What does the move to electric vehiclesmean for steel and ArcelorMittal?

Philippe AubronCMO Automotive Europe ArcelorMittal Europe – Flat Products

Europe media day 2017Paris, 28 November

• What’s driving change in the automotive sector today?

• Key factors behind the growth of electric vehicles

• The impact of electrification on lightweighting

• How is ArcelorMittal placed to benefit?

• Steel as the material of choice

• Autonomous vehicles - what they mean for steel

What’s driving change in the automotive sector today?

• New regulations: reducing CO2emissions while tightening testing requirements

• Vehicle design and driving restrictions: aimed at reducing smog and particulate levels for improved public health – particularly in city centres

Pollution

Local impact:smog

Global impact:climate change

CO2 reductions and future targets

EU proposal, Nov 8th 2017- 30% vs. 2021

Source: IICT – July 2017

Significant reductions in CO2emissions have been achieved

BUT

Significant reductions are still expected

66g

Clean air regulations are growing

New regulations

• Europe: EU C02 2030 regulation: -30 % in 2030 vs 2021, with more stringent test conditions

• Nafta: US may revise their objectives for 2025

• China: 20% of new electrical vehicle by 2025; 50% improvement on mileage/litre

Political trends

• UK and France: targeting end of internal combustion engine cars by 2040

• China, India: targeting fast growth in electrification

New fuel efficiency regulations, aimed at reducing C• 02 emissions will:

• When smog and particulate reductions are combined with fuel efficiency regulations –automakers will develop electric vehicles

• This trend will also change consumer behaviour and habits

Impact of regulations on the automotive sector

improve drive train efficiency

reduce vehicle weight

improve vehicle drag and friction

Today’s technologies for electric vehicles

Technology-driven trends in the automotive

industry are leading to new

powertrain technologies

What are the key short term drivers of electric vehicle design?

Cost

BEV range

Charginginfrastructure

Source : Ricardo, 2017

• 63% rise in BEVs sales, year on year

• 1 million BEV sales expected

Summary of market changes: we are moving quickly towards an electrified world

VW to spend $40bn on electrification in next five years

GM to launch at least 20 new electric vehicles by 2023

Raft of announcements from OEMs in the last three months, announcing investments in electrification

2017

Cost and range are two key drivers

However, there are many other benefits that will attract consumers:

BEVs have roughly • 1/8 the rotating parts, meaning less wear and tear and potentially up to 1,000,000 km vehicle life.

Regular maintenance is significantly lower (• eg. no oil changes)

Operating costs per km are significantly lower•

When will Battery Electric Vehicle sales really take off?

Designing vehicles with cost effective weight reduction:

The mass-market Tesla Model 3 body and chassis is a blend of steel and aluminum, unlike the Tesla Model S which is an aluminium body(Source: Tesla website*)

86% steels including 44% of AHSS on the body-in-white of the Chevrolet Bolt (source General Motors)

Electrical vehicles today favour lightweight design similar to traditional vehicles

Electric vehicles today employ advanced lightweighting to achieve their range goals

* https://www.tesla.com/compare

Less pressure on •lightweighting due to batterytechnology improvements(costs & driving range)

Small • increase in numbers of batteries will likely be more cost effective at adding range than lightweighting withalternative materials

Steel • will remain a cost-effective lightweight material.

The improvements in battery performance –impact on lightweighting

Bat

tery

cost

($/K

Wh)

Energy density (vehicle range)

Future BEV design

Current BEV design(using combustion engine vehiclearchitecture)

• Global footprint

• Broadest product offer

• Co-engineering with OEMs

• Downstream solutions

• Broad set of emerging solutions

How is ArcelorMittal placed to benefit?

Global presence – global reach

> 20 M veh> 15 M veh & < 20 M veh> 10 M veh & < 15 M veh> 5 M veh & < 10 M veh> 2.5 M veh & < 5 M veh> 1 M veh & < 2.5 M veh< 1 M veh

Vehicle production 2016

Automotive production facilitiesAlliances & JVsCommercial teamsR&D centres

Global supplier with increasing emerging market exposure

Our European automotive production sites - Flat Products and downstream

1

19

415 12

6

209

18

3 7

13

10

817514

11

16

Poland

Turkey

Romania

Germany

Italy

Spain

France

Belgium

Luxembourg

Downstream facilities

Steelmaking facilities

Steelmaking and downstream facilities

Avilès (ES)Borçelik* (TR)Bremen (DE)Desvres (FR)Dudelange (LU)Dunkerque (FR)Eisenhuttenstadt (DE)Florange (FR)Fos-sur-Mer (FR)Galați (RO)Genk (BE)Gent (BE)Kraków (PL)Liège (BE)Mardyck (FR)Montataire (FR)Mouzon (FR)Piombino (IT)Sagunto (ES)Saint-Chély-d’Apcher** (FR)

*Joint ventures**Electrical steels production

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Our solutions for e-mobility and lightweighting

Fortiform®

Fortiform® S

Third-generation UHSS for cold stamping. Cold rolled and coated products • 980 and 1180 MPA strength levels; 1470 • MPA in 2018

Press hardenable steels (PHS) / hot stamping steels offer strengths up to 2000 MPa. • Usibor ® 1500, Usibor ® 2000, Ductibor ®450, Ductibor ® 500, Ductibor ® 1000• Can be combined thanks to laser welded blanks (LWB).

