Bracing for Impact: Assessing the impact of the automotive trends on the chemicals and materials industries

The impact of Automotive
Disruption and Light-weighting
on Chemicals and Materials
September 2019
Bracing for
impact

22019_RB_Study_Bracing for Impact_vF.pptx
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It may not be passed on and/or may not be made available to third parties without prior written consent from .
© Roland Berger
Contents Page
A. Executive summary 3
B. Current state of the industry 7
C. The MADE+ trends 15
D. Impact of MADE+ on the chemicals and materials industry 32
1. Impact of MADE+ in the short- to medium-term 35
2. Impact of MADE+ in the long term 49
E. Implications and priorities for Chemicals and Materials players 60
F. Introduction to Roland Berger 65

Keyhighlights
Executive summary
The MADE and light-weighting (MADE+) trends are disrupting the automotive industry –
OEMs and suppliers are being significantly impacted
This in turn impacts the chemicals and materials currently supplied into the automotive industry
through the following key factors:
> In the near term, Light-weighting will impact the choice of metals used (Al in place of Fe metal)
and digitization will demand more electronics and related chemicals
> In the medium term, as BEVs become more mainstream, there will be a significant boom in
emerging battery materials
> In the longer term, mobility and autonomous driving will result in new vehicle archetypes and
cause a bifurcation of industry models
As business models bifurcate, chemicals and materials players will need to:
> invest in new materials to stay ahead of industry trends
> form industry collaborations with existing and emerging players
> anticipate and adapt to changes in procurement, manufacturing and supply chains
> manage the transition from "business as usual" to new operating models
> balance near term pressures (making profits and managing conventional business models) with
longer term needs (investing in new technologies and materials to remain relevant within
emerging industry structures)
Source: Roland Berger
The automotive industry is at an inflection point with the advent of electric vehicles on a commercial
scale and stagnant/reducing volume projections in major developed and emerging economies

The MADE+ trends will have a profound impact on chemicals and
materials – we address 4 key questions in this document
Key questions for chemicals and materials players
What are the
current
dynamics in
the industry?
0
1) MADE stands for Mobility, Autonomous Driving, Digitalization and Electrification; MADE+ includes light-weighting which is propelled by regulations focused on emissions and
electrification
What is
MADE+1)?
What are the
underlying
trends?
1 What are the
near-term
impacts of
MADE+?
2 What are the
long-term
impacts of
MADE+?
3

Abbreviation Full form Term Definition or meaning
Battery materials Materials that are used in the battery systems of
an xEV (e.g. Lithium)
AWD All Wheel Drive
C&M Chemicals and Materials
HSS High Strength Steel
ICE Internal Combustion Engine
LCV/LDV Light commercial vehicle/light duty vehicle
MADE Mobility, Autonomous driving, Digitalization and
Electrification
MADE+ Mobility, Autonomous driving, Digitalization and
Electrification and Light-weighting
PBV Purpose Built Vehicle
PC Passenger Car
PE Polyethylene
PP Polypropylene
Commodity
plastics
Basic plastics such as polypropylene (PP),
polyethylene (PE), polyvinyl chloride (PVC) and
polyurethane (PUR)
Composites Lightweight high strength materials such as carbon
fiber reinforced plastics, fiberglass, etc.
Engineering
thermoplastics
(ETP)/ High
performance
plastics
Thermoplastic resins that are used in smaller volumes
for under-the hood and electronic applications requiring
excellent properties (e.g. thermal, chemical, electronic).
Examples include polycarbonate, nylon, polybutylene
terephthalate/PBT, acetal/POM, polyphenylene
sulfide/PPS, etc.
Natural materials Materials such as wood, leather and natural fibers (e.g.
hemp, flax, jute) that are increasingly becoming
common, driven by sustainability pressures on OEMs
Other materials All other materials not included in the material
categories discussed in the study – these are typically
smaller volume materials
Glossary of terms
PUR Polyurethane
PVC Polyvinyl Chloride
TCO Total Cost of Ownership
xEVs/BEVs Electric Vehicles/Battery Electric Vehicles
PBT Polybutylene Terephthalate
ETP Engineering Thermoplastics
MaaS Mobility as a Service

B. Current state of the
industry

The automotive industry is at an inflection point with several
significant factors impacting business-as-usual
5.4
6.0
11.9
1.7
6.6
Japan/
South Korea
6.7
H1/2018
8.7
13.5
1.6
Europe
8.5
11.2
11.6
H1/2019
Others
South America
NAFTA
China2)
48.4
45.0
-7%
Recent developments in the automotive industry
1) Global light vehicle production volume 2) Greater China
Source: IHS September 2019, Automotive, Roland Berger/Lazard
H1/18 vs. H1/19 [m units]1) Automotive industry dynamics
Production volume is going down globally
US-China trade war threats
are increasing every day
Facing capital constraints, OEMs are forming
industry alliances and partnerships
US-Mexico-Canada Agreement
will disrupt business as usual
Electrification is making a
significant dent in the industry
China's growth is lower than expected
Declining consumer confidence in
Europe and other regions

Near-term volume projections are falling in key developed and
emerging markets putting pressure on OEMs and suppliers
World
NAFTA Europe China3)
Japan/Korea
CAGR2): -0.1% CAGR2): 2.3% CAGR2): 3.9%
CAGR2): 1.9% CAGR2): -0.9%
20152014 2019e20172016 2018
17.017.0 17.5 17.8 17.1 16.6
-2%
21.5
2014 20172015 2019e2016 2018
20.1 21.0 22.2 22.0 21.4
-3%
2014 2015 2016 20182017 2019e
23.0
27.4
24.0
28.0 26.9 24.9
-7%
South America
CAGR2): -2.8%
2014
3.1
2015 2016 20182017
3.3
2019e
3.8 2.7 3.4 3.4
0%
2014 2015 2016 20182017 2019e
13.7 13.2 12.9 13.2 13.313.2
0%
88.8
2015 2019e2014 2016 2017 2018
87.4 93.1 95.1 94.2 90.1
-4%
Most recent expectations announced
by many large suppliers as part of their
H1/2019 earnings even fall to -5%.
Global light vehicle production volume1) by region, 2014-2019e [m units]
Source: IHS May/June 2019, Roland Berger/Lazard
1) Incl. light commercial vehicles; 2) CAGR 2014-2018; 3) Greater China

Several OEMs are already in major restructuring mode – GM and
Ford are each looking to aggressively cut costs
OEM cost savings targets (cumulative) [USD bn]
Source: Desk research, Roland Berger
25.0
14.0
9.0
6.0
2.8
n/a
Ford BMW NissanDaimler VW GM
Cumulative
through '22
x Planned job cuts in '000
Cumulative
through '20
Cumulative
through '22
Cumulative
through '21
Cumulative
through '23
Cumulative
through '22
1519 10 7n/a
> Ford announced its
restructuring plans in late
2018, targeting a USD 25 bn
cost reduction until 2022 and
significant structural
changes:
– Termination of LV
production in Russia and
India1)
– Termination of heavy truck
production in S. America
> GM announced its
restructuring program in
November '18 with a volume
of USD 6 bn cumulative until
2020 – including 5 US plant
closures
> BMW announced a target of
USD 14 bn until 2022 and
expects suppliers to double
their YoY savings
1) Ford will remain active in the Indian market through its JV with Mahindra
Cumulative
through '22
12.5

