future of ice: why accelerating r&d spend is critical for ... · ev market share in new car...
TRANSCRIPT
© Oliver Wyman
Future of ICE: why accelerating R&D spend is critical for future competitiveness & to reach 50g CO2/km
June 2015
Prepared for ERTRAC
Agenda
Market Forecasts
Scenario Modelling
New ICE technologies
R&D Figures
1234
IntroductionThe Art of Market forecast
Section 1
3© 2011 OLIVER WYMAN June 2, 2015
4© 2011 OLIVER WYMAN June 2, 2015
5© 2011 OLIVER WYMAN June 2, 2015
Market forecast EV & PHEV
Press and Quotes
“EV market is nascent and tiny growing” (Green Alpha Advisors, 2012)
“2012 will be make or break for EVs.”(Pike Research, dec 2011)
“ The pure electric vehicles are taking off more slowly than hybrid cars.” (Energy Harvesting Journal, 05.2009)
“65% of global automotive executives don’t expect sales of electrified vehicles to exceed 15% of annual global auto sales before 2025”(KPMG’s 2012 automotive survey)
Market forecast examples – EV & PHEV salesIn millions units, light vehicles, global
2
4
6
8
10
12
14
16
30
2010 2015 2020 2025 2030
Published May 2008
Published May 2009Published
March 2009
Published Jan 2009
Published June 2009
Published June 2008
Published Jan 2009
Source: Press clippings, diverse market studies, IHS Automotive, J.D. Power
Published Jan 2011
Published July 2011
Published Feb 2010
Published Jan 2011
Published Nov 2009
Forecast
Published Jan 2012
Published Jan 2012
Market ForecastScenario Building
Section 2
7© Oliver Wyman 7
ApproachForecasting emerging technologies requires scenario modelling
…
2010 Current market analysis per country
2025 market sizing &segment structure evolution
Key trends identification &modelling
Demography & Macro-economy
Environmental regulation and
governance
Urbanization policies
Design of Scenarios
Scenarios
Scarcity of Energy & Resources
….
Constraints & optimization
Green taxation
Double squeeze
Reference
…
Illustrative
8© 2011 OLIVER WYMAN
ApproachIt is necessary to analyze Mega Trends around several domains, in order to build differentiated scenarios
Urbanization policies
Scarcity of energy and primary resources
Environmental regulation and governance
New vehicles designs and technologies
Connectivity everywhere
New people and freight transportation models
Changing customer behaviors
Demography and Macro-economy
9© 2011 OLIVER WYMAN
Trend descriptionA few trends in China - illustration
Source: Oliver Wyman analysis
380M migrants pouring into cities by 2030: China will experience the largest urbanization of human history
6 – 7% per year growth rate expected for the Chinese economy, slightly slower than in the past 10 years
16% of the total population by 2030 will be over 65
57% of oil in China is imported and the share will continue to increase
70%of smartphone penetration in the urban population by 2030. Vehicles would become more connected through embedded features
E-commerce The B2C E-commerce in China develops even faster than EU, stimulating the development of last mile delivery providers
OwningOwning makes a sense of “security” for Chinese people. Younger generation in Tier 1 – 2 cities will increasingly prefer using instead of owning, but it is not likely to generalize across the country. As a result, car sharing is not likely to develop by large scale in China
Health The Chinese consumers are more and more sensitive to health, safety, and thus to pollution issues
10© 2011 OLIVER WYMAN
15
3
9
2
3
1
0
5
10
15
20
