AB SKF - LMC AUTOMOTIVE...4 SAAR, World, mn units/year Light Vehicle sales were just over 90 mn...

LMC Automotive Markets Presentation to

AB SKF

2nd December 2020

© 2020 LMC Automotive Limited, All Rights Reserved.

Markets

Jonathon Poskitt, Director, Global Sales ForecastsSKF Webinar

2 December 2020

Global Light Vehicle Update


Background

2Sources: European Commission, US Bureau of Labor Statistics

5060708090

100110

Qtr

1

Qtr

3

Qtr

5

Qtr

7

Qtr

9

Qtr

11

Qtr

13

Qtr

15

Qtr

17

GreatRecession

Pandemic

Share Price Evolution (US)

Inde

x

-25.0

-20.0

-15.0

-10.0

-5.0

0.0

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

EU Consumer Confidence (Index)

Eurozone Crisis

0.0

5.0

10.0

15.0

20.0

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

US Unemployment Rate (%)

Consumer confidence across EU plummeted in first lockdown, to levels last seen during Eurozone crisis. Improvement in recent months has run out of steam.

Unemployment rates have risen rapidly in many countries, though various support measures have offset some of the impact. Higher unemployment set to persist.

Following Great Recession, stock markets took years to recover, though the health of share prices this time around has been somewhat more robust.


Macroeconomic picture

3Source: Oxford Economics

Quarterly economic impact felt first in China, though rapid rebound subsequently. US and Europe impact lagged, with latter heading back into contractionary territory in Q4.

-15%

-10%

-5%

0%

5%

10%

15%

2019

Q1

2019

Q2

2019

Q3

2019

Q4

2020

Q1

2020

Q2

2020

Q3

2020

Q4

CH

US

EZ

GDP Growth, QoQ

China GDP growth remains positive though heavy annual recessions for US and Europe. 2021 sees solid bounce back though activity will be held back, with ongoing pandemic disruption early in the year. -10%

-5%

0%

5%

10%

2019 2020 2021

CH

US

EZ

GDP Growth, YoY


Global Light Vehicle sales in a classic V-shaped rebound

4

SAAR, World, mn units/year Light Vehicle sales were just

over 90 mn units in 2019; the selling rate average for Jul-Oct shows a market running at close to last year’s total.

The speed of recovery, given the nature of the pandemic shock, has been surprisingly strong, though the ‘cost’ of the dip has been 13 mn units, if 2019 volumes had been replicated this year.

The key question is whether this level of sales can and will be sustained.

88.6

65.6

57.3

49.2

61.5

78.9

88.4 90.1 91.0 90.7

40

50

60

70

80

90

100

Jan-

20

Feb-

20

Mar

-20

Apr-2

0

May

-20

Jun-

20

Jul-2

0

Aug-

20

Sep-

20

Oct

-20

Full-year 2019 market

-13 mn

Source: LMC Automotive


Latest Light Vehicle market data (selling rates) …

5Source: LMC Automotive

- 5

10 15 20 25 30 35

Jan-

19Fe

b-19

Mar

-19

Apr-

19M

ay-1

9Ju

n-19

Jul-1

9A

ug-1

9Se

p-19

Oct

-19

Nov

-19

Dec

-19

Jan-

20Fe

b-20

Mar

-20

Apr-

20M

ay-2

0Ju

n-20

Jul-2

0A

ug-2

0Se

p-20

Oct

-20

Mill

ions

China

Sep-20:+9% YoY

Oct-20+10% YoY

- 2 4 6 8

10 12 14 16 18 20

Jan-

19Fe

b-19

Mar

-19

Apr-

19M

ay-1

9Ju

n-19

Jul-1

9A

ug-1

9Se

p-19

Oct

-19

Nov

-19

Dec

-19

Jan-

20Fe

b-20

Mar

-20

Apr-

20M

ay-2

0Ju

n-20

Jul-2

0A

ug-2

0Se

p-20

Oct

-20

Mill

ions

USA

0.01.02.03.04.05.06.07.0

Jan-

19Fe

b-19

Mar

-19

Apr-

19M

ay-1

9Ju

n-19

Jul-1

9A

ug-1

9Se

p-19

Oct

-19

Nov

-19

Dec

-19

Jan-

20Fe

b-20

Mar

-20

Apr-

20M

ay-2

0Ju

n-20

Jul-2

0A

ug-2

0Se

p-20

Oct

-20

Mill

ions

Japan

0

5

10

15

20

25

Mill

ions

Western Europe

Sep-20:+4% YoY

Oct-20+1% YoY

Sep-20:-14% YoY

Oct-20+29% YoY

Sep-20:+2% YoY

Oct-20-6% YoY


Vehicle demand – baseline market projections

6

Light Vehicle sales (millions)

15.7 13.3 14.9

25.5 24.3 26.0

20.217.0

18.5

20.7

16.218.7

4.1

3.0

3.9

4.0

3.5

4.1

0

10

20

30

40

50

60

70

80

90

100

2019 2020 2021

AP minus China China North America Europe South America ROW

90

7786



Vehicle demand – lasting impact and ongoing risk

7

Light Vehicle sales (millions)


70

75

80

85

90

95

100

105

110

2019 2020 2021 2022 2023 2024 2025

Jan-20 Forecast

Latest Forecast-13

-7

-4

Downside Risk

More pronounced second wave and economic damage

More serious macro downturn and/or policy tightening

Financial contagion

Slower medical progress/roll out

Upside Risk

Rapid vaccine distribution

Ongoing surge in preference for private ownership and driving

Extended fiscal/macro boost; new or extended targeted automotive support

Recent market strength continues


UpdateGlobal Light Vehicle Production

SKF webinarJustin Cox, LMC Automotive

December 2nd 2020


0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019

Milli

ons

2019 2020

2020 v 2019 Global LV production development


• Better than expected recovery: Q3 2020 only 3% below 2019

• But Q4 is characterized by diverging regional performances:

• Impact from ‘second wave’ lockdowns in Europe undermine inventory replenishment and solidifying recoveries elsewhere.

2019: 88.8mn2020: 74.7mn


Inventory situation differs across markets


87 78 69 76 67 67 66 61 66 7376 6994

119

59 60 55 51 50 59

0

1

2

3

4

0

50

100

150

Mill

ions

US Light Vehicle Days' Supply

Yr-Ago Days' Supply Days' Supply

Europe saw a similar supply spike in days supply but has since balanced on stronger demand and production. Impact from ‘second-wave’ lockdown could see inventory management in Q4 and Q1 2021.

China was destocking heading into the outbreak. Given rapid rebound and restart in production, inventory has begun building again relative to retail demand.

Disruptions endure ensuring that US inventory remains at historic lows. May not see normal inventory levels until mid-2021.