OEMs are investing tens of billions of dollars into xEV and
autonomous tech, while level 4 timelines are being pushed back
OEM investment in xEVs [USD bn]
Profitability struggles on xEVs
> Many OEMs are still subsidizing
their xEV portfolio offering
> Achieving profitability will continue
to be challenge in the upcoming
years, especially on BEVs
Autonomous technology has
proven challenging
> Developing autonomous driving
technology has proven more
difficult that expected – OEMs are
pushing back their time-to-market
projections
- Ken Washington
CTO, Ford
The reason you don’t see those
kind of cars on the roads today is
that I think Google and a lot of other
tech companies… realized just how
hard it is to make the car part
-CNN
-Investor's Business Daily
-Reuters
-InsideEVs
-TechCrunch
-Automotive News
-TechCrunch

Faced with capital constraints, OEMs have been teaming up to
tackle these technologies, leading to some unexpected alliances
Technology-focused OEM alliances
xEV alliances > Daimler and Geely are forming a joint
venture to turn 'Smart' into an all-electric
brand by 2022 with large-scale
production in China
Feb 2019
Global mega-alliances
will increase the
buying power of OEMs
and place additional
price pressure on
suppliers
Through technology
development alliances,
OEMs will avoid
duplication of
expenditures
> BMW and Daimler are partnering to
develop autonomous technology with the
goal of having a market ready vehicle by
the mid-2020s
Feb 2019
> Ford and VW are negotiating to form a
JV to develop autonomous vehicles
> VW would contribute USD 1.1 bn to
Ford's existing autonomous vehicle
entity, Argo – Ford invested USD 1 bn in
Argo in 2017
Jul 2019
Autonomous
driving
alliances
Impact on suppliers
> Honda and GM established a JV for fuel
cell manufacturing; both automakers will
also jointly develop a next-generation
battery for electric cars
2017-18

These market conditions are expected to impact suppliers'
performance
Revenue growth EBIT margin [%]
5 7 6 6
2 3 1
-5
100
107
113
120 123 126 127
~120–125
2012 20182013 2014 20162015 2017 2019e
6.8
7.2 7.3 7.1 7.1 7.2 7.2
201520132012 2014 20182016 2017
~6.0–6.3
2019e
Indexed [2012=100]
YoY [%]
Key supplier performance indicators, 2012-2019e (n=~600 suppliers)
Source: Company information, analyst forecasts, Lazard/Roland Berger supplier database

This impact is also being seen stock prices – A cap-weighted index
of the top 35 suppliers underperformed the S&P since Jan 2018
70
55
80
90
100
120
5
0
110
60
Aug
’18
Jan
’18
Supplier
index
Aug
’19
S&P
109
60
1) Supplier index includes 35 companies that satisfy three criteria: Listed in the top 100 auto suppliers by Automotive News in 2018, publicly traded, and more than 50% of revenue comes from automotive. Companies
included are: Adient, American Axle, Aptiv, Autoneum, BorgWarner, CIE, Compagnie Plastic Omnium, Continental, Delphi Technologies, DENSO, Faurecia, Gentex, Gestamp, Hanon Systems, HELLA, Lear, Linamar,
Magna, Mando, Martinrea International, Minth Group, Mitsuba, Nemak, Nexteer, NHK Spring Co., NSK, Ryobi, Schaeffler, Sumitomo Riko, Tenneco, TI Fluid Systems, Tower Automotive, Valeo, Visteon, YRC Worldwide
Global supplier stock performance vs. S&P 500 [100 = January 2018]1)
> The index of the 35 leading
public automotive suppliers fell
by 40% since January 2018
> This represents a reduction in
market capitalization of
USD 122 bn
Source: Automotive News, CapitalIQ, Roland Berger
> Key stated reasons include:
– Suppliers reported lower FY2018
revenue than anticipated
– Suppliers have reduced
management guidance for FY2019
revenue
– Production forecasts have been
revised downward

In this section, we will provide a short summary of MADE and
light-weighting trends that are impacting the automotive industry
What are the
current
dynamics in
the industry?
0
electrification
What is
MADE+1)?
What are the
underlying
trends?
1 What are the
near-term
impacts of
MADE+?
2 What are the
long-term
impacts of
MADE+?
3

The MADE trends combined with light-weighting are causing a
significant impact on automotive OEMs and suppliers
Chapter summary
Frictions in the auto industry have created a significant pressure for change – Four trends
(MADE) and light-weighting (collectively MADE+) have created a perfect storm
Supply and demand trends are leading to a boom in mobility offerings – regulators are pushing
for shared mobility and substitution of owned vehicles
Autonomous vehicles are gaining traction, driven by softening regulations and improved safety,
technology, and convenience
Digitization is expected to touch the majority of vehicles produced, driven by cross-industry
macro trends and high competition
Vehicles are expected to become more electrified over time, driven initially by regulations and
then by economic advantage
Vehicles will be using more and more lightweight materials to become more fuel efficient and to
increase ride range

Frictions in the auto industry create significant pressure for
change creating a perfect hurricane – MADE + light-weighting
Source: WHO, OICA, Texas A&M Transportation Institute, DAT, Nielsen, Comscore, Roland Berger
Very low asset productivity: On
average, a car is only used for 60 minutes
per day, accounting for less than 5%
Casualties: Nearly 1.3 million people die
in road crashes per year, accounting for
2.2% of all deaths globally and additional
20-50 million people are injured or disabled
Congestion: Commuters spend more
than 10 bn hours per year in congestion,
accounting for ~10% of their driving time
Emissions: Road transportation causes
more than 5,500 Mt CO2, reflecting 17% of
global CO2 emissions
Car buying: 95% of vehicle buyers use
digital as a source of information. In fact,
twice as many start their research online
versus at a dealer.
Frictions in Automotive industry
MADE+
hurricane
Electrification Digitalization
Autonomous
driving
Mobility
l
Light-
weighting

The MADE+ trends in themselves have several underlying supply
and demand factors
Overview of MADE+ trends
Powertrain electrification
> Compliance with future
emissions regulations
> Electrification
landscape incl.
infrastructure
> Profitability challenges
> China as a benchmark
Electrification4
Connectivity
> Connectivity
> AI
> Evolution of digital
technologies and culture
> Full integration of the
connected vehicle into
customers' everyday life
Digitalization3
> Technology and regulatory
progress
> High customer value and
improved safety
> Consequences for cars,
small vehicles, LCVs
> Aftersales /service impact
Automated driving
Autonomous driving
Mobility solutions
> Changing customer
behavior (sharing vs. owning)
> Urbanization changes
traditional mobility and
logistics concepts
> New mobility mix and new
business models/players
Mobility
MADE+
hurricane
Light-weighting
> Increasing emissions and
regulatory pressures
> R&D investment in
material mix
> Increased global demand
> Decreasing cost of
materials
Light-weightingl
Non-
traditional entrants
ICE
advancement
Increased
transparency
Low cost brands
Online shifts
Geographic shift
Emissions
regulations
Fuel cells
Market
consolidation
xEV
advancement
Cost of
materials
Increased global
demand

