E-mobility Quarterly Index

E-mobility Quarterly Index

Dear reader,

In key automotive markets around the world, important decisions are being made to sustainably anchor e-mobility in our mobile society. National governments and global leaders of the automotive industry intend to take the lead here in terms of customer demand and developing the technology portfolio. Three key indicators show whether they are able to do so:

1. Technology: Technological development of the vehicles of national OEMs and national subsidies for vehicle development

2. Industry: Regional value added to the automotive industry by national vehicle, system and component production

3. Market: Size of the national market for e-vehicles based on current customer demand

Roland Berger Strategy Consultants and fka have consolidated these indicators in the E-mobility Quarterly Index, making it possible to compare the competitive positions of the automotive industry's seven leading countries (Germany, France, Italy, US, Japan, China and South Korea). The index also looks at the automotive markets using globally uniform parameters (Fig. 1).

Methodology – Data used in the comparison

– Technological performance and cost/benefit ratio of EVs, both those currently available on the market as well as those soon to be launched

– National e-mobility R&D programs (time frame 2015) – only research funding programs were considered (i.e. no industry loan programs, budgets for purchase incentives, etc. were taken into account)

2. Industry:

– Cumulative national vehicle production (cars, light-duty trucks) for 2012-2015, including BEV and PHEV

– Cumulative national battery cell production (kWh) up through 2015 3. Market:

Quarterly Index: Q2 2012

The E-mobility Quarterly Index for Q2 2012 illustrates the relative competitive positions of the world's top automotive countries along the three indicators of technology, industry and market (Fig. 2).

Summary of competitive position comparison:

The E-mobility Quarterly Index highlights clear differences in the competitive positioning of the various automotive countries. Germany, France and South Korea hold strong positions regarding technology, while Japan and the US have a clear lead in regional value-add. Vehicles of national OEMs in the US are weaker in terms of technology, despite bigger national funding programs. The size of the e-mobility sales market is not necessarily proportional to the size of the national automotive sales market: South Korea and China in particular report very low nationwide sales shares for EVs. Key reasons for Japan's leading role in vehicle supply and demand are its intensive market cultivation and the incentives it offers. Japan's R&D funding is currently very low, which could have a negative impact on the country's competitive position over the long run. By contrast, South Korea's position is set to improve considerably, thanks to its strong technological base and recently launched government programs.

Core statements of the E-mobility Quarterly Index for Q2 2012: 1. China:

China's position in the E-mobility Quarterly Index is weak regarding regional value-add (Fig. 5, Fig. 6), with low figures in current vehicle and battery cell production. In terms of technology, China has a considerably weaker position concerning its EV models currently offered or being launched by national OEMs. The same is true for locally manufactured battery cells (Fig. 3). However, China has far and away the largest R&D budget (Fig. 4). This points toward a significant move forward in vehicle technology in the long run. Vehicle demand in the Chinese market is extremely low, and is currently characterized by cars in the fleets of government institutions. As the Chinese government's development plans include a strong shift toward focusing on hybrid technology, there is no reason to expect any changes here in the medium term (Fig. 7).

2. South Korea:

According to this issue of the E-mobility Quarterly Index, South Korea holds the top position for the technology indicator (Fig. 2). This is borne out by the high technological

However, the country currently produces little value-add in EVs and PHEVs (approx. 20,000 vehicles in 2015, Fig. 5), but more local production for li-ion battery cells (3,000 MWh, Fig. 6). Sales of EVs are still negligible. South Korea is taking steps to remedy these weaknesses: rolling out further market development actions, e.g. probably a purchase incentive, plus quickly putting Korean EVs on the market.

3. Germany:

In a worldwide comparison, German OEMs are well-positioned in terms of technology, even if there are not too many cars currently available on the market. Even if in some cases they have a weaker positioning in this segment, OEMs in other countries (France, Japan, South Korea) similarly offer highly attractive concepts in terms of value for money. The high technological level of German EVs is based on the large amount of R&D funding (large in both absolute terms and relative to GDP – see Fig. 4). This also offers a basis for gaining ground in the technology race concerning storage (see Technology Roadmap – Fig. 8).

In contrast to its technological position, Germany is not developing its market sufficiently compared to its peers. The same is true of South Korea. The regional value-add is higher where countries devote significantly more resources to promoting the industry. Europe's automotive leaders have much weaker positions here. There is also further potential for improving the number of new EVs registered, which is consistently subsidized in other countries (except South Korea – see Fig. 7).

Chart appendix

Figure 1: A leading position of Automotive countries depends on three parameters –

these are combined to the "Quarterly Index eMobility"

"Quarterly Index Electromobility" – Three parameters: Technology, Industry, Market

Index "Technology" Electric Vehicle Performance National RD&D Funding

> Performance of electric vehicles (battery electric vehicles and plug-in hybrid electric vehicles incl. range extended EV's)

> National R&D funding for electric vehicles and electrical power train/storage systems for EV's

X

60%

40%

Source: Roland Berger; fka

Index "Industry" Index "Market" Electric Vehicle Production Electric Vehicle Sales Ratio Supplier Produc-tion Footprint

> Value add in the respective countries: vehicle assembly

> Value add in the respective countries: cell manufacturing

> Size of national market (EV/PHEV as percentage of total sales)

X

60%

40%

100%

Figure 2: Our "Quarterly Index Electromobility" (Q2/2012) shows the relative

competitive position of the seven leading automotive countries

INDUSTRY 5 4 3 Market Japan

"Quarterly Index Electromobility" – Overview Q2/2012

TECHNOLOGY 3 2 1 0 1 0 2 3 4 5 South Korea Germany France China Italy United States