1

60 65 5978

110

63 60 64

0123456

020406080

100120

Mill

ions

Europe Light Vehicle Days' Supply

Days' Supply Inventory

-0.50.00.51.01.52.02.5

Wholesales

Retail Sales

Stock change

China: Stock Change


North America launch delay analysis

05

1015202530

2020 2021 2022

Delay Activity by Year

Redesigns Facelifts

Nearly 80% of planned NA launches impacted.

Average delay in region increased to 5.5 months, affecting 25 assembly lines.

OEMs are prioritizing new programs based on importance.

Facelift activity further down the priority list.

8 launches throughout forecast were cancelled.


2020 LaunchesLaunches Action

38 Planned 2020 NA launches4 Launched by ramp-up delayed

12 SOP delayed within 202012 SOP delayed into 2021 or beyond9 SOP not officially delayed


Global production decline by major market


Light Vehicle production (millions)

-22%

-18%-19%

-5%-32% -5%

-16%


-2,000 -1,500 -1,000 -500 0 500

IranRomaniaNetherlandsMoroccoSouth AfricaSlovakiaTurkeyItalyPolandRussiaKoreaUKSpainCanadaIndonesiaThailandFranceBrazilIndiaChinaGermanyJapanUSA

Thousands

Global LV Production: 2020 v 2019 Growth by Selected Countries

6

-17%-15%-25%-5%-24%-33%-39%-29%-46%-29%-20%-26%-7%-16%-30%-20%-12%-14%-23%-16%

+38%

Bars : Volume Change YoY (000s)xx% : Percentage Change YoY

-29%-10%


Global LV Production 2020 and 2021 growth v 2019 Base


0

20

40

60

80

100

120

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Q1: -6% Q2: -3% Q3: -1% Q4:+2%

2021: Indexed against 20192020: Indexed against 2019

Q4: +4%

Q3: -2%

Q2: -43%

Q1: -22%

Base 2019 = 1002019: 88.8mn

Inde

x

2021: 86.9mn2020: 74.7mn

© 2020 LMC Automotive Limited, All Rights Reserved. 8

-14%

-8%

-3%

2%

-15%

-10%

-5%

0%

5%

10%

Q1 Q2 Q3 Q4

Pan Europe

-7%

-4%-1% -1%

-15%

-10%

-5%

0%

5%

10%

Q1 Q2 Q3 Q4

N America

4%

9%

-2%

0%

-15%

-10%

-5%

0%

5%

10%

Q1 Q2 Q3 Q4

China

LV Production 2021 growth v 2019 Base: Selected Regions


Note: % change represent 2021 volume v 2019 volume


Global production growth by Region (2021 v 2020)


Light Vehicle production (millions)

+21%+17%

+20%+8% +38% +30%

+16%


88.8 90.4

74.7

86.991.8

95.2

2019 2020Pre

COVID-19

2020 2021 2022 2023

Chinese momentum, and wider stock-replenishment underpin 2021 production.

2021 inventory growth associated with improving confidence in demand outlook and new models: Global production volume moves ahead of Sales.

Risks include a recurring impositions of widespread lockdowns and short-term capacity constraints.

Global production baseline forecast

-16%

10

+16%



OEM Medium Term ‘Score-card’


Global LV Production by Key Groups: 2019=100

OEM Notes• Combination of Regional

market exposure and competitiveness development support performance in medium term

2020 2021 2022 2023All Global Total 84 98 103 107Toyota Grp 86 99 105 107VW Grp 83 96 99 103RNM 73 91 96 102Hyundai Grp 87 109 115 117GM 83 92 96 95Honda 85 92 97 102Ford 77 98 103 107FCA 77 96 102 109PSA 79 103 108 114Suzuki 82 87 92 95Daimler 85 95 99 106BMW Grp 88 95 100 103SAIC 91 98 99 103Geely 95 108 117 126


World LV Production Scenario Range



Electrification

Sam Adham, Senior Powertrain Analyst

Global Light Vehicle Powertrain Briefing

8th October, 2020

A selection of various battery and e-motor trends


0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

0

100

200

300

400

500

600

700

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

GW

h c

um

ula

tive

GW

h a

nn

ua

l

EMEA cumulative ROW cumulative EMEA annual ROW annual

• If 24 GWh each, implies a need for at least 25 European „Gigafactories‟ by 2032

• Compare with ICE production: Currently 60 active engine plants in Europe

• BEVs account for 70% of total GWh demand now, rising to 90% in the future

Source: LMC Automotive Global Light Vehicle Powertrain Forecast with Battery & eMotor Module

EMEA & Global LV xEV battery requirement

World: Battery Demand Outlook

2


Operator Location Capacity Comment

Northvolt Sweden 16 GWh initial, rising to 32 GWh Expected 2021. Supplying VW, BMW

Northvolt Germany 16 GWh initial, rising to 32 GWh Expected Q1 2024. Supplying VW, BMW

CATL Germany 14 GWh initial, rising to 24 GWh Expected 2022

LG Chem Poland 10 GWh initial, rising to 65 GWh In operation

SK Innovation Hungary 7.5 GWh initial, 17.3 GWh by 2022 In operation

Samsung SDI Hungary 3 GWh current In operation

BYD UK ? Prospective. Potential JLR partner

Britishvolt UK 10 GWh initial, rising to 30 GWh 2023. Prospective. Potential JLR partner

Tesla Germany Would need to be ~8 GWh initially Planning

Saft/PSA France 8 GWh initial, rising to 24 GWh Expected 2023

Saft/PSA Germany 24 GWh Expected 2023. Plant conversion

Daimler Germany ? In operation; 2 plants; pack assembly

Daimler Poland ? In operation; pack assembly

VW Czech Rep. ? In operation; PHEV pack assembly

FCA Italy ? In operation. Final assembly

PSA Slovakia ? Final assembly

Volvo Belgium ? In operation. Final assembly

Europe: Importing Battery Cells & Packs isn‟t Sustainable

Known and assumed major PEV battery production operations in Europe

3


40 Wh/kg 65 Wh/L

180 Wh/L 90 Wh/kg

250 Wh/kg 300 Wh/L

Energy density: there is still much to be done

100 200 300 400 500 600 700 800

Specific Energy [Wh/kg]

Sp

ec

ific

Po

we

r [W

/kg

]

200

400

600

800

Lead-Acid

NiCd NiMH

Current

Li-ion

Where we

need to be

0 100 200 300 400 500 600 700 800

Energy Density [Wh/L]

Po

we

r D

en

sit

y [

W/L

]

2000

4000

6000

8000

Li-ion

900

Solid-State

0

Advanced Li-ion

Even the best li-ion batteries today have an energy density of ~300 Wh/L

That is just 3% of the energy density of gasoline

Hydrogen

Diesel

Gasoline

Li-ion Battery

NiMH Battery

Lead Acid Battery

10,000 20,000 30,000 40,000 5,000 10,000

Specific Energy [Wh/kg] Energy Density [Wh/L]


