s Perform Autonomy Infrastructure Costpositioned country to drastically reduce its car CO2 emissions a n c e - Well to wheel emissions of alternative vehicles - Well to tank (g CO2/km) Tank to Wheel Well to WheelGasoline/Diesel 20 to 35 130 to 180 150 to 210Hybrid 24 104 128Battery 10 to 14 0 10 to 14Extended-Range EV 10 22 73 95Extended-Range EV 60 20 31 51Extended-Range EV 30 21 52 73 Source : EDF/ADEME Extended-Range EV 60 would allow to divide by four cars emissions, which is the country objective by 2050 11

Extended-Range EVs are the only alternative technology able to Climatic changes End of fossil r e s o Air pollution ucompete today at a global scale with the ICE on autonomy and r c e Sustainable car = same performance, autonomy and cost as an ICE s Perform Autonomy Infrastructure Costinfrastructure investment required a n c e Performance AutonomyLow High Infrastructure Distance Time to recharge Storage weight investment 600 km 5 min 45 kg Already existing Internal Combustion Engine 600 km (20 to 60 2-3 hours 50 to 90 kg Already existing Extended-Range EV km electric) 60 to 250 km 4-8 hours 90 to 250 kg To be developed electric Electric vehicle 600 km 5 min 90 to 100 kg To be developed Fuel Cell Vehicle Sources: Frost & Sullivan analysis, 2011 12

Climatic changes End of fossil Air pollution r e s o uThe main driver explaining the lack of success of vehicles with some r c e Sustainable car = same performance, autonomy and cost as an ICE s Perform Autonomy Infrastructure Costelectrification is their cost, mainly driven by batteries a n c e - Incremental retail price increase of current and future propulsion technologies - 2008 2035 Retail price of gasoline vehicle Retail price of gasoline vehicle in $19,600 $21,600 in 2008 2035 Incremental retail price increase compared to 2008 Incremental retail price increase compared to 2035 gasoline vehicle gasoline vehicle Diesel $1,700 +8,7% Diesel in 2035 $1,700 +7,8% Gasoline turbo $700 +3,6% Gasoline turbo in 2035 $700 +3,2% Hybrid $4,900 +25% Hybrid in 2035 $2,500 +11,6% Gasoline in 2035 $2,000 +10,2% Extended-Range EV* in 2035 $5,900 +27,3% Battery electric ** in 2035 $14,400 +66,7% Source: On the road in 2035, MIT, July 2008 Fuel cell in 2035 $5,300 +24,5% * 30 miles electric autonomy (48 km) ** 200 miles autonomy (320 km) Many players working on innovative business models to overpass the battery cost challenge 13

Extended-Range EV is expected to be competitive with the ICE by Changements climatiques Épuisement des énergies fossiles Pollution atmosphérique2015 with a payback period of les than 4 years for an oil price at Performance Autonomie Infrastructures Coûts2,5 €/L without any state subsidy - Total cost of ownership of an ICE compared with a Extended-Range EV - Extended-Range EV with 50 km TCO of a C-segment car ICE electric autonomyRetail price (€) 14800 € (20000$) + 7400 € (+10000 $*)Electric autonomy 0 km 50 kmEnergy consumption 7 l/100km 1.4 l/100km ** & 15 kWh/100kmAnnual energy consumption (14000 km) 980 l 196 l & 1,68 MWhAnnual TCO(1,75€/l & 100 €/MWh) 1715 € 343 € + 168 € = 511 €Annual TCO(2 €/l & 100 €/MWh) 1960 € 392 € + 168 € = 560 €Annual TCO(2,5 €/l & 100 €/MWh) 2450 € 490 € + 168 € = 658 € - Payback period sensitivity to oil price and state subsidy - Oil price 1,75 € 2€ 2.5 € Incremental annual TCO of ICE 1204 € 1400 € 1882 € Payback period without subsidy 6.1 years 5.3 years 3.9 years Payback period with a €2,000 subsidy 4,5 years 3,9 years 2.9 years Payback period with a €4,000 subsidy 2.8 years 2,4 year 1.8 years * Prospects for Plug-in Hybrid Electric Vehicles in the United States and Japan: A General Equilibrium Analysis MIT, 2009 ** 80% of French drivers average trip per day is less than 50 km every day 14

Extended-Range EV represent the best trade-off for a sustainable vehicle at aglobal scale in the short to medium term - up to 2030 Internal Combustion Engine Extended-Range EV Well to Wheel Emissions Well to Wheel Emissions 5 5 Cost Autonomy Cost Autonomy 0 0 Energy Efficiency Infrastructure Investment Energy Efficiency Infrastructure Investment Electric Vehicle Fuel Cell Vehicle Well to Wheel Emissions Well to Wheel Emissions 5 5 Cost Autonomy Cost Autonomy 0 0 Energy Efficiency Infrastructure Investment Energy Efficiency Infrastructure InvestmentSources: Frost & Sullivan analysis, 2011 15

Electrification of vehicles will take place progressively starting withExtended-Range EV whose electric autonomy increases when battery pricesdecrease - up to the day when all vehicles will run electrically• ICE will still be around for a while representing the majority of vehicle sales for another 15 years• Hydrogen is very unlikely to be used in a car before 2025 - only an energy vector for gas or nuclear, no significant advantage over an PHEV and some investments required to set up a distribution infrastructure• EV, which neither emits CO2 nor pollutants, still face too many challenges – cost, autonomy, infrastructure, norm standards – to have a chance to replace at a global scale the ICE before 2040.• There is however a potential for EV and FC in local niche applications like company fleets, car sharing or bus/tramway• Extended-range EV has both the ICE advantages – autonomy, infrastructure required, affordable cost - and the EV ones – Energy efficiency, Well to Wheel emissions without sharing their drawbacks - Annual light-duty sales by technology type - - Annual global EV and PHEV sales - Source: EIA 2011 16

Our economy is very sensitive to oil prices - any price increase in the last 40 years led the global economy into recession – it is high time to reduce transportation 97% dependency to oil by developing electric cars & CO2 free electricity generation Car production evolution vs. GDP & oil price evolution Incremental Worldwide GDP Oil prices Global car production ? 1970 1975 1980 1985 1990 1995 2000 2005 2010Globalrecessions 17

Nicolas Meilhan Functional Expertise • 6 years of strategy consulting experience working with leading companies on international projects. Over 25 significant consulting projects on a Global scale. Particular expertise in: - Strategic assessment of opportunities - Market entry & expansion strategy - Product portfolio management & diversification strategy - Distribution strategy - Economic & business modelling - Innovation Management & Open Innovation Industry Expertise  Experience base covering broad range of sectors, leveraging long-standing working relationships with leading industry participants’ Senior Executives - Automotive aftermarket & remanufacturing - Electrified Vehicles - Renewable Energies (wind, solar, fuel cells)Nicolas Meilhan - Resource RarefactionSenior Consultant - Sustainable development • Key note speaker in various conferencesFrost & Sullivan • Quoted regularly in top business European publicationsEurope What I bring to the TeamParis, France • First-rate expertise in clean transportation and clean energies • Experience in management of consulting projects across multiple sectors and regions+33 1 42 81 23 24 • Combined analytical skills, marketing and technology experience and perspectivenicolas.meilhan@frost.com • A creative mind and an entrepreneurial approach to business Career Highlights • Started to work as a structure engineer in the Automotive industry, specialised in crash tests • Before Frost & Sullivan, work as a consultant in the leading management consulting firm AT Kearney, Paris Education • Master of Science from ESTP (Paris, France) • Master of Engineering from Massachusetts Institute of Technology (Cambridge, USA) 18

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Will electric car rule the future?

by Nicolas Meilhan on May 12, 2011

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Will electric car rule the future? — Presentation Transcript