Usibor®

Ductibor®

MartINsite®Cold rolled fully martensitic steels with tensile strengths currently from 900 to 1700 MPa.• Dedicated to roll forming applications

iCARe®Electrical steels for electrified power train optimization• Our ranges Save, Torque and Speed are specifically designed for a typical electric

automotive application.

Innovative coatings

Full range of innovating coating supporting the development of UHSSJetgal• ® as Hydrogen free process, Zagnelis® Zinc-Magnesium as improved corrosion protection, Innovative coatings improving PHS in wet areas

iCARe®Electrical steels for electrified power train optimization• Our ranges Save, Torque and Speed are specifically designed for a typical electric

automotive application.

ArcelorMittal engineering studies: hybrid and electric vehicle structures

ArcelorMittal has performed several studies on BEV and PHEV (plug-in hybrid electric vehicle) structures:

• BEV and PHEV vehicles have higher total vehicle mass due to higher overall powertrain system mass (including battery cells) Increased requirements in terms of structure Increased need for high strength materials such as

Advanced High Strength Steels in order to protect passengers

• Battery cell protection also requires strong structures AHSS are a high performance, light and cost-efficient

solution

Our S-in motion® catalogue already includes our first solutions for electric vehicles

S-in motion®

ICE C-SegmentS-in motion®

Electric C-Segment

S-in motion®

Plug-in Hybrid C-Segment

S-in motion®

D-SegmentEU market

S-in motion®

Mid-size SedanNA market

S-in motion®

Mid-size SUV

S-in motion®

Light Commercial

S-in motion®

Pick-up Trucks

S-in motion®

Truck Cabs

- -60kg (-15%) vs current ICE

baseline

-50 kg (-16%) vs current

PHEV baseline

Our Tailored Blanks facilities around the world

ChinaShanghai • Baosteel & Arcelor Tailor Metal (JV)Gonvvama• Loudi (JV) Gonvvama• Shanghai area (JV)Gonvvama• Shenyang (JV)Gonvvama• Chongqing (JV)

Europe• Birmingham, UK• Bremen, Germany• Neuwied, Germany• Liège, Belgium• Genk, Belgium• Gent, Belgium• Lorraine, France• Senica, Slovakia• Zaragoza, Spain• Orhangazi, Turkey

(JV)

North AmericaArcelorMittal Tailored Blanks• Concord, Ontario, Canada• Woodstock, Ontario, Canada• Detroit, Michigan, USA (project)• Pioneer, Ohio, USA• Murfeesboro, Tennessee, USA• Silao, Guanajuato, México• San Luis Potosí, S.L.P., México

Delaco ArcelorMittal Tailored Blanks• Tonawanda, NY, USA (JV)• Dearborn, Michigan, USA (JV)• Montezuma, Iowa, USA (JV)

India• Arcelor Neel Tailored Blank Chennai (JV)• Arcelor Neel Tailored Blank Pune (JV)

Located close to our automotive customers

Audi A8

Switched back to steel with body structure to be made up of more than 40 % steel including 17% PHS

“If you compare the stiffness weight ratio, press hardenable steel is currently ahead of aluminium.” Dr. Bernd Mlekusch, head of Audi’s Leichtbauzentrum

Steel as the material of choice

Steel as the material of choice

Peugeot 3008

Body structure is 90% steel,

including 65% high strength steels

Source Eurocarbody Conference – 2016

25%

65%

10%

Other steels High Strength Steels Other materials

Autonomous vehicles encourage electrification

Source: Morgan StanleyResearch, August 2017

Autonomous vehicles - steel is addressing the safety challenge• There is no reason to believe that vehicle autonomy will prevent all crashes. Passive

safety solutions will continue to play a major role.

• Extreme weather can block sensors, causing tyres to loose grip unexpectedly; humans or animals can emerge suddenly; human drivers will still be on the road; sensors can fail or act erratically; hacking presents a risk.

• Autonomous vehicles will continue to need the safety, affordability, light weight, and environmental credentials of advanced steel body structure solutions well into thefuture.

Vehicle safety structure and systems are not expected to be reduced.When it comes to safety, the performance of steel cannot be matched.

ArcelorMittal will keep focusing on the development of lightweight design solutions for •all vehicles (hybrid, electric and combustion).

Steel is the material of choice in a world where weight reduction is critical to achieving •emissions reduction regulations. In a future world, where batteries are low cost and BEVs are the vehicle of choice, we forecast steel will continue to be the material of choice for manufacturers.

Pressure on CO• 2 emissions, smog, and particulate reduction will continue to be a major driver for greater production of electric vehicles.

Megatrends affecting automotive industry and mobility are an opportunity to •demonstrate the capacity of steel to adapt in all circumstances.

Conclusions: