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"The Future of the Automotive Industry", Automotive Session, POSCO EVI Forum

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The Future of the Automotive Industry and its Impact on Automotive Materials

Presentation on November 1st POSCO EVI Forum

New trends - Rise of EVs, Autonomous Vehicles, Sharing Econommy

Impact on Automotive Industry-
Changes in Value Chain, Business Model, Car Design

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"The Future of the Automotive Industry", Automotive Session, POSCO EVI Forum

  1. 1. The Future of the Automotive Industry - And its Impact on Automotive Materials - Park, Hyungkeun Image: Mercedes Benz Concept
  2. 2. 1/26After a 130 years of car history, still… Source: “Resource Revolution “, Heck & Rogers (2014) Idling Egine losses • Rolling resistance • Aux. power • Transmission losses • Inertia • Aerodynamics Fuel Efficiency • 0.8% looking for parking • 0.5% sitting in congestion Utilization efficiency 2.6% driving A car spends 96% of its time parked * Based on the USA Infra efficiency Energy used to move a person/thing (4~5%) 86% of fuel never reaches the wheels Only 10% of a road occupied by cars (Peak)  Peak only 5% of the time 90% of road is idle
  3. 3. 2/263 key drivers of automotive paradigm shift Electric vehicles (EVs) Energy efficiency Sharing economy Ownership efficiency Self-driving cars Use efficiency
  4. 4. 3/26Tesla Model 3 & GM Bolt heralds ‘era of electric vehicles’ Rank Model 2015 Sales 1 Toyota Corolla 1,278,909 2 Volkswagen Golf 1,041,279 3 Ford F-Series 920,172 4 Ford Focus 826,221 5 Toyota Camry 754,154 6 Hyundai Elantra 746,924 7 Volkswagen Polo 698,182 8 Honda CR-V 696,594 9 Chevrolet Silverado 669,683 10 Toyota RAV4 664,382 Global Top Sellers 2015 400,000 Pre-orders In April only, If 500,000 vehicles are produced by 2018, Tesla will be able to become a top seller Tesla Motors Model 3 $35,000 Price 215 miles Mileage End of 2017 Release GM Chevy Bolt • 200 miles per charge • 60kWh battery capacity • U$37,500, release in 2017 Source: Compiled from the media (Unit)
  5. 5. 4/26 U$30,000 Innovation in battery pack cost • Leading companies’ battery cost: U$400/kWh (cell U$250/kWh) U$150/kWh by 2025 upon popularization of EVs *Tesla already achieved U$190/kWh by 2016 (’16.4 IR) [Battery pack cost, U$/kWh] 0 100 200 300 400 500 600 2013 2015 2020 USABC Target* Tesla 2016 Pack Cost Cell Mfg Other Materials Separator Electrolyte Anode Cathode 521 393 261 150 190 Best-in-Class Manufacturer 2025? Cost-competitive EVs Source: Avicenne Energy 2015, POSRI revised * USABC (US Advanced Battery Consortium) has set a price target of battery pack at $150/kWh Rapidly falling battery costs will expedite spread of EVs EV price excl. battery packs  • Less room for improvement in auto body tech. U$20,000  Ideal battery pack cost • Over 300 miles • About 60 kWh • U$150/kWh U$10,000
  6. 6. 5/26 * Share of xEV (HEV, PHEV, AEV, FCEV) in total auto sales (passenger cars, SUVs, light duty vehicles) xEV adoption forecast Perspective by institution 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 2010 2015 2020 Midrange Entire forecast range 0.8~4.0% 2.0~12.0% 1.5~2.5% 6.0~8.0% Optimistic About 10 mil. units by 2020 (Over 10% )* • Battery research institutes (SNE, IIT, B3) - China’s bus market working as positive - Influenced by micro car, e-bike, commercial vehicle markets Neutral About 5 mil. units by 2020 (6~8% ) Pessimistic About 2 mil. units by 2020 (Under 2% ) • Battery producers (LG Chem, Samsung SDI) - Battery producers have neutral views - Paying attention to 100GWh-battery market in anticipation for increased EVs (‘20) • Traditional energy institutes (OPEC, Shell) - Limited battery tech., insufficient infra. ICE’s improved gas mileage Performance 2.9% [Share of xEV in new car sales] ※ Complied from various forecast reports after 2009, UK Dept. for Transport  BNEF forecasts that xEV will account for 35% by 2040 (BNEF: Bloomberg New Energy Finance) EVs accounting for 6% of new car sales within 5 years (neutral)