Mobility offerings are booming – shared mobility and substitution
of owned vehicles are gaining traction
Key mobility trends (selected)
RB forecast:
Private vs. shared mobility [% of US miles driven]
Regulatory push towards shared
mobility
> Solution to congestion may be shared mobility,
which reduces the amount of vehicles on the
road
Consumers embrace sharing economy
> Sharing economy adoption has taken off
across several industries, e.g. hotel, music and
transportation
New mobility offerings gain traction
> Mobility offerings are gobbling market share
from other transportation options (e.g. in NYC)
Regulators are concerned about
increased congestion on city roads
> More vehicles are on the road than ever before
Mobility
13%
2020
99%
2016
1%0%
98%
1% 1%
96%
1%3%
2025
87%
0%
2030
Shared ridesOwned vehicles Shared vehicles

Factors related to mobility have a net reduction on the production
volume going forward
Indicative
Volume with and without MADE+ Comments
15.3
16.7
2020 Demand for
transportation
2030 w/o
MADE+
> Demand for transportation, a
traditional driver of automotive
sales, is expected to increase
– Without the impact of MADE+
trends, we would expect 16.7
million vehicles to be produced
> As cost and availability of mobility
offerings further improve, more
passengers will substitute from
other methods (e.g. walking,
public transit)
> Vehicle utilization is expected to
increase as autonomy and shared
mobility become more prevalent
> Lifetime mileage is expected to
increase
North American production volume 2020, 2030 [m vehicles]
15.2
Substitution
from
transit/walki
ng
Vehicle
utilization
Lifetime
mileage
2030 w/
MADE+
Traditional drivers MADE+ impact
Mobility Backup

Autonomous vehicles are gaining traction, driven by softening
regulations and improved safety, technology, and convenience
Key autonomous driving trends (selected)
Autonomous driving
Driving safety is improving
> Fully autonomous driving technology (L4-L5) is
expected to reduced accident frequency by ~45%
> Today, ADAS already reduced frequency &
severity
Convenience is improving
> Consumers are interested in technology, safety
and convenience (freed-up time)
> Up to 1 h 11 min per day for the average US
driver
Technology is advancing
> Waymo has made significant technological
progress with 8 m miles driven autonomously
> Commercial service started in 2018 (Phoenix,
AZ)
Regulatory hurdles are falling
> Congress unanimously passed legislation to bar
states from prohibiting autonomous driving tests
99%
14%
1%
12%
87%
0%
2020 20302018
0%
85%
13%
2%
2025
82%
4%
Non-autonomous (L0-L1)
Semi autonomous (L2-L3)
Highly autonomous (L4-L5)
RB forecast:
US autonomy [% new vehicle sales]

Fully autonomous driving maybe reached as early as 2030 –
Current focus is on road testing steering and acceleration functions
Stage 5
Full
Automation
>2030
Situation
independent
automated driving
Stage 1
Driver
Assistance
✓
Automation of an
individual function,
driver fully engaged
(e.g. emergency
braking systems)
Stage 4
High
Automation
>2025
Automated in certain
conditions, driver
not expected to
monitor road
(e.g. highway pilot)
Stage 2
Partial
Automation
Road testing
Automation of
multiple functions,
driver fully engaged
(e.g. steering,
acceleration)
Stage 3
Conditional
Automation
Automation of
multiple functions,
driver responds to
a request to
intervene
2018
✓
Stage 0
No Automation
Driver is fully
engaged all the time,
warning signals
might be displayed
Autonomous driving
Autonomous driving – Technological roadmap (SAE levels)
Source: SAE, expert interviews, Roland Berger
Backup

Digitization is expected to touch the majority of vehicles produced,
driven by cross-industry macro trends and high competition
Key digitization trends (selected)
Vehicle connectivity increases
> By 2025, ~50% of vehicles will be connected
> OEMs and independent players driving the
development
Many players enter the market
> Multiple players are entering the market to
connect vehicles and offer proprietary service
offerings
Consumers expect digital features
> Expectations of features like large touchscreens
and connectivity are created by other markets
(e.g. smartphones, smart home)
– Demand for bigger touchscreens driving the
demand for polycarbonate displays
US consumers move increasingly online
> Consumers are increasingly open to digital
experiences with 75% of consumers preferring
online to in-store shopping
Digitization
2025
26% 1%
32%
3%
72%
65%
20202018
3%
10%
89%
5%0%
95%
2030
Not connected ProprietaryRetrofit
RB forecast:
US connected cars [% new vehicles sold]

By 2025, ~ 50% of all vehicles in the car parc will be connected –
this in turn will demand more electronic materials and housings
Share of connected vehicles [% of car parc (PC & LCV)]
20122010 20112008 202520192009 2013 2014 20202015 2016 20212017 2018 2022 2023 2024
>50% of car
parc connected
OBD+:
CarLock
Mojio
Vink
Vyncs
VeePEAK
OBDLINK LX
Hikeren
Kiwi
CellAssist
SplitSecond
Delphi
DanLaw
Fleet:
FleetGenius
LocalMotion
Watson IoT
Zubie
App Only:
AutoPI
DashCommand
EngineLink
iOBD2
TorquePro
Insurance:
Metromile
Snapshot
LibertyMutual
Travelers
Drivewise
Source: IHS; LMC; Roland Berger
retrofit proprietary
Implications for C&M players
> Higher demand for electronic
materials and chemicals
including silicone, coatings,
adhesives and high
temperature plastics for
housings
> Need for new industry
collaborations with electronics
players and suppliers
Digitization Backup

Vehicles are expected to become more electrified over time –
driven initially by regulations
Key electrification trends (selected)
Regulatory push towards electrification
> Besides country- and state-driven emissions
regulations, several cities are banning vehicles
with internal combustion engines
Progress in battery technology
> Battery capacities and energy densities are
increasing allowing for longer driving ranges
> Cell costs are decreasing, lowering EV sales
prices
OEMs creating new offering
> OEMs launching large model initiatives with
electric/hybrid derivatives of existing models and
dedicated EV models
Customer pull due to EV appeal
> Customers are increasingly demanding EVs due
to their specifications, low operating cost and the
vehicles image
Electrification
0%
2025
2%2%
2018
96%
6%
11%
16%
68%
8%
14%
38%
40%
2030
Battery electric vehicle
Hybrid-Full
Hybrid-Mild
Internal combustion
(incl. stop-start) & other
RB forecast:
NA electrification) [% new vehicle sales in volume]

The share of electric vehicles is expected to significantly grow
over the next decade
2) 3)
Passenger cars sales forecast by region and powertrain type1), 2018-2030 [m units]
1) Includes both passenger cars and light commercial vehicles; 2) Includes Mexico and Canada; 3) EU-28+Norway+Switzerland
Source: IHS, RB xEV forecast, Roland Berger
Europe
North
America China
xx% CAGR Battery electric vehicle Hybrid - Mild Internal combustion (incl. stop-start) & other
Electrification Backup
0.3
2018
0.3 0.1 1.0
15.1
1.8
6.6
6.4
2.5
16.7
1.3
11.0
2025
2.4
2030
15.8 16.3
+0.4%
Hybrid - Full
0.6 3.3
20.9 10.2
2025
2.2 2.4
0.20.3
2018
5.3
23.4
12.6
5.3
6.2
2030
21.9 24.0
+0.8%
18.0
0.8
25.9 6.1
32.5
0.5
9.0
5.9
1.8
11.5
0.1
2018
24.6
2025
1.8
10.2
2030
31.7
+1.9%
91.7
86.1
1.2
1.5
17.1
3.0
2018
12.4
2030
9.0
67.2
2025
19.3
10.9
33.9
44.9
105.7
109.0
+1.4%