Figure 3: Technology: Germany, France, Korea with best vehicle performance

following different pricing strategies – USA with weaker position

ELECTRIC VEHICLE PERFORMANCE

> Highest average vehicle price (high national purchase incentives)

Ø S l

Low

China France good

COUNTRY

> Weak technological position, worst performance/sales price ratio (Tesla, Fisker) > Balanced performance/sales price ratio,

2nd_{best position for vehicle technology index}

Performance vs. sales price ratio of market-ready BEV and PHEV

0 100 200 300 400 500

Ø Sales Price

[EUR] Med

High

Ø Technology Level [Points]

Korea

Japan USA

Germany

poor

2nd_{best position for vehicle technology index}

(1st_{: Korea)}

> Poor technological performance, comparably high sales prices (European level) > Low-price strategy, partially based on vehicle

concept (Renault Twizy)

> Best technological performance, but no vehicle yet available in showrooms

Note: No market-ready, mass-produced EV/PHEV models from Italian OEM Source: Roland Berger; fka

Figure 4: Technology: China leading in eMobility-related R&D funding –

Germany follows straight

Excl. Lightweight material research funding as part of NPE program Note: major subsidies awarded are manufacturing, not R&D

related – these are not included 0,020

0,105

0,169 National R&D funding for eMobility [EUR m]/[% of GDP]

2,093 2,484 7,135 0,012 0,012 0,101 0,074 180 486 734 1,354

Figure 5: Industry: EV/PHEV production in 2015 dominated by Japan –

Production volume in Germany higher than in China

EV/PHEV PRODUCTION VOLUME [k units]

COUNTRY TOP-3 MODELS

Nissan Leaf, Toyota Prius III PHEV, Mitsubishi iMIEV

330

490

Chevrolet Volt (PHEV), Ford Focus EV, Fisker Karma (PHEV)

Expected production of EV and PHEV in 2015

140 150

170 BMW i3, VW e-up!, Smart ForTwo ED 3rd Gen. Chana Benben Mini EV, Geely, Nano Lynx/Panda, BYD E6

Renault ZOE Z.E., Renault Twizy Technic, Renault Fluence Z.E.

Hyundai BlueOn, Kia Ray

20

Note: No significant EV/PHEV production in Italy expected Source: Roland Berger; fka

Figure 6: Industry: Japanese and Korean players dominate cell manufacturing

in 2015 – Korean also active in the US

EXPECTED 2015 GLOBAL MARKET SHARE1)

16% 23% ∑ = USD 8.6 bn 2) 2 662 3,041 7,619

2015 CELL MANUFACTURING BY COUNTRY [MWh]

> Mainly LG and Samsung/SB-Limotive > Mainly A123 and Korean manufacturer > Main cell manufacturing hub > Figures do not include coated electrodes

shipped by NEC to Europe for cell assembly by AESC

Key cell manufacturer and production by country in 2015

13%

645 1,516

2,662 > Mainly A123 and Korean manufacturer _{with local production (LG)}

> Mainly local for local > Mainly LiTec

> Assembly of AESC cells in UK and Portugal planned, coating in Japan > No significant cell production

Source: Roland Berger LiB market model as of QI/2012

1)USD based, Market value derived using USD 730/kWh for hybrids, USD 560/kWh for PHEV, and USD 400/kWh for EV in 2015 2) Includes Primearth's share

0 0 9% 8% 7% 3%

Figure 7: Market: EV/PHEV sales currently clearly depends on incentives given by governments 0.5 5,183/0.29 US 8,652/0.36 Japan % BEV/PHEV [Sales 2011] 0.0 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 5,000/0.20 France 0/0.00 Korea 0/0.08 Germany 3,500/0.02 Italy 5,336/0.02 China INCENTIVES [EUR]1)

1)On national level, partly additional incentives on regional levels Source: Roland Berger; fka

Figure 8: Technology: Major innovations in cell material technology are expected

to emerge after 2015 – HCMA and/or 5-V Spinel

2000 2005 2010 2015 Cathode 2020 2025 2030 LCO LCO NCA LMO LFP NCM 5V spinel HCMA LiNiPO45V LiCoPO45V LiMnPO44V Air Sulfur

Li-Ion key materials roadmap

Anode Elec trolyte Separ ator Graphite Hard Carbon LiPF6_{+ org.} solvents (standard electrolyte) Polyolefin 4 Soft Carbon Li4Ti5O12

Graphite + Graphite Si-composites

Li metal

Gel-polymer

electrolyte 5v electrolyte

Solid polymer electrolyte Polyolefin +

ceramic coating ceramic fillerPolyolefin +

Source: Avicenne; Fraunhofer ISC; Roland Berger

Authors

Dr. Wolfgang Bernhart

Partner

Roland Berger Strategy Consultants, Stuttgart

Loeffelstrasse 46, 70597 Stuttgart Phone: +49 711 3275-7421 Fax: +49 711 1377-7421 E-mail: [email protected] Dr. Thomas Schlick Partner

Roland Berger Strategy Consultants, Frankfurt

Bockenheimer Landstraße 2-8, 60306 Frankfurt

Phone: +49 69 29924-6202

Fax: +49 69 29924-6102

E-mail: [email protected]

Dipl.-Kfm. Ingo Olschewski Senior Manager

Forschungsgesellschaft Kraftfahrwesen mbH Aachen Strategy and Consulting

Steinbachstraße 7, 52074 Aachen Phone: +49 241 8861 160 Fax: +49 241 80 22147 E-mail: [email protected]

Dipl.-Ing. Markus Thoennes Consultant

Forschungsgesellschaft Kraftfahrwesen mbH Aachen Strategy and Consulting

Steinbachstraße 7, 52074 Aachen Phone: +49 241 80 25586