35

40

45

50

55

60

65

70

2015 2020 2025 2030

We

igh

ted

Ave

rag

e

Ba

tte

ry C

ap

acity (

kW

h)

NEAR TERM: IMPROVING LITHIUM-ION • New anode and cathode materials • Stable and higher quality electrolytes

and additives • Better pack design and materials • Advanced control • Better manufacturing processes

MID-TERM: ERA OF DIMINISHING GAINS • Low-hanging fruit is harvested by

this time, and any advance is minimal, before switch-over to next-gen batteries

LONG TERM: BEYOND LITHIUM-ION • Battery cost and performance breakthrough • Solid state as an alternative to liquid electrolyte • Li-Air, Li-S, as an alternative to li-ion • Next gen liquid, gel, polymer electrolytes to

enhance performance of new anode and cathode materials

optimised lithium

diminishing gains

advanced lithium

Global BEV battery capacity trend – weighted average by volume

BEV Battery Technology Development

5

Source: LMCA Global Light Vehicle Powertrain

Forecast with Battery & eMotor Module


40

80

120

160

Next 10 years: -$8/yr

6

0

500

1,000

Pa

ck

Wh

ole

sa

le C

os

t ($

/kW

h**

)

$156 (BNEF), $150 (McKinsey)

BEV-ICE cost parity* BEV-ICE profit parity*

* Depending on segment and market

** Price based on Li-ion battery pack produced at a large battery plant (35GWh)

BEV Battery Pack Price Outlook

Past 10 years: -$85/yr

$62 (BNEF)

$100 (BNEF)

$~150

Incentives needed

This curve represents mass

market – in reality the cost

depends on the segment, vehicle,

OEM, and cathode chemistry!

Current view is that Li, Mn, Co &

Ni supplies will be sufficient to

keep up with demand, but prices

will be spiky

We aren‟t assuming a

commercial-level battery

breakthrough such as solid state

before 2030

The outlook from here is Li-ion

with scale, optimisation and

incremental gains


BEV Battery Cathode Chemistry Outlook

Source: LMC Automotive G LVPTF Battery & eMotor Module

7

LFP NCA

NMC

2019

LFP LNMO (?)

NCA

NMC

NMCA

2025

Source: LMCA Global Light Vehicle Powertrain Forecast with Battery & eMotor Module

LFP share suffered a

collapse towards 2019, but

is bouncing back in China

NMC is dominant, but

cobalt-free imperative is

driving development of

alternatives

LNMO is what we‟re

assuming to be future

chemistry for Tesla and

SVolt


PHEV battery capacities are getting larger

Typical battery sizes by segment

8

5

10

15

20

25

Ba

ttery

ca

pac

ity [

kW

h]

2015

2020

2025

Source: LMCA Global Light

Vehicle Powertrain Forecast with

Battery & eMotor Module

In Europe, WLTP forced larger packs

Will keep increasing with incremental

improvements in volumetric energy density


What is holding back solid state and other breakthroughs?

There are other technical limitations and trade-offs to consider:

Specific Energy

Specific Power

Scalability

Cost

Longevity

Degradation

Stability

Operating Range

Charging Time

Self-Discharge

Safety

Toxicity

9


Efficiencies in pack design and management – on the cell, module, and pack level

Battery predictive control and thermal management

Dedicated, modular, scalable, and shared EV platforms

What else can be done to improve battery performance?


Hybrid driving functions

Sta

rt/S

top

To

rqu

e A

ssis

t

Lo

ad

-po

int

sh

ifti

ng

Sailin

g

/ C

oasti

ng

Recu

pera

tio

n

e-C

reep

Ve

loc

ity

Time

For 48V, motor powers initially ~8-10kW, which is enough to enable most functions, but larger

motors will emerge bringing with them more recuperation potential, and enable some of the more

advanced functions like e-creep


e-Motor Topology

Efficiency, and ability to operate the various driving modes, depends

heavily on the position of the e-motor


P2 Modular Transmissions

With further electrification of driveline, general trend towards modular P2 and P4.

48V Mild hybrids will mostly be P0 initially, but starting around 2021 OEMs will

transition to P2, either with suppliers or upgrades of in-house developed

transmissions.

Even some non-premium OEMs will adopt P2 48V. e.g. PSA selected Punch

Powertrain DT2 lightweight low-cost hybridised dual-clutch.

13

Getrag 7HDT300 (P2 DCT) ZF 8P70AH (P2 AT no TC) Daimler 9G Tronic (P2 AT)


48V Mild Hybrids – Topology Forecast

Mostly P0 initially – cheapest and

simplest to implement, but still limited

in energy recuperation potential and

efficiency. Will remain on low-cost

small segments.

P2 best all-rounder on cost-benefit,

depending on model segment.

Expected emergence in 2022.

Naturally linked to transmission. Will

push out P0 because of efficiency

advantage and also because manual

transmissions (where P0 is prevalent)

are dying out over time.

P0-P4 also attractive solution for AWD

SUVs, but expected to be niche.


Trend towards DHTs with fully integrated eMotors

DHT general definition: “a transmission where an electrical machine(s) is fully

integrated into the drivetrain to under undertake its desired functions”

For cost reasons the transition to electrification will not be straight to DHTs, but

rather add on/replacement components for conventional driveline systems (P2/P4

concepts)

15

GKN Multimode eTransmission

on Mitsubishi Outlander PHEV

Larger electrical power demand will

lead to larger e-motors/batteries, which

will demand higher integration into

transmission/driveline.

Consumer acceptance and other

factors will influence market share of

DHTs. Cheapest or most efficient

solutions are not always the best.


P4 and EVT

16

P4 electric rear axle drive is an attractive solution for AWD SUVs

Usually have an additional front motor, i.e. P0-P4, P2-P4

Decoupled rear axle means that fuel efficiency penalty is minimal

compared to mechanical AWD


Powertrain

Sam Adham, Senior Powertrain Analyst

Presentation for SKF, 2nd December 2020

Update, with Focus on xEV Trends


Global update on xEV trends

Regional regulation and reaction Europe

China

USA

Other topics: OEM tie-ups, BEV vans and NA

trucks

Wrapping up

2

Contents


World: Is the xEV Industry Knocked off Course?