Vehicles will be using more and more lightweight materials to
become more fuel efficient and to increase ride range
Key light-weighting trends (selected)
Light-weighting
The concept of lightweight for
vehicle manufacturers and its
suppliers is beyond the weight
of cars and trucks. Since it
takes less energy to accelerate
a lighter object than a heavier
one it will be an integral part of
the solution for increased
ranges and less exhaust gas
emission
Emission regulations increase pressure
> GHG emission and fuel consumption targets set
by regulatory bodies across continents enforced
by hefty penalties if not met
Light-weighting in xEVs
> The combined impact of light-weighting and
improvements in battery technology will increase
range, but only up to a point
Conflict of objectives
> Range anxiety, safety regulations, connectivity
and comfort features increase weight
The way to lightweight
> The implementation of lightweight measures can
be revolutionary or evolutionary
Ambitious weight reduction goals
> Automotive industry and regulatory bodies have
set very ambitious goals for weight reduction over
the upcoming decades

Light Duty
ICE Vehicles
Conceptualized Battery
Electric Vehicles
LDV Compo-
nent Group
2020 2025 2030 2040 2050
Body 35% 45% 55% 60% 65%
Power train 10% 20% 30% 35% 40%
Chassis/suspens
ion
25% 35% 45% 50% 55%
Interior 5% 15% 25% 30% 35%
Completed
Vehicle
20% 30% 40% 45% 50%
The auto industry is also currently setting ambitious goals to
significantly reduce weight of components
Lightweight goals for light duty vehicles by the U.S. Department of Energy1)
2020-2050 targets for weight reductions for systems of
1)U.S. DoE, VTO – 2013 workshop report
Source: DOE, Roland Berger
LDV Compo-
nent Group
2020 2025 2030 2040 2050
Body 35% 45% 55% 60% 65%
Chassis 25% 35% 45% 50% 55%
Interior/closures/
misc.
5% 15% 25% 30% 35%
Battery Assembly 30% 64% 70% 75% 80%
Motor/electronics 25% 29% 33% 37% 40%
Completed
Vehicle
26% 46% 54% 59% 50%
Light-weighting

The automotive industry is facing increased environmental
regulation pressures to lower emissions and improve fuel efficiency
Assessment CO2 emission/fuel consumption regulation
127
75
60
>202520202013 2025
941)
-41%
> Corporate CO2
emission target [g/km]
> Fuel efficiency targets
[km/l]
> Potential4) corporate
CO2 emission targets
[g/km]
> Additional potential fleet
xEV target share
154
105
75
>20252013
t.b.d
2020 2025
-32%
169
116
95
75
2020 20252013 >2025
-44%
> CAFE3) [g/mi]
> Additional ZEV
regulation CARB
178
132
101 95
20252013 2020 >2025
-43%
Penalty: 55 USD per
mpg and
car
≙ 6 USD
per g CO2
and car
Non compliance fine for
manufacturers of JPY 1 m
≙ USD 8.500
No enforcement
specified yet
Up to 95 EUR per g
CO2 and per car
> In 2020, all major markets
will adopt new fuel
emissions standards,
based on average fleet
emissions
> Most OEMs cannot meet
these targets with only
improved conventional
powertrains
> Adoption of the World-
wide harmonized Light
vehicles Test Procedure
(WLTP) would put
additional pressure on
OEMs as it mirrors actual
fuel consumption more
closely than e.g. the
current NEDC5)
As-is Target 2020/2021 Target 2025 RB projection beyond 2025
≙ 41
mpg
≙ 54
mpg
≙ 31
mpg
≙ 57
mpg
Japan China
United
States2)
European
Union
Source: FAW, EPA, EU, Inovar, Lazard, Roland Berger
Light-weighting
1) Average weight depended CO2 emission target; 2) The current Trump administration is in the process of rolling back emissions regulations previously set under Obama;
3) Example for passenger car; 4) No decision made yet; 5) New European Driving Cycle

The MADE+ hurricane is on its way and will be impacting
everything in its path
The MADE+ hurricane – mapping the impact on the value chain
Level 4/5 zone Level 2/3 zone Tropical storm zone
Coastline
etc.
Level 5

D. Impact of MADE+ on
the chemicals and
materials industry

0
2
4
6
8
10
12
14
16
Beyond
2040
2030
Productionvolume
2020 2040
The MADE+ trends are expected to impact the chemicals and
materials space
ICE Hybrid BEV
Short-term and longer-term impacts of MADE1)
Near term Longer term
Level 5
autonomous
goes
mainstream
IV
Illustrative
1) The total volume beyond 2030 is meant to be illustrative
Shared
mobility
becomes
sustainable
IIIII
Electric
vehicles
become
mainstream
Impact of light-
weighting and
digitalization
I

Chemicals and materials will see a profound impact, both in the
near term and over the longer term
Impact on chemicals and materials in the near term and the longer term
ShorttomediumtermLongerterm
Key factors Description Impact on Chemicals & Materials
II Electric vehicles
become
mainstream
As electric vehicles gain more traction and
battery technologies mature, BEVs account
for a bigger share of the road. Currently,
available materials rather than optimal ones
are used
Battery materials, aluminum, commodity plastics,
engineering plastics, composites
Fe metal, glass, rubbers, fluids, etc.
III Shared mobility
becomes
sustainable
Mobility-as-a-Service business models will
change the landscape of mobility with a
significant number of shared vehicles.
Volume decrease will accelerate and the auto
industry will see a bifurcation of models and
new types of vehicles
Easy-cleaning, graffiti-resistant material, resilient upholstery
(e.g. silver impregnated vinyl), natural materials, materials
used in public transportation
Traditional materials and plastics
IVLevel 5
autonomous
becomes
mainstream
Electronics, sensors, micro-computing chips, high-temp
plastic housings, completely new materials based on
purpose of vehicle, less demanding battery technology
Fully autonomous technology, performing all
dynamic driving tasks, is rolled out into the
mass market
Currently used materials may be replaced by alternatives
due to fundamentally different design concepts
Light-weighting is causing a shift in structural
elements while other trends are resulting in
higher quality interiors, more displays, more
functionality, and smart surfaces
Aluminum, commodity plastics, engineering plastics,
composites, silicon (displays), etc.
Fe metal, glass, rubbers, fluids, etc.
I Impact of light-
weighting and
digitalization

D.1 Impact of MADE+ in
the short- to
medium-term

In this section, we will focus on the impact of these trends on the
number, mix and characteristics of vehicles in the near term
What are the
current
dynamics in
the industry?
0
electrification
What is
MADE+1)?
What are the
underlying
trends?
1 What are the
near-term
impacts of
MADE+?
2 What are the
long-term
impacts of
MADE+?
3

MADE+ is expected to change the vehicle portfolio
Chapter summary
In the short to medium term, two main factors will impact chemicals and materials
> More cars will become connected and light-weighting efforts will continue to
accelerate
> The share of BEVs will continue to grow as the technology matures
> In addition, the industry will continue to see a gradual democratization of new
materials and premiumization of vehicles
1
Macroeconomic factors will result in stagnant volumes and reduced demand for
materials
3
A higher degree of connectivity, emissions regulations and light-weighting goals will result
in an increased demand for aluminum, electronic chemicals and plastic housings
while lowering demand for Fe metal, glass and rubber
4
As BEVs take off and reach maturity, new materials that are currently still being
developed will become more mainstream
5
In summary, chemicals and materials players will need to invest in new material
research and ensure design excellence to thrive
6
2 This creates opportunities and risks for chemicals and materials players supplying into
the auto industry