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Scenario 3
Scenario 2
Scenario 1
4%
12%
20%
% o
f EV
in n
ew c
ar s
ales
Market modellingEV market share in new car sales in China
Market share of EV in new car sales (%) China total
Note : The milestones indicate years when the distance between scenario is large enough to differentiate the KPI evolution trend towards each one of them Source : Autoinfo.gov.cn + Press release + OW Analysis
Milestone #12020
Milestone #22025
∆ = 400% ∆ = 400%
11© 2011 OLIVER WYMAN
Source: Avicenne & Oliver Wyman analysis1 In ideal driving conditions2 Renault, Volkswagen and Toyota ambitions in ideal driving conditions
3 scenarios for 2025 can be drawn from different forecastsA Pessimistic (slight change), a realistic (awareness take off) and an optimistic scenario (green world)
Slight change Awareness take off Green world
Technology advance
• 2025 battery performance: – Energy density 150-200
Wh/kg– Electrical range 200-250
km1– Cost €300/kWh
• 2025 battery performance: – Energy density 300-400
Wh/kg– Electrical range 400 km1– Cost €250/kWh
• 2025 battery performance: – Energy density 400-600
Wh/kg– Electrical range 500-800
km2– Cost €200/kWh
Environmental regulation
• Tightened emission restrictions but large gap depending on countries
• Tightened emission restrictions, emission taxes & penalties
• Mandatory share of alternative powertrain in vehicle fleet
• Maximum authorized CO2 emissions 75g/km in Europe
• Major cities have zero-emission zones downtown
Fuel price • Oil price stays below $100 per barrel (€75)
• Oil price rises to around $200 per barrel
• Oil price rises to around $300 per barrel
Subvention policy
• Government subsidy up to €1,000 not enough to compensate the gap with ICE which emissions meet regulation standards thanks to technology advances
• Government subsidy up to €2,000
• Other incentives: free parking, wide charging infrastructure network
• Government subsidy up to €2,000
• Private actors fund part of the cost through alternative sales models: leasing, car sharing, pay-as-you-go
12© 2011 OLIVER WYMAN June 2, 2015
110,8
61,3
2010 2025
Market forecast by scenario EV / PHEV market forecasted by OEMS and EV experts varies from 6.6% to 35% depending on the scenario
ICE=Internal Combustion Engine, PHEV=Plug-in Hybrid Electric Vehicle, EV=Elecrtic VehicleSource: J.D. Power, Oliver Wyman analysis
ICE
Full + Mild Hybrid
EV
Scenario 1: Slight changeProduction, in mio. vehicles
Scenario 3: Green worldProduction, in mio. vehicles
Scenario 2: AwarenessProduction, in mio. vehicles
61,3
110,8
2010 2025
PHEV
ICE
Full + Mild Hybrid
EV
PHEV
110,8
61,3
2010 2025
Full + Mild Hybrid
EV
PHEV
ICE
6.6%19%
35%
Assumption : market size constant in the 3 scenarios
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0
2
4
6
8
10
2010 2020
Decrease of Diesel in EuropeThe diesel share should decrease in Europe
1 Growth of Diesel powertrain cost to reach CO2 and pollutants targets
2 Decreasing fuel efficiency gap between Gasoline and Diesel
3 Increasing taxation of Diesel by EU
4 Degradation of the Diesel image (health, pollution)
5 Imbalance Lobby of oil & gas majors
Diesel / gasoline mix evolution in Europe main markets In million unit
-16%
+25%
48%
52%
39%
60%
Source: Oliver Wyman analysis
1% Others
Gasoline
Diesel
Trends
Energy Mix - Market ModellingSynthesis
Whatever the scenario ICE will still have a market share of
at least 60% and up to 84% & will represent the bulk of the volume !!!
