The document discusses the risks and opportunities of electric vehicle (EV) electrification, highlighting the current state of the market with limited adoption among consumers in North America. It outlines challenges such as infrastructure incompatibility, range anxiety, and high upfront costs, alongside insights into emerging technologies and the potential impact of China's electric vehicle market. The report emphasizes the need for advancements in technology and regulatory improvements to drive EV adoption and market growth.

1. ELECTRIFICATION OF THE VEHICLE Risks & Opportunities By Phil Biggs January 2011 © One World Partners, LLC 2011, All Rights Reserved

2. Introducing the Electric Car… Primary power plant is battery – no backup powertrain in place as in hybrid vehicles. North American mass marketing is in pre-testing stage. Nissan Leaf is the only commercial vehicle to-date Tesla is a niche vehicle. Chevy Volt is considered a “plug-in hybrid” (electric coupled with a small on-board gasoline-powered engine). Other unique electric alternatives coming to the market: Fisker is producing a stealth-luxury offering called the Karma. Aptera has a three-wheeled vehicle made from fully re-cycled materials, touting better weight, aerodynamics, and efficiency. Wheego is advocating consumer education along with its niche-only market presence. © One World Partners, LLC 2011, All Rights Reserved

3. Future Design and Demand Curve Remain Uncertain… Currently, fewer than 7% of Americans are even considering buying a plug-in vehicle. ** Of those that purchase electric, many are unlikely to increase their risk by buying unproven technology from unknown manufacturers. Breakthrough technology will continue to push the market, along with the need to fund new R&D. Warranty, safety and regulatory issues will hinder fast growth as well as drive demand for iterative product and service improvements. © source: www.money.cnn.com and Kelley Blue Book

4. Cleaner to Operate? With nearly 50% of U.S. electricity generated by coal, many electric vehicles do have a carbon footprint. The other power sources are natural gas and nuclear power, so electric cars on the whole are cleaner to operate. Shifting to all-electric cars will over time certainly result in lower CO2 emissions, because most new power plants coming on-line in the U.S. are not coal-fired. Other electric car advantages: The electric car has a “long tailpipe” and pollution from power plants is released where the plant is located, usually not near cities. Due to new regulation, emissions from coal-burning power plants are more controlled, and coal plants are bound to become cleaner. © source: www.money.cnn.com

5. Measuring Payback and Cost-Benefit Traditional powertrain / 15,000 miles @ 25 MPG $2100 annual fuel cost @ $3.50 per gallon cost Electric powerplant / 15,000 miles @ 90+ MPGe $400 annual cost @ 11 cents per kilo Operating cost savings of about $1700 but… Consumers will pay more up-front for the vehicle Significant uncertainty regarding re-sale value How much will electric cars cost to insure? © One World Partners, LLC 2011, All Rights Reserved

6. Commercial Issues Incompatibility with existing infrastructure Charging stations and retail re-charge dockets many times have no common architecture with current electric vehicles. Many drivers develop range anxiety Limited 100-mile range causes safety and use concerns. Over 20 hours needed to bring vehicle to full charge Locating retail charging stations is often difficult I-Phone application may solve that problem. © One World Partners, LLC 2011, All Rights Reserved source: www.money.cnn.com

7. Growth of On-Board Electronics Echo Boomers are pushing the trend to higher electronic content in the vehicle. Over 90% of the vehicle is now tied to electronic systems. ** Flatwire technology may replace conventional wiring harnesses, which in turn could radically change OEM relationships with suppliers such as Visteon, Delphi, Tyco. Millenials demand and expect device-ready electronics even in A and B car segments i.e. Fiesta, Focus. © One World Partners, LLC 2011, All Rights Reserved source: www.autoconomy.com

8. Developments In the Pipeline… Drive-by-wire or DbW Replaces the traditional mechanical control systems with electronic control systems using electromechanical actuators and human-machine interaction such as pedal and steering feel emulators. As a result, traditional components such as the steering column, intermediate shafts (throttles), pumps (brakes), hoses, belts, coolers and master cylinders are eliminated from the vehicle. Active Steering System Semi-automatic parallel parking. Steer-by-Wire (SbW) eliminates mechanical linkages. SYNC Gen3 with complete voice-activated control and wide range of new on-board communications and electronic applications. Ford E-PASS is due in 2011 – all electric components, no mechanicals. © One World Partners, LLC 2011, All Rights Reserved

9. China is the Wild Card … Brand acquisition and status are driving forces among many Chinese consumers. 60% of Chinese car buyers are considering electric vehicles (as contrasted with less than 7% in U.S.) Sales of 5 million electric vehicles in China projected by 2020… May represent 35% of the global electric-vehicle market. China plans to leapfrog traditional combustible powertrain direct to electric alternatives. China will provide its automotive OEMs with over $17 billion in government co-R&D investment. © One World Partners, LLC 2011, All Rights Reserved

10. North American Sales Forecast 2009 10.4 million units 2010 11.5 million units Up 10.6% year-over-year On pace to exceed 12 million units 2011 13 million units © source: www.autoconomy.com