On the Whole, OEMs are striving to protect their xEV programs

• VW resumed production of the ID.3 on 23rd April – 2020 delivery goal unchanged

• Mercedes-Benz back on track to produce 50k EQC this year – the original target

• Hyundai ramps up Kona EV production in Europe to ease supply constraint

• Tesla ‘may hit 500k 2020 target’ despite pandemic (we don’t think so)

• China is getting back on track: BEV sales finally up in July and August (+39%)

• BMW iX3 proceeding according to plan in China despite COVID-19

• Porsche won’t cancel any projects (but Taycan Cross Turismo has a minor delay)

Policymakers (in Europe and China at least) will support the plug-in market

• Europe: Clean vehicle incentive packages in multiple markets

• China: State NEV subsidy runs until the end of 2022 at least

• USA: Diminishing federal support for big BEV players, varying state incentives

3


0

1

2

3

0

50

100

150

200

World vol ('000s) World % Linear (World vol ('000s)) Linear (World %)

World: BEV Volumes are Starting to Recover

Monthly PV* BEV sales

• Although volumes have suffered as a result of the pandemic, share is growing

4

Sa

les (

‘00

0s)

Sh

are

(%

)

Source: LMC Automotive Global Hybrid & EV Forecast

*including N. America LV


-30

-20

-10

0Market BEV

World PV* sales Jan-Aug: 2020 vs. 2019

World: BEV Sales have Outperformed the Market in 2020

• World BEV PV sales from January to

August 2020 were 955k compared with

1,035k in the same period in 2019.

• The out-performance of BEV comes

despite China NEV sales being

hampered by reduced subsidies, some

USA OEMs losing tax credit & cheap

gasoline almost everywhere.

• It’s Europe that has driven the strong

performance. Tesla started the year

well and there are more new models.

But even ageing BEV models are in

demand, bucking the market.

%


*including N. America LV

-23% -8%

5


…but the Regional Picture is very Mixed

• Europe’s BEV sales have greatly outperformed the market while China’s have

been curtailed by policy changes, and the USA’s have tracked LV sales closely


-40

-20

0

20

40

60

Market BEV

Europe PV sales

Jan-Aug: 2020 vs. 2019

%

+54%

-34% -40

-20

0

20

40

60

Market BEV

China PV sales

Jan-Aug: 2020 vs. 2019

-40

-20

0

20

40

60

Market BEV

NAM LV sales

Jan-Aug: 2020 vs. 2019

%

%

-16% -26% -23% -20%

6


1.5

1.6

1.7

1.8

1.9

2019 2020

+11%

World: Despite USA/China/COVID-19, BEV Grows in 2020

40

60

80

2019 2020

World PV market (inc. NA LV)

Sale

s (

mn

)

-17%

The positive result for BEV demand this year is entirely due to Europe


67mn 1.7mn

1.8mn

World PV BEV market (inc. NA LV)

80mn

7


World: Regional Long-Term Outlook

8

Global PEV Outlook by Major Market (mn units)

Data source: MIIT, LMC Automotive

0.0

0.2

0.4

0.6

2015

China

Europe

NAM

World

0

1

2

3

2020

0

4

8

12

20250

10

20

2030

• Our analysis suggests that Europe retains the lead in plug-in sales this decade

• However, new government guidance in China is expected soon on post-2022, although any

forecast increase is still unlikely to be put it ahead of Europe by 2030

16mn BEV

4mn PHEV


0

10

20

30

2017 2020 2023 2026 2029 2032

BEV PHEV HEV** FCEV

Sa

les (

mn

un

its)

World: Outlook by xEV Technology Type

9


*Including n. America light truck

** Full hybrid + mild hybrid + mild hybrid (48V)

World PV market*

BEV

21%

HEV

25%

PHEV

5%

All xEV

53%

• Global PV electrification achieves more than 50% within 12 years


0

10

20

Q3 2020

Q4 2019

World: COVID-19 doesn’t Impact the Long-Term Forecast


*Includes N. America light truck

Q4 19: 2020-31 - 111 mn

Q3 20: 2020-31 - 115 mn

Sa

les (

mn

un

its)

• There may be a net positive influence in BEV demand resulting from a

reluctance to revert to the use of public transport (especially in China).

• COVID-19 and the resulting improvement in air quality may act as a focal point

for public opinion to shift in favour of faster elimination of fossil fuel emissions.

World BEV PV market*

10

0

10

20

30

40

50

Q3 2020

Q4 2019

World xEV PV market*

Sa

les (

mn

un

its)

Q4 19: 2020-31 - 356 mn

Q3 20: 2020-31 - 350 mn


-12

-10

-8

-6

-4

-2

0

2

26

36

46

56D

ec

-11

Ap

r-1

2

Au

g-1

2

De

c-1

2

Ap

r-1

3

Au

g-1

3

De

c-1

3

Ap

r-1

4

Au

g-1

4

De

c-1

4

Ap

r-1

5

Au

g-1

5

De

c-1

5

Ap

r-1

6

Au

g-1

6

De

c-1

6

Ap

r-1

7

Au

g-1

7

De

c-1

7

Ap

r-1

8

Au

g-1

8

De

c-1

8

Ap

r-19

Au

g-1

9

De

c-1

9

Ap

r-2

0

Au

g-2

0

Share YoY

W. Europe Car Market

Decline has slowed with YoY share falling at between 2 and 4 percentage points

2020 forecast: 28.7% (-3.3pp), with diesel still needed for CO2 compliance

Europe: A Word on Diesel

Source: National Sources

Figures include diesel hybrid

Dieselgate

Die

se

l %

of N

ew

Ca

r S

ale

s

YoY

Month

ly V

ariance (

PP

)

11


0

25

50

0

4

8

Diesel volume (left axis) Diesel share (right axis)

Ne

w D

iese

l P

V S

ale

s (

mn

)

Diesel PV sales lose 2mn by 2032, becoming confined to the largest vehicles

Europe: Diesel Outlook

Die

se

l %

of S

ale

s

Source: National Sources, LMCA European Diesel Forecast; Includes diesel hybrid

1.1mn

7%

29%

4.6mn

12

3.2mn

32%

W. Europe Car Market




China

USA

Other topics: OEM tie-ups, BEV vans and

trucks

Wrapping up

13

Contents


0

2

4

6

8

10

0

20

40

60

80

100

Europe vol ('000s) Europe %

Europe: Regulatory Impact on the BEV Market is Clear

Monthly PV BEV sales

14

Sa

les (

‘00

0s)

Sh

are

(%

)



Europe: Incentives+OEM Action Create Record BEV Sales

• Many markets set BEV sales records, despite the patchy recovery in car demand

• But will we see a cliff-edge decline when the boosted incentives expire?

0

2

4

6

8

10

12

14

16France

0

5

10

15

20

25Germany

0

1

2

3

4

5Italy

0

1

2

3Spain

0

5

10

15

20

25 UK

Monthly BEV sales, ‘000s

15


Includes pan-Europe + CIS = Record BEV sales


0.0

0.9

1.8

2020 2021 2022

Q4 2019 Forecast Q3 2020 Forecast

0

0.9

1.8

2020 2021 2022

Q4 2019 Forecast Q3 2020 Forecast

Europe passenger car PEV market S

ale

s (

mn

un

its)

• For BEV in 2020, incentives, OEM push & buyer awareness balance COVID-19

Europe: How is the near-term Forecast Looking?