Hybrid Vehicles have become a mass market while EVs are still a niche gradually taking off
ICE R&DPerformance improvement via technologies
Section 3
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ICE – Performance improvement & increasing powertrain costImprovement potential in fuel efficiency is still significant but both Gasoline and Diesel powertrain cost will increase to meet CO2 emissions standards
Levers 2025 target impact on consumption reduction
Downsizing (already in use in most vehicles) 10 to 25 %
Combustion CAI 10 to 15 %
Electronic Control Valve 10 %
Variable compression ratio 6 %
Reduced internal friction 5 %
High efficiency alternator 2 %
Management system to the battery charge 2 %
• Key evolutions vs. 2010: 2025
– Fuel Consumption: -20% / -40%
– Vehicle price: +3,5 to 20%
Source: National Renewable Energy Laboratory 2011 study, Fuel thrifty efficient, Mission “véhicule 2030 Voitures Electriques”, OW analysis
ICE gasoline
The fuel efficiency gap between Gasoline and Diesel should decrease
Key levers for consumption improvementNot exhaustive
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4 5 6Variable Distribution New generation of gearboxes Combustion Improvement
(CAI…)
1 2 3Turbocharging Direct Injection Stop & Start & Cylindrer De-
activation
ICE Technology Trends Mainly different technologies can be leveraged to improve ICE efficiency
Source: Analyse Oliver Wyman
7 8 9Car Electrification Emission controls & air
handlingLight weighting
Not exhaustive
ICE R&DKey Numbers
Section 4
1919© Oliver Wyman
Regulation Trends – Tighter Norms across the WorldThe easy part of the journey has been done, the next wave will require exponential investments….
CO2 Emission Reduction Targets( g/km) Comments
• 2000-2015 – Easy part: – High reduction potential– Known technologies– Incremental innovation– Reasonable R&D and CAPEX
Investment
• 2015-2030 – Tough part: – Lower reduction potential– New technologies– Disruptive innovation– Higher R&D and CAPEX Investment
280
60
260
240
220
200
180
160
140
120
100
80
2002 2006 2010 2014 2018 2022 2026 2030
US (FTP75/US06
Europe (NEDC)
Japan (JC08)
China (NEDC)
S. Korea (NEDC)
Source: IHS, Analyses Oliver Wyman (1) NEDC: Nouveau Cycle Européen de Conduite
2002- 2030
-65%-63%-56%
-33%
Today
The last grams of CO2 …will be costly to reach !!!
© Oliver Wyman www.oliverwyman.com
Number of ICE Family by OEM Due to larger R&D & CAPEX need, OEMs are gradually reducing the number of main families which are developed more in cooperation to share costs
Source : analyses Oliver Wyman
Evolution of ICE product offering : average number of ICE families between 2001-2004 & 2009-2012Only engine family developed by OEM are accounted for
7,06,5 6,3 6,3
14,5
11,010,5
7,0
9,0
19,0
12,812,3
19,519,0
18,3
15,8
17,0
14,3
12,0
7,06,8
7,57,8
6,5
7,0
12,3
8,58,8
9,510,5
11,8
12,812,811,8
8,5
14,314,8
14,515,0
14,815,3
14,315,0
15,0
10,0
11,5
9,3
9,0
11,5 11,511,3
11,3
6,36,8
7,5
7,07,3 6,5
6,06,0 5,55,8
7,0
6,86,87,3
7,0
7,06,8
7,0 6,8
8,8
10,010,5
9,59,0
8,5
8,5
8,5 8,8
5
7
9
11
13
15
17
19
2001-2004
2002-2005
2003-2006
2004-2007
2005-2008
2006-2009
2007-2010
2008-2011
2009-2012
2010-2013
Total 89 88 86 84 80 77 75 7391 72
R&D IntensityThe number of patents on Diesel Engines has doubled in 15 years…
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2012 2025
R&D by moduleOf all vehicle modules, engines and electric drive systems account for the largest share in R&D & are growing fast
Automotive R&D Spendin bn. €
DrivetrainChassis
Electric/ Electronic
Vehicle
Exterior
ICE/aux. systems
Electric drive systems
Body structure
Interior
Source: Oliver Wyman
~150
~110
’12-’25CAGR
4.3%
2.9%
4.5%
7.0%
3.3%
6.1%
2.5%
2.5%
0.1%
2.3%
• More than 120 Md€ is spend annually in R&D by automotive players…
• Spend will increase by 30B€ in 2025
• One third of this spend is dedicated to develop new powertrains to meet tightening regulations across the globe !!
• But public funding will be more and more required to meet emissions targets beyond 2025
Conclusion
It is key to keep investing in developing new ICE to address the mainstream market in order: • to improve fuel consumption • to increase performance • to reduce emissions,• to increase automotive industry image in sustainable
development • and last but not least, to create jobs !!