0
2
4
6
8
10
12
14
16
Beyond
2040
2030
Productionvolume
20402020
In the short to medium term, electrification, digitization and light-
weighting have the most significant effects
ICE Hybrid BEV
Near term factors of MADE+ disruption1)
Level 5
autonomous
goes
mainstream
IV
Illustrative
Shared
mobility
becomes
sustainable
IIIII
Electric
vehicles
become
mainstream
Impact of light-
weighting and
digitalization
I

Players providing battery materials will receive a huge lift, while
those selling glass, rubber and Fe metal will be adversely impacted
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65%
Glass
Fluids
Aluminum
C+M impact1)
Commodity plastics
Ferrous metal
Copper / brass
Magnesium
Engineering plastics
High performance plastics
Adhesives
Rubber
Composites
Platinum
Coatings
Natural materials
Battery materials
Other
"Huge growth opportunity –
use it or someone else will"
"High revenue risk –
need for portfolio review"
"Some opportunities to
expand auto exposure"
"Some revenue at risk"
IllustrativeOverall impact of MADE+ on the Chemicals and Materials industry
1) Relative change in C&M demand from 2020 to 2030, cube root for graphical normalization
Exposure to auto industry

402019_RB_Study_Bracing for Impact_vF.pptxSource: Roland Berger expert survey
As a result, there will be large volume impact on the choice of
metals used and growth in materials required for electrification
Chemicals & materials demand
Negative impact on demandPositive impact on demand Neutral impact on demand1)
Composites
Commodity plastics
Glass
Rubber
Platinum
Magnesium
Adhesives
Natural materials
Copper /brass
Aluminum
Engineering plastics
Other
Fluids
High performance plastics
Coatings
Ferrous metal
Battery materials
Change
[%]
+1,508.7%
+1.9%
-5.6%
-6.7%
-5.5%
+192.2%
+138.0%
+39.8%
+23.0%
+20.8%
+39.4%
+23.9%
-0.4%
-0.7%
+0.4%
-21.8%
+232.5%
Illustrative
1
200
50
43
0.05
1
2
13
27
284
37
12
21
0.2
11
1,039
26
2020
Demand
[kg/vehicle]
14
204
47
41
0.04
2
4
18
34
345
52
15
21
0.2
11
806
86
2030
Demand
[kg/vehicle]
Light-
weighting
Electri-
fication
Mobility Digitali-
zation
Auto-
nomous
Metals
Plastics
Other
1) Neutral impact on demand includes offsetting trends
LEM DA

Ferrous metals will see significant substitution for aluminum due
to autonomous, electrification, and light-weighting trends
Metals demand
Illustrative
Platinum 0.05
Magnesium 1
Copper
/brass
27
Aluminum 284
Ferrous
metal
1,039
Change
[%]
2020
Demand
[kg/vehicle]
2030
Demand
[kg/vehicle]
Light-
weighting
L
Electri-
fication
E
Mobility
M
Digitali-
zation
D
Auto-
nomous
A
-5.5%0.04
+192.2%2
+23.0%34
+20.8%345
-21.8%806
Further Insights
> Increasing substitution of higher
grades of steel and stagnating
volumes require fewer amounts of
steel overall
> Electrification causes the demand
for aluminum to decrease as fewer
engine blocks and casings are
needed
– However, light-weighting effects
of aluminum outweigh that of
electrification as extruded,
stamped, and casted aluminum
for motor casings increases
significantly
> As more wiring is needed, demand
for copper increases
> Demand for platinum will decrease
from electrification as need for
catalytic converters used in ICE
vehicles declines

Overall plastics demand is poised to increase due to the MADE+
trends
Plastics demand
Illustrative
High
performance
plastics
0.2
Engineering
plastics
37
Commodity
plastics
200
Change
[%]
2020
Demand
[kg/vehicle]
2030
Demand
[kg/vehicle]
Light-
weighting
L
Electri-
fication
E
Mobility
M
Digitali-
zation
D
Auto-
nomous
A
-0.7%0.2
+39.4%52
+1.9%204
Further Insights
> Demand for engineering plastics
and high performance plastics
increase due to greater need for
casings and housings for displays,
dashboards, and electronics
> Mobility trends demands the use
of cheaper commodity plastics
particularly in interior systems (e.g.
instrument panels, seating &
restraint, etc.) within urban shared
cars
> Plastics (e.g. polycarbonate) will
also substitute other materials,
such as glass, based on light-
weighting trends
> Bioplastics will be increasingly
used with natural materials due to
stricter environmental standards
and the importance of portraying a
'green' image

There is low substitution risk for polycarbonate from other ETPs
as key properties have been optimized to certain applications
Key engineering plastics and typical automotive applications
Material Advantages Disadvantages
Source: A2Mac1, Desk Research, Roland Berger
Automotive applications
Nylon > Toughness and impact resistance
> Abrasion resistance
> Broadly processable
> Good chemical resistance
> Heat resistance
> Broad product range
> Dimensional stability in the
presence of moisture
> Air intake manifolds
> Oil and tank caps
> Radiator tanks
> Door handles
> Electrical connectors
Polycarbonate > Impact strength
> Clarity
> Ability to be alloyed to expand
property and economic envelope
> Heat resistance
> Chemical resistance
> Stress crack resistance
> Instrument panels
> Door and side handles
> Storage compartments
> Lighting systems
> Glazing
Acetal > High tensile strength with rigidity
and toughness
> Low coefficient of friction
> Heat resistance
> Moldability
> UV degradation
> Limited processing options
> Gears
> Door and mirror systems
> Instrument panels
> Electrical systems
PBT > Chemical resistance
> Heat resistance
> Electrical properties
> Rapid crystallization relegates it
mainly to injection molding
> Brittle without reinforcement
> Windshield and window systems
> Wire harnesses
> Safety sensor and door systems
Modified poly-
phenylene oxide
> Heat resistance
> Good physical properties
> Ability to be flame retarded
> Chemical resistance
> Limited processing options
> Fuel injection pressure sensors
> Engine cooling housing
> Fuel systems and lid trims

Acrylic
In fact, polycarbonate is a potential substitute of glass as a result
of electrification and light-weighting influencing material selection
Strong Moderate
Substitution comparison for automotive glass glazing
Desired property
Likelihood
of substitution
Impact resistance
Safety
Low cost
Light-weight
High transmission rates
High chance of substitutionLow chance of substitution
Source: BCC Research, Expert Interviews, Desk Research, Roland Berger
LimitedWeak
Ease of processing1)
While PC and acrylic can
largely be cut and cold-
formed on-site, glass
materials require pre-forming
and fabrication before being
installed
PC has greater impact
resistance than both glass
and acrylic while also
needing less structural
support
Lifecycle
Glass can be made more
resistant to breakage by
increasing its thickness and
heat treating, but this adds
more cost and weight
Scratch resistance
N/A
Glass Polycarbonate
1) Fabricate or compound
Further Insights
> The use of polycarbonate in
place of glass for thin films is
a significant new application
– Substitution would only
potentially occur on the
rear window, sunroof, and
partially on the side
windows, but not the
windshields due to safety
reasons (low scratch
resistance of PC)
– Laminated safety glass is
the predominant specified
material for windshields
> Plastics are lighter than
glass, resistant to shattering,
and can be easily fabricated
with multiple glazing layers to
improve thermal resistance
or reinforced with fiber to
increase strength