  7. 7. 6/26 Total 2.1 mil. miles self-driving record • 24 Lexus RX450h SUVs • 34 prototypes • 6 states with self-driving car legislation • 19 accidents (mostly by other vehicles) A 15km self-driving test on A8 motorway in Germany (Oct. ‘15) A 30km self-driving test on G7 highway in Beijing (Dec. ‘15) Fierce competition for developing self-driving cars Source: Compiled from the media
  8. 8. 7/26 Source: “Revolution in the driver’s seat”, BCG (2015) 200 50 10 1 2014 2015 2025 2030 Price decline in full-self driving system [$1,000] LIDAR (Core Equipment) GPS positioning $80~$6,000 Ultrasonic sensors Measure position of nearby objects $15~$20 Odometry sensors Complement GPS info. $80~$120 Central ECU Information processing & control 50~200% of sensor costs Lidar Monitors surroundings $90~$8,000 Video camera Visual monitoring $125~$200 Radar sensors Monitor surroundings (pedestrians, roads) $50~150 ‘Fully autonomous vehicles’ about to be commercialized  Tesla Motors offers a level 5 autonomous system without LIDAR at a price level of 8,000 US dollars
  9. 9. 8/26 Source: “Revolution in the driver’s seat”, BCG (2015); forecast is based on McKinsey&Company 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 2020 2025 2030 2035 2040 15.4% 56.0% 62.5% 97.5% 9.0% 34.0% 8.0% 100.0% 90.0% Incl. partial automation Share of high automation Incl. partial automation Share of high automation High Scenario Low Scenario Share of self-driving cars in new car sales BCG 25% Partial 15% Full 10% Mixed views on the market penetration PROS • Reduced accidents: 94% caused by human mistakes • Improved efficiency: Less congestion • Prosperous sharing economy: Less demand for cars, improved efficiency CONS • Facility investment: Expensive facility, infra investment • Unpredictable mechanical fault: System failure, hacking • Job loss: Truck and taxi drivers
  10. 10. 9/26 Source: Chinese automotive consumer survey, McKinsey 2016 (n=3,571) *Estimated by A.T. Kearney 1.5 mil. 22,000 NORTH AMERICA EUROPE ASIA-PACIFIC 2.1 mil. 31,000 2.3 mil. 33,000 Leading company Survey about car ownership • 60% No more symbol of wealth • 42% Less appealing due to high maintenance costs & traffic jam • 37% Alternatives make car ownership less important Survey about alternatives • 40% Rent a car if necessary • 34% Long-term leasing if cost is similar • 26% Don’t mind sharing a car with others 86,000 cars 58 mil. users 2.5 bil. minutes per year EUR 650 mil. car-sharing market WORLD (‘15): 500,000 car-sharing vehicles by 2020* Rapid growth in car sharing, reduced car ownership
  11. 11. 10/26Impact on Automotive Industry Changes in Supply Chain • Electrification – Battery, motor, electric components • Autonomous Vehicles - LIDAR, camera, radar • Customization – 3D printing, customized design parts Changes in Business Models • Car Sharing – Car ownership becomes obsolete • Robot Taxis – New form of cheap public transportation • Autonomous Trucks – Disruption in logistics Changes in Car Design • Simple Structure – Less components, less weight • Micro Mobility – Mini pods, Minibus • Pedestrian Interaction – Communication with outer space