BEV PHEV

Sa

les (

mn

un

its)

16


Includes pan-Europe + CIS


Europe CO2 situation

17

Source: ICCT

Over-reliance on one xEV model and/or lack of plug-in offering has led some

OEMs to pool together


0

20

40

60

80

100

0

5

10

15

20

2017 2020 2023 2026 2029 2032

% o

f S

ale

s

Sa

les (

mn

un

its)

BEV PHEV HEV PEV % ICE %

Europe passenger car xEV Market

• More than 90% of passenger car sales will be electrified by early next decade

• Plug-ins will account for 50%+ of the market, dominated by BEV

Europe: Longer Term xEV Outlook

BEV= 3.8mn

BEV= 8.8mn

18


Includes pan-Europe + CIS




China

USA


trucks

Wrapping up

19

Contents


NEV subsidy (BEV,PHEV,EREV,FCEV) :

Revised subsidy in place and extended to 2022, but will taper off towards

end of 2022

Requirements on battery range and energy density to qualify

Max vehicle price 300k RMB, except for battery-swapped models

Purchase tax is zero

Verdict: decreased subsidy, but necessary to support the market, and

incentivises longer range and lower cost

China: Government Policy Updates

20


Dual credit policy: New version in place, and new quota for 2021-2023 established ‘Energy saving vehicles’ now qualify: FHEV, MHEV/48V Test cycle changes from NEDC to WLTP/CLTC Number of credits that each model counts towards has diminished Verdict: more difficult for OEMs to meet their targets, but good news is more

powertrain options available to them (FHEV, MHEV) CAFC (Corporate Average Fuel Consumption) targets: Targets unchanged, but impact from NEV credit policy update OEMs have met their targets but will find it increasingly difficult in further years Local government incentives: Some local governments have offered some additional subsidies and incentives

to shelter the NEV market from COVID impact License plate lottery continues in several cities – NEVs can bypass

China: Government Policy Updates

21


China: NEV Outlook

22

NEV sales were derailed by subsidy cut & COVID-19 in 2020, but grow in the long-term

0

2

4

6

2015 2016 2017 2018 2019 2020 2025 2030

BEV PHEV

Source: MIIT, LMC Automotive Global Hybrid & EV Forecast

Sa

les (

mn

un

its)

0.2

NEV

1.0

NEV

1.1

NEV

6.3

NEV

4.0

NEV

3.1

BEV

4.8

BEV

0.8

BEV

0.9

BEV




China

USA


trucks

Wrapping up

23

Contents


North America: Overview

24

Highly fluid US market providing plenty of uncertainty for

electrification rollout.

COVID-19, SAFE regulations, SAFE litigation, presidential elections

Many factors continue helping BEV sales increase.

Consumer costs continue falling, more diverse products, sustained

incentives, continued infrastructure investments

NA EV production base remains important despite the US losing

its global sales lead.

Strong investments, high quantity of local talent


State ZEV membership growing.

Larger infrastructure ease plug-in anxiety.

Tougher future CO2 targets?

0

1

2

3

4

5

6

7

8

9

2018 2021 2024 2027 2030

Millio

ns

US Light EV Sales

HEV PHEV BEV

2030 Change over

Baseline

XEV: +67%

BEV: +60%


Scenario: Dems Win Senate, California Lawsuit Win

25


NA Electrified Light Vehicle Production

26

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

Millio

ns

BEV PHEV HEV

BEV growth from

established OEMs

and startups.

BEV, FHEV, MHEV

production shares

trending at similar

rates.

Electrification

strategy varies

significantly

between OEMs.





China

USA


trucks

Wrapping up

27

Contents


BEV platform, joint vans/trucks

Future Landscape: OEM tie-ups

28

Merger: xEV platforms &

powertrains & models

xEV platforms & powertrains &

models, in NA

EV powertrain development, V8 engine

Fuel cell development, Supra

model

Hybridised engine programme, DHT

Re-badged hybrid models, AV

BEV platform, joint models, AV

BEV platform

EV truck platform & powertrain

Fuel cell development,

EV truck production BEV batteries


Future Landscape: OEM tie-ups

29

A-seg models (due to end)

EV charging investment, mobility services

xEV powertrains

Joint IC engines

Joint IC engines

+ Chinese JVs

Joint vans

+ Joint investments with battery suppliers


BEV Vans & opportunities for door-to-door delivery

30

• Europe is the major growth market

in this segment by far

• 99% of volume here is BEV

versions of existing model lines.

Start-ups and new models account

for very little, although more of a

share in NA

• Range is not typically an issue but

TCO is. There will be an explosion

of growth once costs come down

• BEVs make sense for smaller vans

but less so for large ones driving

longer distances – large batteries

eat into payload capacity


Includes: Europe BEVs, Personal+Commercial, Van body style only

Not shown: North America, Asia-Pacific and Rest of World

0%

5%

10%

15%

20%

25%

30%

35%

40%

K

200K

400K

600K

800K

1000K

1200K

2017 2019 2021 2023 2025 2027 2029 2031

Volume

% Share

Europe BEV vans


BEV Truck Market

31

K

20K

40K

60K

80K

100K

120K

140K

2021 2023 2025 2027 2029 2031

Others (GMC Sierra,Nikola Badger, BollingerB2, LMC Endurance)

GMC Hummer E-PickupEV

Tesla Cybertruck

Rivian R1T

Chevrolet Silverado

Ford F-150

Ram 1500

• An expansion of truck product

will give the US market a boost

in the coming years

• Focuses are different: some

target personal use (Rivian,

Hummer) while others target

commercial/fleet sales (LMC

Endurance)

• However, the products that

should really help garner

acceptance are more

SUV/CUVs – these have been

the growth segments, but have

remained devoid of product until

the intro of Model X/Y


Includes: North America BEV sales, Pickup body style only

NA BEV Pickups


BEV Truck Market

32


Includes: North America BEV sales, Pickup and SUV body style only

-100K

100K

300K

500K

700K

900K

1100K

1300K

2020 2022 2024 2026 2028 2030 2032

Pickup

SUV

• An expansion of truck product

will give the US market a boost

in the coming years

• Focuses are different: some

target personal use (Rivian,

Hummer) while others target

commercial/fleet sales (LMC

Endurance)

• However, the products that

should really help garner

acceptance are more

SUV/CUVs – these have been

the growth segments, but have

remained devoid of product until

the intro of Model X/Y

NA BEV Pickups & SUVs


How policies are driving the China NEV market

Lancy Zhang, China Powertrain Analyst


8th October, 2020

Electrification


Outline

• NEV Definition

• Government Policy and Regulations

• NEV Market Status

• Outlook

2


NEV definition

Different definitions to NEV between the China government and LMC

3

Plug-in

BEV: battery electric vehicle

Geely Kandi BAIC EU260 BYD Qin SAIC Roewe 550

EREV: extended range electric vehicle PFCEV: fuel cell electric vehicle

Lixiang One Honda Clarity

Non-plug

FHEV: full hybrid electric vehicle

Toyota Carolla Beyond China government’s definition to NEV

MHEV: mild hybrid electric vehicle

Nissan Murano

Lexus ES

PHEV: plug-in hybrid electric vehicle


Subsidy will extend to 2022, but the amount will decrease slightly

0

1

2

3

4

5

6

PHEV ≥50 100 - 150 150 - 200 200 - 250 250 - 300 300 - 400 ≥ 400

2017 2018 2019 2020 2021F 2022F

Government Policy: Subsidy

BEV Range (Km) Energy Density (Wh/Kg)

0

0.2

0.4

0.6

0.8

1

1.2

1.4

90 - 105 105 - 125 125 - 140 140 - 160 ≥ 160

2017 2018 2019

Note:

- 23rd Apr to 22nd Jul 2020 is the

interim period

- subsidy only available for

vehicle’s price below 300,000

RMB, except for battery-

swapped vehicles

0,000 RMB

4

Year

Decrease

2020

10%

2021

20%

2022

30%

Purchase Tax Free

300,000 RMB

Battery- Swapped Vehicles


Local governments offer some incentives on NEV since COVID-19 outbreak

Government Policy: Local Government

8

03.03.2020/Guangzhou: 10,000RMB per vehicle

08.05.2020/Hainan: 10,000RMB per vehicle

09.04.2020/Shenzhen: 10,000RMB per vehicle

09.04.2020/Ningbo: 10,000RMB per vehicle

23.04.2020/Shanghai: 5,000RMB for charging fee

25.03.2020/Beijing: 10,000RMB per vehicle Add 20,000NEV car plates

27.05.2020/Shaanxi: 6,000RMB per vehicle


Change of test procedure

Revised Dual-Credit regulation published

10

Fuel type Ratio WLTC/NEDC* Gasoline 1.22

Diesel 1.20

LPG 1.16

Gas 1.36

HEV gasoline 1.32

HEV diesel 1.34

PHEV 1.00

Source: *Stefanos Tsiakmakis etc.. From NEDC to WLTP: effect on the type-approval CO2 emissions of light-duty vehicles

Gasoline

Diesel

Gaseous

Plug-in hybrid

Non plug-in hybrid

BEV

FCEV

WLTC

WLTC

CLTC

Fuel consumption

Fuel consumption Electric consumption Pure electric range

Electric consumption Range

TCAFC will adjust according to WLTC

After 2025, all vehicle types will change to CLTC

China Automotive Testing Standard Import Schedule

Type

Before 2025 After 2025

Light Vehicle (CVW≤3.5t)

All types

• Gasoline/Diesel • Hybrid Vehicles • Alternative fuel Vehicle

WLTC

CLTC

• BEV • Fuel Cell Vehicles

CLTC



Flexible relationship between NEV credits carry-forward and ICE’s CAFC

12

𝐼𝐶𝐸𝐶𝐴𝐹𝐶𝑆𝐶𝐴𝐹𝐶

≤ 123%

2019 NEV positive credit

2020 NEV positive credit

2021 or after NEV positive credit

year +1 year +2 year +3 year +4

100% 50% off 50% off

50% off 50% off 50% off

50% off 50% off 50% off



2018 2019 2020 2021 2022 2023

8% 10% 12% 14% 16% 18%

BEV

PHEV

FCEV

0.5 0.3 0.2Low Fuel Consumption (LFC) Vehicle -

Standard credit per vehicle

0.012*R+0.8 0.0056*R+0.4

2.0 1.6

0.16*P 0.08*P

previous new

Year

required quota

a) New NEV quota is set for 2021-2023

b) Standard credit per vehicle is declined

c) New concept, LFC, is proposed


13



What are LFCs

14

L/100km

3.00

4.00

5.00

6.00

7.00

8.00

9.00

Fuel Consumption Target Value 2021 LFC condition(123%)

2022 LFC condition(120%) 2023 LFC condition(115%)

1090 2510 Curb Mass (kg)

T=6.57

T=4.02

LFC Assessment requirement: Comprehensive fuel consumption ≤ Vehicle target value x Annual compliance requirement



LFCs has coefficient bonus when calculating the output

It gives OEMs more options in powertrain fitment not only focusing on pure electricity

Japanese OEMs will benefit from it as their have LFCs

What is LFCs

5.17 5.51

5.85

6.95

7.73 8.08

4.00

5.00

6.00

7.00

8.00

9.00

1090 1350 1500 2000 2350 2510

2021 2022 2023

Camry HEV Accord HEV

Odyssey HEV

15

L/100km

kg

Corolla HEV

Crider HEV


What will be the impact by LFC?

For example

16

Version 1.0 Version 2.0 ICE 30,000 30,000 Low fuel consumption* 20,000 20,000 NEV Percentage 14% 14% NEV Standard Credit (30,000+20,000)*10%=5,000 (30,000+20,000*0.5)*10%=4000

NEV Credit

NEV Actual Credit

NEV Standard Credit

Credit per NEV Vehicle

NEV Total Volume

NEV Standard Percentage

ICE Total Volume

ICE LFC *0.5


CAFC performance

CAFC has met the target, but there is still lots of pressure in the following years

17

6.43 6.05 5.8 5.56 4.60

6.88 6.78 6.62 6.48

0

1.5

3

4.5

6

7.5

2016 2017 2018 2019 2023 Target

CAFC with NEV bonus* CAFC without NEV**L/100km

𝐶𝐴𝐹𝐶 = 𝐹𝐶𝑖 × 𝑉𝑖𝑁𝑖=1

𝑉𝑖𝑁𝑖=1 ×𝑾𝒊

bonus coefficient

TCAFC target is becoming smaller

CAFC is becoming bigger due to Wi

smaller

2019 5.5 3.0

2020 5.0 2.0

2021 4.9 2.0

2022 4.8 1.8

2023 4.6 1.6

YearTCAFC

L/100kmMultiple of vehicle/WiCAFC credit = (TCAFC – CAFC) * output


The more NEV share, the better CAFC performance

Some major OEMs CAFC performance

18 Data source: MIIT LMC Automotive

Geely

SAIC

FAW-VW

Brilliance BWM

SGM

FAW-Toyota

SVW

GAC-Toyota

Beijing-Benz

DF-Honda

GAC-Honda

GAC

Great Wall

2017

SAIC

Geely

Brilliance BWM

GAC-Toyota

FAW-VW

FAW-Toyota

SVW

Great Wall

Beijing-Benz

DF-Honda

GAC

GAC-Honda

SGM

2018

SAIC

GAC

Brilliance BWM

GAC-Toyota

Great Wall

FAW-Toyota

Geely

GAC-Honda

DF-Honda

SVW

Beijing-Benz

FAW-VW

SGM

2019

Positive credit: Actual value < standard value


NEV credit performance

19

4.1% 6.8%

16.5%

22.8% 20.2%

2016 2017 2018 2019 2020 (Jan-Aug)

Actual NEV quota

3.00 2.90

3.60

4.20 4.10

2016 2017 2018 2019 2020 (Jan-Aug)

NEV credit per vehicle

NEV credit is surplus， but will decrease sharply under new regulation

0

2

4

6

8

Tesla Model3 standardrange

BYD Han Luxury NIO ES8 2020 415KM NIO ES6 2020 430KMperformance

Trumpchi Aion S Buick Velite6

under previous policy under new policy

2020 target 12%

units

units


-47.0%

-71.9%

-45.7%

-30.8% -24.0%

-32.4%

28.7%

23%

-100%

0%

100%

200%

300%

400%

500%

0

20

40

60

80

100

120

140

160

180Ja

n-1

8

Feb

-18

Mar

-18

Ap

r-1

8

May

-18

Jun

-18

Jul-

18

Au

g-1

8

Sep

-18

Oct

-18

No

v-1

8

Dec

-18

Jan

-19

Feb

-19

Mar

-19

Ap

r-1

9

May

-19

Jun

-19

Jul-

19

Au

g-1

9

Sep

-19

Oct

-19

No

v-1

9

Dec

-19

Jan

-20

Feb

-20

Mar

-20

Ap

r-2

0

May

-20

Jun

-20

Jul-

20

Au

g-2

0

Tho

usa

nd

s

EREV

PHEV

BEV

YoY

NEV market saw 29% decline in Q2

21 Data source: CAAM, LMC Automotive

0

20

40

60

80

100

120

140

160

180

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Tho

usa

nd

s

2017

2018

2019

2020

Q2 market improved greatly from Q1, but demand was still at a low level


NEV sales decline by major segment and OEMs

22

-49%

-64%

-55% 118%

-39%

BEV sales (Thousand) PHEV sales (Thousand)

NEV sales (Thousand)

-42%

-54%

-70% -85%

-13% -93%

-37%

-55% -71%

-23% -8% -39%


Global brands starting to taking more and more share in NEV market

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

20

18

01

20

18

02

20

18

03

20

18

04

20

18

05

20

18

06

20

18

07

20

18

08

20

18

09

20

18

10

20

18

11

20

18

12

20

19

01

20

19

02

20

19

03

20

19

04

20

19

05

20

19

06

20

19

07

20

19

08

20

19

09

20

19

10

20

19

11

20

19

12

20

20

01

20

20

02

20

20

03

20

20

04

20

20

05

20

20

06

20

20

07

20

20

08

BEV

US

KR

JP

EU

CN

Global brands sales keep rising in NEV sector

23

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

PHEV

Data source: CAAM, LMC Automotive


-3.0%

1.0%

5.0%

9.0%

13.0%

17.0%

21.0%

25.0%

0

2

4

6

8

10

12

14

16

Jun

-18

Jul-

18

Au

g-1

8

Sep

-18

Oct

-18

No

v-1

8

De

c-1

8

Jan

-19

Feb

-19

Mar

-19

Ap

r-1

9

May

-19

Jun

-19

Jul-

19

Au

g-1

9

Sep

-19

Oct

-19

No

v-1

9

De

c-1

9

Jan

-20

Feb

-20

Mar

-20

Ap

r-2

0

May

-20

Jun

-20

Jul-

20

Au

g-2

0

Tho

usa

nd

s

NIO Xpeng Weltmeister Model 3 (domestic)

NIO share Xpeng share Weltmeister share Model 3 (domestic) share

NEV market: a volatile environment continues… New start-up companies facing more direct competition from Tesla

Meanwhile Tesla is struggling with disruption of supply chain due to low local content rate.

24 Data source: insurance data, LMC Automotive


Outlook

28

NEV market is disturbed by COVID-19 in 2020, but will grow in the long-term

124 227 466

792 882 795

3,025

61 94

114

296 230 212

909

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2015 2016 2017 2018 2019 2020F 2025F

Tho

usa

nd

s

BEV PHEV EREV



Change

Kevin Riddell, Senior Manager


8 October 2020

US LV Electrification In Turbulent Times


Contents

2

US Electrification Environment

US EV Sales Outlook

North American EV Production Outlook

Alternative Scenarios


The Last 4 Months Have Been Busy!

3

June: Washington state adopted California ZEV regulations.

June: The new SAFE regulations take effect.

California restricted from instituting more stringent CO2 standards.

August: California finalizes voluntary agreements with BMW, Ford,

Honda, VW, Volvo to meet stricter fuel economy standards.

August: A reduction in fines imposed by NHTSA for missing fuel

economy targets reversed in U.S. Court of Appeals.

September: Governor of California files and Executive Order that by

2035 new LV sales are to be Zero Emission.


Presidential Elections in November

4

VS.

Track record of reducing/removing environmental regulations to boost the economy.

Ensure the U.S. achieves a 100% clean energy economy and net-zero emission no later than 2050.


Contents

5


US EV Sales Outlook




Source: JATO Dynamics, OEMs

0

10

20

30

40

50

60

70T

housands

BEV FCEV PHEV HEV

A Rough First Half of the Year for EVs

Despite steady supply of new products, increased sales has been slow.

In first half of the year BEV sales down.

6


A Closer Look at BEV Sales

7

• Coronavirus significantly

lowered near-term BEV sales.

• BEVs stated as top priority.

• Stable incentives.

• Many new entries coming. 0

100

200

300

400

500

600

700

800

900

1,000

201

5

201

6

201

7

201

8

201

9

202

0

202

1

202

2

202

3

Thousan

ds

US LV BEV Sales

2020 Outlook from 2019 Q4: 288,000

2020 Outlook from 2020 Q3: 215,000

BEV Topline Change: 25%

BEV Market Share: 1.5%

Source: JATO Dynamics, OEMs, LMC Automotive


0

1

2

3

4

5

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Mill

ions

xHEV PHEV BEV

Electrification Outlook

Source: LMC Automotive 8


EV segment trends – CAGR 2019-2030

9

Non-premium Segments

Premium Segments 15%

SUV Pickup Car/Sporty MPV/Van

17%


100%

40% 3% 27% 23%

7% 8% 23%



BEV segment trends – CAGR 2019-2030

10

Non-premium Segments

Premium Segments 10%


30%


100%

139% 2% 36% 51%

2% 8% 27%



Content

11


US EV Sales Outlook




NA Electrified Light Vehicle Production

12

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

Millio

ns

BEV PHEV HEV

BEV growth from

established OEMs

and startups.

BEV, FHEV, MHEV

production shares

trending at similar

rates.

Electrification

strategy varies

significantly

between OEMs.



NA EV Light Vehicle Battery Requirement

13

0

20

40

60

80

100

1202

01

5

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

Battery Requirements (GWh) for NA Light Vehicle Production

Estimated 106 GWh

of storage capacity

required for 2025.

Larger battery packs

accelerating the

curve.

Avg BEV pack capacity

(kWh) 2015: 57 2020: 72 2025: 86



Content

14


US EV Sales Outlook




0

1

2

3

4

5

2018 2021 2024 2027 2030

Millio

ns

US Light EV Sales

HEV PHEV BEV

SAFE entrenched. No ZEV regulations.

Higher percentage of HEV are 48-volt.

BEVs still see significant growth, but slower.

California/OEM agreement supporting EV

sales.

2030 Change over

Baseline

XEV: -14%

BEV: -24%

Republicans Win in November, California Lawsuit Fails

Source: LMC Automotive 15


State ZEV membership growing.

Larger infrastructure ease plug-in anxiety.

Tougher future CO2 targets?

0

1

2

3

4

5

6

7

8

9

2018 2021 2024 2027 2030

Millio

ns

US Light EV Sales

HEV PHEV BEV

2030 Change over

Baseline

XEV: +67%

BEV: +60%


Democrats Win in November, California Lawsuit Win

16


In Conclusion

17

Highly fluid US market providing plenty of uncertainty for electrification

rollout.

COVID-19, SAFE regulations, SAFE litigation, presidential elections

Many factors continue helping BEV sales increase.

Consumer costs continue falling, more diverse products, sustained

incentives, continued infrastructure investments

NA EV production base remains important despite the US losing its global

sales lead.

Strong investments, high quantity of local talent


LCVs

David Leah, Senior Analyst


8th October 2020

The European LCV xEV Market


Current Situation Topline

1.5

1.75

2

2.25

2.5

2.75

3

Mill

ions

COVID-19

impact Eurozone crisis

Recovery

Long term looks positive. Demand to

be driven by various factors, such as:

Shift in consumer behavior to

online shopping/e-commerce

Downsizing trends from HGVs to

LCVs (agile supply chains)

Rise of last-mile delivery

Environmental Factors: rise in

xEVs/CO2targets/Incentives/ZEZs

/ICE bans/Social reasonability

etc.…

= boost renewals

-16% YoY


Current Situation Fuel Type

3

~10K ~ 50K

0.5%

4.9%

2016

93.6%

xEV

Petrol

Diesel

Other* CNG, LPG

1.0%

1.1%

6.7%

2018

91.2%

1.0%

2.4%

5.7%

2020

90.9%

1.0%

CAGR = 48.6%

xEV set to account for ~2.4% of sales in 2020 (2% YTD)

xEV demand has increased at a CAGR of 48.6%, albeit low base

Diesel has remained the dominant fuel type (TCO & >torque benefits versus petrol)

Key


40%

36%

24% Small vans

Medium vans

Large vans

Current Situation Snapshot

4

Total xEV sales

+15% YTD

23k units YTD

2 1

3

Renault Kangoo

best selling

model

France market

leaders in volume

terms ~6k

units YTD

Norway highest

xEV market

share ~7%

YTD

~75% of xEV

sales = BEVs

40% of xEV sales small

or car-derived sized vans

YTD


260

190 180

12080

170

90 110

500

300400

100 100

400 400

200

800900

700

500

300

600

800 800

5

Current Situation YTD Analysis

900800

500

100

400

1,800

700500

J F M A M J J A YTD (Jan – Aug)

+0.1%

+8%

+210%

-35%

YTD Sales

6,000

5,500

2,500

1,200

Market share* %

~2.5%

~3.5%

~2.5%

~6.5%

*Of respective market


Current Situation OEM Analysis


20%

40%

60%

80%

100%

0.0

0.4

0.8

1.2

1.6

2016 2018 2020 2022 2024 2026 2028 2030 2032

Mil

lio

ns

BEV PHEV HEV FCEV ICE %

Forecast xEV Outlook

7

BEVs to account for around a

third of sales by 2032.

ICE vehicles set to account for

around 50% of total sales by

2032.

Tipping point for LCVs to be

around mid-2020

Note: PHEV includes EREV.HEV includes MHEV (48V), MHEV & FHEV.


Forecast xEV Model Launches

8

Note: Includes Vans & Pick-ups only. PHEV includes EREV. HEV includes MHEV (48V), MHEV & FHEV

610

23

4348

2

5

7

4

6

12

1

2

3

0

10

20

30

40

50

60

70

80

2016 2018 2020 2022 2025

BEV PHEV HEV FCEV

Average CO2 A seven fold

increase in model launches

between 2018 and 2025.

Competition set to intensify

putting pressure on OEMs.


0

25

50

75

100

125

150

175

200

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Industry Factors CO2 emission targets

9

2017: 175 g/km

2020: 147 g/km

2025: 125 g/km

2030: 101 g/km

Historical emissions

Average CO2 emissions of new

vans in the EU will have to be

15% lower in 2025 and 31% in

2030 compared to the 2021

target.

The ZLEV credit system

enables OEMs with an xEV (0

to 50g/km) share >15% in 2025

and >30% in 2030 to benefit

from less stringent CO2

requirements (capped at 5%).

Note: Figures are expressed in NEDC terms.*The binding emission targets for OEMs are set according to the average mass of their vehicles

Source: European Commission; ICCT


Industry Factors Incentives

10

Tax Benefits Purchase Incentives Max (€) Subsidy

Acquisition Ownership Company Car Incentives

Source: ACEA

≤20g CO2/km up to €7k subsidy

(6k from 2021)

≤50g CO2/km up to €6k govt + €3k

OEM subsidy (until 2022)

≤75g CO2/km & ≥16 km battery

range = up to €8k subsidy

Tax based on Weight, CO2 & Nox

levels: ~20 to 30% of passenger

car rates

≥30 km battery range = €4.4k

subsidy, rising to €6k if vehicle

scrapped

≤60g CO2/km up to ~€6k subsidy


ICE phase-out targets

Industry Factors ICE Bans / ZEZs

11

2025 2030 2035 2040

Norway Denmark

Netherlands

UK

Spain Sweden

Iceland

Scotland (2032)

London

2025

Proposed city-wide Zero

Emission Zones (ZEZ)/ICE

bans

Note: Phase out targets may exempt vans in some countries.

Source: ICCT

Note: On the whole, targets are progressive, starting in

specific urban areas before expanding to entire city

bans. In addition, some bans target diesel vehicles,

others all ICE.

*This slide does not include every country/city which

has announced ICE bans.

France Paris

2024

Oslo

2024

Amsterdam

2030

Rome

2030

Govt. national phase-out targets

LMC Automotive Markets Presentation to

AB SKF

[email protected]

AB SKF - LMC AUTOMOTIVE...4 SAAR, World, mn units/year Light Vehicle sales were just over 90 mn...

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