Battery materials will see a significant increase in demand as
many other chemicals & materials will experience neutral impact
Other chemicals & materials demand Illustrative
1) Neutral impact on demand includes offsetting trends; 2) Nickel and Cobalt are a part of 'battery materials'
Battery
materials2) 26
Change
[%]
2020
Demand
[kg/vehicle]
2030
Demand
[kg/vehicle]
Light-
weighting
L
Electri-
fication
E
Mobility
M
Digitali-
zation
D
Auto-
nomous
A
Further Insights
> The increase in EVs will drive up
demand for battery materials
> Composites are growing but
restricted to the high-end, luxury
vehicles
– Adhesives are tied with
composites because they are
used to combine composites
with metal components
> Demand for natural materials will
increase as stricter environmental
regulation is implemented
especially in cities
> Fluids will see offsetting demand
impact from the MADE+ trends:
though the need for transmission
oil decreases, other fluids, such as
cooling fluids for electric vehicles,
will increase in demand
> Rubber is decreasing as different
fillers and rubber compositions are
being used that require slightly less
rubber to achieve lower rolling
resistance, driven by light-
weighting
Composites
Glass
Rubber
Fluids
Natural
materials
Coatings
Adhesives
Other
1
50
43
21
13
11
2
12
86
14
47
41
21
18
11
4
15
+1,508.7%
-5.6%
-6.7%
+138.0%
+39.8%
+23.9%
-0.4%
+0.4%
+232.5%

As BEVs take off and reach maturity, new materials that are
currently still being developed will become more mainstream
Adoption curve
Market
penetration
Time
Current battery electric vehicle
> Optimal technology still being developed
> Materials of construction currently in play
> Materials are selected for small-scale
production
Internal combustion engine
> "Status quo"
> Mature technology
> Materials of construction have
been selected and optimized
Solid state /Future battery
electric vehicle
> Technology still in development
and under experimentation
> All materials in play Hybrid electric vehicle
> Technology developed over a decade ago
> Materials of construction have been
selected
> Optimization underway
Implications for C&M players
> For BEVs, current material
selection is based on sub-
scale economics and may
change as production of
BEVs increases
> For example, tooling metal
components in small scale
production runs provide
lower production costs, but
increased scale will warrant
investment in injection
molding for larger
components
> Thus, materials of choice
may change as electric
vehicles reach greater scale
and as solid state batteries,
which have higher
temperature requirements
than lithium-ion batteries,
become more mature
Illustrative

This in turn will favor different kinds of plastics – for example,
solid state batteries would need more plastics
Illustrative
Required properties
Potential materials
Current lithium
batteryHybrid1) Solid state battery
Maximum use Temperature [°C] 150 to 180 85 to 100 150 to 170
Electric permittivity required Low High High
Flame retardance required Moderate High High
Chemical resistance required High Moderate Moderate
> Nylon
> Aluminum
> Steel
> EPDM
> Polypropylene
> ABS
> PC
> Aluminum
> Steel
> Nylon
> PPS
> Aluminum
> Steel
> High temperature
plastics
Source: Goodfellow, Expert interviews, Roland Berger
Material requirements for power train materials
1) Dual power train

In summary, light-weighting, digitalization and electrification are
expected to have a significant impact on various current materials
Aluminum, engineering plastics,
composites, natural materials, adhesives
Battery materials (incl. emerging
technologies such as solid state batteries),
copper, other misc. electrical materials,
engineering plastics, adhesives,
magnesium
Any materials that are in the drive train
(incl. under the hood, seals), Fe metal,
commodity plastics, fluids
Steel (smaller bodies and stagnating
volume in mature markets), rubber, glass
Near-term impacts of MADE+ and implications for Chemicals and Materials players
Implications
> Investing in research and
development on new light
and commercially viable
materials
> Ensuring design
excellence to optimize
each part to utilize the least
possible amount of material
> Industry-wide cooperation
across the supply chain to
help standardize and
reduce cost
Key factors Impact on Chemicals & Materials
II EVs become
mainstream
I Impact of
digitalization and
light-weighting

D.2 Impact of MADE+ in
the long term

In this section, we will focus on the longer term effects of MADE+
on the chemicals and materials industry
What are the
current
dynamics in
the industry?
0
electrification
What is
MADE+1)?
What are the
underlying
trends?
1 What are the
near-term
impacts of
MADE+?
2 What are the
long-term
impacts of
MADE+?
3

In the longer term, mobility and autonomous driving are expected
to become bigger drivers, disrupting the traditional model
Chapter summary
1
2
3
5
6
In the longer term, MADE+ will impact the chemicals and materials industry through two key
factors:
> Shared mobility will become more ubiquitous
> Level 5 autonomous driving will become mainstream
The emergence of purpose built vehicles will result in a bifurcation of industry models
into the conventional model (utility mass market vehicles and luxury) & a new age model
(purpose built vehicles)
As purpose built vehicles take off, the industry will have to borrow design principles from
urban public transportation models
As fully autonomous vehicles become a reality, the material requirements will be
determined by the use case of the vehicle
Further, the demand for electronic components such as sensors and micro-computing
chips will skyrocket – This in turn will call for a new set of material requirements to act as
housings
In order to succeed in this complex environment, chemicals and materials players will need
to nurture emerging technologies while remaining economical under the current business
model
4

0
2
4
6
8
10
12
14
16
2020
Productionvolume
2030 2040 Beyond
2040
In the longer term, shared mobility will become more mainstream
and will continue to have a significant volume impact
ICE BEVHybrid
Long term factors of MADE+ disruption1)
Level 5
autonomous
goes
mainstream
IV
Illustrative
Shared
mobility
becomes
sustainable
IIIII
Electric
vehicles
become
mainstream
Impact of light-
weighting and
digitalization
I

As a result, we will see a bifurcation of industry business
models to tackle different archetypes
Vehicle archetypes – today and in the future
Today
Sedan/Hatchback/
Pickup truck
Mass Market, Economical
Premium Vehicle
More expensive, more
features, could be hybrid
Today's vehicles are developed based
on same design requirements, similar
use cases, similar materials, etc.
Future (2030)
B Premium,
predominantly
e-powered
A Purpose Built
Vehicle, e-
powered only
C Mass market,
predominantly
ICE-powered
PBVs will significantly profit from the development
towards MaaS. MaaS revenue is expected to
increase from 3% in 2015 to 34% in 2030
Conventional
business
model
86% 14%
74%
17%
10% Next-gen
business
model

Purpose built vehicles will have new design and material
requirements for durability and modularity
Purpose-built vehicle concept
Illustrative
> Low TCO and long life
time/reliability
> Purpose-designed or flexible
interior
> Fast cleaning and maintenance to
maximize uptime
> Customizable passenger comfort
Functional characteristics
Vehicle concept
> Open, flexible interior with
low, flat floor
> Modular and easily
switchable trim/seating
Interior > Durable, versatile and anti-
microbial finishes that are
cost-effective, increased
use of plastics
Implications for
chemicals and materials
> Light-weighting to
maximize payload &
minimize TCO (use of HSS
and aluminum)
Exterior
& chassis
> Optimized design for high
mileage
> Box-shaped silhouette on
skateboard architecture
> Battery electric powertrain
> 60 kWh battery
Power-
/drivetrain
> Steel, aluminum used for
housings /frames and
plastics used for cooling,
separators, and electronics
> Materials will change as
scale increases

Illustrative
Premium SUVs will increasingly favor comfort and customization,
creating new design and material choices
Premium vehicle concept
> Brand recognition and exterior
design
> Interior comfort & design
> Emotional appeal & driving
experience
> Sufficient range
Vehicle concept
> Advanced connectivity and
infotainment features
> Customizable seating
Interior > Stylish and high-end trim
features, use of natural
materials or high-quality
vinyl
> Demand for more silicon,
electronic chemicals and
plastics for housing
> Increasing use of aluminum
and also plastics/composites
for body (e.g. hood, trunk)
Exterior &
chassis
> Similar design and
dimensions, but increased
focus on weight optimization
> Battery electric powertrain
> Larger, 80-100 kWh battery
> AWD eDrive for high
performance compared to
ICE
Power-
/drivetrain
> Steel, aluminum used for
housings /frames and
plastics used for cooling,
separators, and electronics
> Materials will change as
scale increases
Implications for

Illustrative
Mass market vehicles will be optimized for cost and convenience
Mass market vehicle concept
> High fuel economy
for compliance
> Low cost and lower weight
materials
> Modular components for economies
of scale
> Higher info/entertainment content
for convenience
Vehicle concept
> Increased connectivity and
infotainment features
Interior > Use of plastics with light
weight, low cost, and
attractive appearance
> Use of high strength steel
or aluminum/plastic in
some cases to reduce
vehicle weight
Exterior
& chassis
> Similar design, but
continued focus on light-
weighting to conform to
emissions regulations
> Optimized system for
production economies of
scale, low maintenance,
low fuel consumption
Power-
/drivetrain
> Use of lighter and heat
resistance components
under the hood
> Components incl.
turbochargers, pumps, oil
pans, etc.
Implications for

As shared mobility becomes ubiquitous, industry players will need
to adopt design requirements from public transportation
Private, individual,
road-based
solutions (mix of collective/shared
solutions and road-based
solutions)
Public, collective,
heavy, rail-guided
solutions
Shared
solutions
> As shared solutions
become more
ubiquitous, the
competition is no
longer with cars but
with public
transportation
options
> Shared solutions are
increasing the
demand for materials
similar to that used in
public transportation
– easy to clean,
graffiti-resistant,
comfortable and
robust
Convergence of the transport modes

The story of autonomous adoption is analogous to that of the
'horseless carriage' in the late 19th century
A perspective on autonomous vehicles
1895
Horseless
Carriage
Transitional automotive technologies
2030+
Driverless
Car
Late 19th century Mid 21st century
> The horseless carriage was an early name for the
first automobiles, regarded as a transitional
technology and a marking point in history
> Likewise, today's version of the horseless carriage
is the driverless car – an inordinate change in terms
of technological complexity and potential societal
shifts
> Thus, a true autonomous vehicle ceases to be a car
just as the horseless carriage ceased to be a 'horse
and buggy'
> As a result, the competitive set will not be limited to
automotive players; it will also consist of individual
trains and busses, among others
> In addition, the materials of construction have yet to
be defined as a true autonomous vehicle and
accompanying infrastructure has not been
developed yet

In the longer term, mobility and autonomous driving are expected
to disrupt industry models and demand new materials
Vehicle interiors, natural materials, anti-
microbial, easy-to-clean materials
Sensors, electronic components, housing,
new optimized materials (e.g. carbon fiber)
Revolutionary design concepts (bringing a
luxury living room experience into the car)
will warrant a rethink of materials used
Continued lower demand for steel and
heavy materials, commodity plastics,
conventional powertrain components
Key factors Impact on Chemicals & Materials
IV Level 5
autonomous goes
mainstream
III Shared mobility
becomes
sustainable
Long-term impacts of MADE+ and implications for C&M suppliers
Implications
> Investments in commercializing new
materials
> Bifurcation of automotive industry
models will result in different
specifiers and need for industry
collaborations
> Complete rethink of car design and
interiors will demand a different level
of collaboration with automotive
players
> Delicate balance of two business
models – staying relevant and
profitable in the existing model with
higher but decreasing volume while
investing in emerging technologies
and materials to stay ahead of
competitors in the next-gen model

E. Implications and
priorities for
Chemicals and
Materials players

Chemicals and Materials players will need to navigate change at
different levels to enable a smooth transition into the future world
Manage immediate
industry volume
developments
Navigate short-term
impact of MADE+
Prepare for long-term
impact of MADE+
Manage transition
into the future
2 3
4
Priorities for C&M players
1
> Understand and quantify
volume developments and their
impact on current portfolio
> Take counter-measures and
reallocate investments if
needed
> Identify suitable opportunities
from MADE+ (aligned with
current portfolio,
competences and trends)
> Focus especially on materials
supporting light-weighting
and electrification
> Identify long-term impact of
MADE+ on current portfolio and
resulting financial performance
> Identify suitable opportunities for
long-term bets around new
materials for new mobility
concepts
> Collaborate with automotive
players to rethink the car design
> Partner with players across
the value chain to help
standardize and reduce costs
> Invest in new skills and
competencies

In addition to lower volumes, C&M players will need to deal with
two automotive business models in the near and longer term
Shift in automotive business models and implications
Existing
model
Innovation
frontier
> Continues to exist for the mass market /utility vehicle and
hence still optimized for scale, scope, speed and supply
chain
> Investment in new materials (high quality material for
personal vehicles)
> Newer materials (robust, cheap and easy to clean for
shared vehicles)
> Processes optimized for flexibility (based on use case)
> Different supply chains
> Different business model
Illustrative
Req. for success:
> Flexibility
> Experimentation
Today Future
Conventional
business
model
Conventional
business
model
BEV/Hybrid
model
Next-gen
business
model
> Efficient
> Low-cost
> Large volume
processes
Req. for
success:
> Scale
> Speed
> Optimized
supply chain
Shift in automotive business models Requirements of the business model
This has implications on two levels:
A. Innovation/new material development
B. Business model and operations

Chemicals and materials players will need to rethink the way they
innovate…
A. Innovation and material development implications – key questions
Who takes over responsibility for developing new materials?
Who is the specifier?
Will development of new materials be an industry solution
or an individual solution?
How should R&D be funded? What types of new materials should they
investigate? What are the key priorities?
How can players nurture innovation while remaining economically relevant
and profitable?
How can chemicals and materials players balance requirements
for near term needs with long term needs?

…and the way they operate in order to sustain both business
models
B. Business model and operational implications – key questions
What are the implications for manufacturing, production, procurement and
supply chain?
Do suppliers manage needs of current customers (OEMs, Tier 1
suppliers) and emerging ones (new mobility providers)?
What different industry structures will need to emerge?
How can players manage the transition and the ability to serve both the
conventional model and the emerging next-gen model?