  12. 12. 11/26Changes in Supply Chain - Electrification Source: POSRI * According to JAMA(Japan Automobile Manufacturers Association), among 30,000 parts in a gasoline car, 6,900 engine parts, 2,100 powertrain parts and 2,100 electric components can be reduced when electrified ICE EV New Parts  Drive Motor  Battery Pack  High Voltage Components Disappearing Parts  Engine  Intake/ Exhaust  Transmission  Fuel Tank  Axle Components Electrification  Electric Pump (HVAC)  Electric Steering System  Electric Brake  Regenerative Brake
  13. 13. 12/26Changes in Supply Chain – New Production Paradigm Crowdsourcing from 20,000 people Online collaboration Using already market-available components Basic components Preassembled, consumer self-assembles and finishes last process 3D printing base frame Carbon fiber reinforced ABS
  14. 14. 13/26Changes in Business Models Source: ‘Revolution of the automotive ecosystem’, Roland Berger * VMT (Vehicle Miles Traveled) Private Cars Auton. Minibus Robot Taxi Family Autonomous Vehicle Shared Autonomous Vehicle Pooled Shared AV ‘15 ‘30 Transportation Demand (VMT*) 74% ▶ 46% 0% ▶ 27% 24% ▼ 25% High-Cap. Transport 2% ▼ 2% • Car Rental • Taxi • P2P Sharing Others ‘15 ‘30
  15. 15. 14/26Changes in Car Design - Electrification Source: Tesla Motors, BMW
  16. 16. 15/26Changes in Car Design – Urban Mobility Source: MIT, EZIO
  17. 17. 16/26 1st Material War Oil Shock (80’s) 2nd Material War Oil Price Hike, China Effect (2000’s) Impact on Automotive Materials 3rd Material War Climate Action (2010~) CAFE 27.5 mpg for almost 26 years 1985~2010 Market-Lead Efficiency Improvement Regulation-Lead 33.0 54.5 20252012 CAGR 4% AutoBody Design, Frames Transparent Plastics, Fiber-reinforced Plastics Major Steel Market Poly Polymer/ Composite Al Aluminum Wheels Ornaments Emblems, Covers, Housings, Bumpers Engine Castings, Closures Interior Instrument Panels, Seat Covers, Thermoplastics, Engineering Plastics Source: POSRI
  18. 18. 17/26Automotive Materials Race Source: Compiled from the media * CFRP: Carbon Fiber Reinforced Plastic Future Automotive Material?  2015 Ford F-150 Pickup • Aluminum full body 222kg reduction • Railframe 77% HSS, 27kg reduction Al Aluminum 317 kg (Compared to MY2014)  Volkswagen 7th gen • Superstructure (AHSS 60%) 37kg reduction • Other powertrain-, electric components Fe Steel 100 kg (Compared to 6th gen.)  BMW i3 EV • CFRP applied on whole passenger cell • Aluminum subframe, plastic closures Poly Polymer/ Composite 315 kg (Compared to LEAF)
  19. 19. 18/26Automotive Materials Race - Steel Source: WorldAutoSteel WorldAutoSteel FSV (Future Steel Vehicle) Development of Steel Solutions
  20. 20. 19/26Automotive Materials Race - Aluminum Source: POSCO Al Replacement PossibilitySection Components Description Body-In-White • Structures • Supports Steel more competitive  Better crash∙process featuresLow Closure • Hood • Door • Trunk Lid High Al, rigidity advantage  Fast adoption Body (Non-BIW) • Bumper Beam • IP Support Competitive environment  Al growth in midterm Medium Suspension • Subframe • Control Arm Medium PO (durability↑), Al(drive comfort)  Steel more competitive Seat/Fender • Fender • Seatframe Low Seat: Steel more competitive Fender: Steel, plastic competitive
  21. 21. 20/26Automotive Materials Race – Plastic & Composites Source: BMW i-Series Carbon Fiber Lifemodule 7-Series Carbon Core Plastic Structures for Interior Support Structure PBT Seat Cover PA Structure PU Rear Seat Support PU Interior Materials Kenaf: Biological fibers from plants -20.6kg CO2 reduction per kg Outer Shell Elastic parts EPDM-modified PP copolymer
  22. 22. 21/26 Source: BMW, compiled from the media PAN (Precursor) Weaving Prepreg Carbonization Carbon Fiber • Energy intensive carbonization • Wanapum hydroelectric power SGL Moses Lake (JV w/ BMW) Electricity:2.8cent/kWh ※ 1/3 of US, 1/5 Germany Cutting Forming (HP-RTM) • High-pressure resin transfer molding • Thermosetting plastics, 100 degrees high pressure Fast forming speed: 3~5min. 1/3 of market price ※ Forming normally takes several hours Thermal Pressing Assembly BMW Leipzig • 4x 2.5MW wind turbines 100% energy supply • Press, paintshop minimized Energy use : -50% Water use : -70% Recycled Materials Rooftop CFRP 10% Thermoplastics 25% Aluminum frame 80% Maintenance (Sectioning) Economic Repair Process • CFRP parts sectioned  bonding process Insurance, repair cost↓ Automotive Materials Race – Plastic & Composites
  23. 23. 22/26 Source: American Chemistry Council 2014 CFRP Hood (17min. forming time) Valve Cover (BASF) Nissan Tail gate (LyondellBasell)) Audi A8 Frontend (Lanxess) Roof Assembly Nissan Battery Case (SABIC) Door trim Panel (Bayer) Front grill Ford Diesel System (BASF) Seat pan Foam-filled frame (Dow) Automotive Materials Race – Plastic & Composites
  24. 24. 23/26Automotive Materials Race – Comparison Source: Mass Reduction for LDV for MY2017-2025, NHTSA Fe Steel Al Aluminum Poly CFRP (Applied on same base model 2011MY Honda Accord, NHTSA) 328 kg 164 kg213 kg -35% -23% Weight Price +$720 +$1,792 Weight reduction and cost analysis Metal Intensive Plastic/Composite Intensive [단위:$/kg] 1.14 1.44 4.26 17.6 1.46 2.08 5.62 42.24 Mild Steel AHSS Aluminum Sheet CFRP 가공비 소재가격 Unit cost comparison (Fender example) [ $/kg ] Processing cost Material cost
  25. 25. 24/26 Source: American Chemistry Council 2015 *LDV(Light Duty Vehicle): Passenger cars, pickups, SUV 2014 US LDV* weight breakdown Regular Steel, 35% High-&Medium- Strength, 16% Stainless Steel, 2% Other Steels, 1% Iron Castings, 7% Aluminum, 10% Magnesium, 0% Copper and Bass, 2% Lead, 1% Zinc Castings, 0% Powder Metal, 1% Other Metals, 0% Plastics/Polymer Composites, 8% Rubber, 5% Coatings, 1% Textiles, 1% Fluids and Lubricants, 6%Glass, 2%Other, 2% 1,812 kg/unit Fe Steel • Mass market of $30,000 cars • Steel intensive, while closures like hood, doors are aluminum  Nissan Leaf, Tesla Model3 ※ Battery weight 218kg out of 1,495kg (15%) Al Aluminum • Premium brands with over $50,000 • Battery pack cage, base frame and body in white with closures  Tesla Model S ※ Battery weight 540kg out of 2,200kg (25%) Poly Polymer/ Composites • Building full supply chain is key • Sports cars, luxury cars  BMW i-Series ※ Battery weight 230kg out of 1,195kg (19%) Automotive Materials Race – EVs
  26. 26. 25/26 Source: Korea institute of machinery and materials • Energy efficiency, quality still needs improvements  R&D stage Hybrid Welding • Using tool rotation friction heat  Hyundai, trunk lid welding  Honda Acura, Nissan Friction Stir Welding • Anti-corrosion treated boron steel rivets • Hybrid & aluminum bodies  Jaguar, Land rover, Ford Self-piercing Rivets • BASF, Henkel are key players • Aluminum bonding, finishing  Various applications Chemical Bonding • Future of welding • Friction welding using ultrasonic waves Ultrasonic Spot Welding Automotive Materials Race – Multi-material solutions
  27. 27. 26/26Key Takeaways Multi-material use, hybrid structure is the new norm  While alternatives grow fast, steel solutions will still play a key role  Develop multi-material solutions, collaborate with your competitors Electrification, Car Sharing and Autonomous Vehicles are unavoidable future  Prepare for new players, supply chain and business models  It may also have direct impact on car sales  Keep an eye on new entrants who may become your future customers

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