F. Introduction to
Roland Berger

We are a global top-5 strategy consulting firm with extensive
experience across all industries and functional issues
Germany # 3
Growth regions China and Russia/CEE # 2
World # 5
Core markets in Western Europe # 3
2017
Market position
in the strategy segment
Our profile International position
Our values Extensive experience
Created in 1967
in Germany
by Roland Berger
50 offices
in 34 countries with
2,400 employees
Over 220 Partners
~1,000 international
clients
We serve …
… The largest international
companies:
30% of the Global 1000
40% of Europe's leading companies
… The most dynamic and innovative
mid-size companies
... Governments about to deregulate
and privatize
Excellence
We achieve excellent results and develop global Best-
practices to ensure measurable and sustainable success
Empathy
We are insightful and responsible advisors who
contribute to the greater good
Entrepreneurship
We follow an entrepreneurial approach and
provide creative and pragmatic solutions
Brussels | Kiev |
Prague |
Moscow
Beijing
Budapest | Zürich
Amsterdam
Detroit | Shanghai
Warsaw
Zagreb
Manama
Chicago | Hong Kong |
Beirut
Casablanca |
Istanbul | Taipei
Doha
Stockholm| Goteborg|
Singapore
Dubai | Kuala Lumpur |
Lagos | Jakarta
Seoul | New Delhi |
Guangzhou |
Montreal| Boston
Mumbai
2009
2010
2011
2012
2013
2014
Bangkok | Pune
Munich
Milan
São Paulo
Stuttgart
Düsseldorf
Madrid
Frankfurt| Vienna
Berlin | Hamburg |
Lisbon | London |
Paris
Tokyo
1993
1994
1995
1997
2002
1998
2000
2003
2006
2007
2008
1967
1969
1976
1982
1986
1987
1989
1990
1991
1992
Bucharest

Our chemicals industry experience is based on a deep
understanding of value chains, markets and competitors
Specialty chemi-
cals/materials3
> Agrochemicals &
Pharma intermediates
> Performance chemicals
> Performance materials
/composites
Basic materials
& intermediates2
> Olefins
> Aromatics
> Inorganics
Oil & gas
1
> Traditional
> Unconventional (Shale)
> Renewable/Bio-based
Formulation
& fabrication4
> Coatings, adhesives,
sealants and inks
> Substrates
> Parts/aggregations
End markets
5
> Automotive
> Construction
> Electronics and
Consumer Products
> Agro /feed
> Corporate and BU growth strategy
> M&A transaction support
> Global footprint optimization
> Supply strategies
> Org. design and implementation
> Product portfolio strategy
> CRM/distribution strategies
> Recycling/alternative feedstocks
> Penetration of growth regions
> Turnaround/restructuring
> Acquisition-based growth strategy
> Technology and innovation strategy
> Business model optimization
> Pricing and segmentation
> SG&A cost reductionOrganization
Operations
Strategy
Expertise
Project examples
Chemicals and materials value chain expertise
Chemicals practice

Our Automotive Competence Center comprises five clusters and
has a truly global footprint with over 300 consultants worldwide
Automotive Competence Center – Functional clusters and global presence
5Partners
40Consultants
USA
Our
clusters
Our
global
presence
Commercial vehicles,
agri. & construction
Marketing, sales &
aftersales
Financial & mobility
services
Product creation &
technology
Suppliers
1Partners
10Consultants
MENA
2Partners
20Consultants
India
1Partners
5Consultants
Singapore
3Partners
30Consultants
Japan
3Partners
20Consultants
Korea
3Partners
40Consultants
China/Hong Kong
2Partners
20Consultants
Russia/CIS
2Partners
10Consultants
South America
18Partners
150Consultants
Western Europe
2Partners
20Consultants
Eastern Europe
Automotive practice

Our knowledge of the "oil to car" value chain has supported
several projects for Chemicals in Automotive applications
Project examples for chemicals in automotive applications – selection
Selected project references
> Market entry and Business development strategy for a chemical company in the
field of fabrics for automotive interior usage
> Automotive strategy for high value-add plastics and composites company
> Epoxy market study for several end markets incl. automotive for a specialty
chemicals company
> Identification of risks and opportunities for Polyurethane in xEVs in Europe
> Benchmark of new composite technology against traditional automotive
materials
> War-gaming exercise for a chemicals manufacturer to support distribution
strategy selection in automotive refinishes
> Ethylene Propylene Diene Monomer (EPDM) market assessment and due
diligence
> Automotive light-weighting material trends in Europe
> CFRP strategy for automotive for a Japanese chemical company
> European CFRP market assessment for a Japanese conglomerate
> Carbon fiber supplier due diligence for a Japanese chemicals company
> Vendor due diligence on the automotive division for an automotive supplier
> Lithium cathode materials (LiB CAM) strategy for a commodity chemicals
manufacturer
> Chinese OEM strategy for an automotive lubricants manufacturer

This study is a joint effort by the Automotive and Chemical
competence centers - Please contact us for further information
Authors and key contributors1)
Surabhi Shankar
Project Manager
Chemicals CC
Stephan Keese
Senior Partner
Automotive CC
Konstantin
Shirokinskiy
Principal
Automotive CC
Frederic Choumert
Partner
Chemicals CC
Brian Gersh
Principal
Chemicals CC
Jonathon Wright
Partner
Chemicals CC
Maximilian
Wegner
Senior Consultant
Automotive CC
George Learn
Junior Consultant
Automotive CC
Jeffery Wang
Junior Consultant
Chemicals CC
Daniel Kubis
Senior Consultant
Automotive CC
Peter Hudson
Senior Consultant
Automotive CC
1) We would also like to thank the following colleagues/experts for their contributions to the study: Benny Guttman, Dr. Gunter Lipowsky, Eric Esperance, Florian
Daniel, Johan Karlberg, Jan-Philipp Hasenberg, Laurianne Schilles, Markus Baum, Martin Tonko, Pierre Desjardins, Thomas Schlick, Wilfried Aulbur, Yatao Gu

This presentation was prepared by Roland Berger GmbH ("RB") exclusively for the benefit and internal use of our clients and
solely as a basis for discussion of certain topics related to the automotive, chemicals and materials industries described
herein. This presentation is strictly confidential and may not be reproduced, summarized or disclosed, in whole or in part,
without the prior written authorization of RB, and by accepting this presentation you hereby agree to be bound by the
restrictions contained herein.
This presentation is based on publicly available information that has not been independently verified by RB. Any estimates
and projections contained herein involve significant elements of subjective judgment and analysis, which may or may not be
correct. Neither RB, nor any of its affiliates, nor any of its direct or indirect shareholders, nor any of its or their respective
members, employees or agents, provides any guarantee or warranty (express or implied) or assumes any responsibility with
respect to the authenticity, origin, validity, accuracy or completeness of the information and data contained herein or
assumes any obligation for damages, losses or costs (including, without limitation, any direct or consequential losses)
resulting from any errors or omissions in this presentation.
The economic estimates, projections and valuations contained in this presentation are necessarily based on current market
conditions, which may change significantly over a short period of time. In addition, this presentation contains certain forward-
looking statements regarding, among other things, the future share of chemicals and materials in a vehicle, which may
include projections based on growth strategies, business plans and trends in the automotive sector and chemicals/materials
industries and global markets. These forward-looking statements are only predictions based on current expectations; the
actual future results, levels of activity and/or financial performance may differ materially from the predictions contained in this
presentation. Changes and events occurring after the date hereof may, therefore, affect the validity of the statements
contained in this presentation, and RB does not assume any obligation to update and/or revise this presentation or the
information and data upon which it has been based.

Bracing for Impact: Assessing the impact of the automotive trends on the chemicals and materials industries

Bracing for Impact: Assessing the impact of the automotive trends on the chemicals and materials industries

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