powering autos to 2020: the era of the electric car?the era of the
TRANSCRIPT
Powering Autos to 2020:The Era of the Electric Car?The Era of the Electric Car?Press Briefing
Detroit, June 14, 2011 – Embargoed until 12:00pm EDT today
Welcome to BCGToday's speakers
Xavier Mosquet Marco Gerrits
Senior PartnerGlobal leader of BCG's Automotive practice
PartnerHead of BCG's Automotive practice in Greater p
Managing Director of BCG's Detroit office
Lead author of Powering Autos to 2020: The Era of the Electric Car?
pChina
Coauthor of Powering Autos to 2020: The Era of the Electric Car?
1
BCG Detroit+1 248 688 [email protected]
BCG Beijing+86 10 8527 [email protected]
BCG presents third study on automotive propulsion and electric car adoption
2009 2010 2011
Powering Autos to 2020:The Era of the Electric Car?
Focusareas
• Potential of ICE technologies
• Consumer perspective
• Carbon-cost tradeoffs
• Total costs of ownership (TCO)
• Battery technology and industry overview
• Battery cost analysis
2
• Updated volume forecasts
• Go-to-market challenges
• Volume forecasts • Total costs of ownership (TCO) revisited
Powering Autos to 2020 integrates major market drivers: regulation, technology, total cost and consumers
The automotive market environment is quickly evolvingSt i t i i t t b i t d i ll j k t• Strict emission targets being enacted in all major markets
• First EVs1 on the street and government incentives in place
We would like to offer an updated perspective on the main market drivers ...We would like to offer an updated perspective on the main market drivers ...• Emission targets and the improvement potential of different technologies• Total Cost of Ownership – purchase costs, operating costs and terminal values• Consumer's perspective on different technologies and their willingness to pay
... and discuss possible scenarios and their likely implications for key stakeholders• Powertrain mix in US, Europe, Japan and China under different scenarios in 2020
Implications for OEMs suppliers and regulators• Implications for OEMs, suppliers and regulators
31. EVs include pure battery, range-extended, and plug-in hybrid electric vehicles
Agenda
Technology, costs and emissions
Consumer perspective
Market forecast and implications
Q&A
4
Automotive CO2 emission standards are becoming more stringent worldwide
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 ...CO2 g / km -NEDC Cycle(MPG - CAFE Cycle)
1301
(45 MPG)EU154
(39 MPG)95
(61 MPG)
US 1523
(39 MPG)240
(26 MPG) 2052 191 228 198 172(34 MPG) 181
Japan 141 (42 MPG)
125(47 MPG)
109(53 MPG)
185(33 MPG)China 145
(41 MPG)167
(36 MPG)
5
1. From motor vehicle technology only. EU plans to reduce emissions by another 10 CO2 g/km from other improvements (e.g. air conditioning technology) and biofuels2. For 2012-2016, California agreed to conform to the Federal Standards, before California had enacted stricter legislation3. Based on released scenarios of a 47-62 mpg target for 2025 – 47 mpg expected to be the more likely Note: All targets are expected to be phased inSource: ICCT, EPA, The Motor Industry of Japan 2010, Asahi Shimbun press search
Enacted (through legislation) Proposed Estimates based on current trend
Conventional technologies with high CO2 reduction potential; ICE has the most potential
Vehicle mass ICE technologyAerodynamics Transmissions Power management
Levers Optimized design (drag coefficient and
Lightweight material New manufacturing
Vaporization and combustion
Improved automatic transmissions control
Switch from mechanical to electric(drag coefficient and
frontal area) Optimized tires
New manufacturing technologies Content optimization Downsizing
combustion optimization Energy losses
reduction (pumping, friction, heat) Weight reduction
transmissions control Continuously variable
transmissions Dual clutch
mechanical to electric accessories Optimization of
accessories' electric consumption
g
Impact on CO2emissions
1% CO2 reduction for ~0.01 drag coefficient reduction
3-4% CO2 reduction for 10% mass reduction
From 1 to 20% CO2 reduction per technology
From 1 to 7% CO2reduction per technology
From 1 to 2% CO2reduction per technology
2020 max potential %CO2 red
~5% ~5-6% ~40%4 ~5-10% ~3-5%
Cost to ~$100/veh ~$500/veh2 ~$2,000-2,500/veh ~$100-200/veh ~$150-250/veh
6
consumer/car1
$100/vehor ~$20/%CO2
2$500/veh
or ~$100/%CO23
$2,000 2,500/vehor ~$50-60/%CO2
5$100 200/veh
or ~$20-40/%CO26
~$150-250/vehor ~$50/%CO2
1. Vehicle price increase before VAT 2. Cost for avg. weight reduction of 250 lbs 3. New materials show potential for weight reduction up to 37% at cost of $2,100, i.e. ~$160/%CO2 4. 30-35% for Diesel 5. Average for gasoline and diesel: individual technologies vary from $20 to $100+ per %CO2 6. Replacement of 5-speed automatic gearbox with dual clutch transmission on compact car Source: Expert interviews, BCG analysis
ICE technologies alone can reduce emissions by 40%At a cost of $50 per percentage of CO2 reduction: approx. $2,000 per vehicle to the consumer
Estimated 2020 costs to consumer per % of CO21 ($)
80
Cumulative cost increase per vehicle ($)20001957
1 732~$2,000 for 40% CO2 reduction
60 1500
1,732
1,522
1,222
$2,000 for 40% CO2 reduction
~$50 / %CO2
40 1000
20
0
500
0
397297
9733
Average 0 10% 10 20% 20 30% 30 40%
100
GDIEGRVVT/LDownsizing+turboEPSStart-stopLow friction
Optimized cooling
30200
Cumulative CO2 reduction (%)
400
7
Average incremental
cost per %CO2
0-10% 10-20% 20-30% 30-40%
$23 $44 $58 $70
1. Estimated 2020 price to customer before VAT. Assume 1% decrease in manufacturing costs from 2010 to 2020 and OEM mark-up ranging between 50 to 100%; shown for D segment in North America. Expect minor variances by segment and region
Performance-cost tradeoffs lead to potential range of technology options by segment
Estimated 2020 price to customer1 ($)2500
Base for segment D/E, SUV, PUP, etc.
$200 / % CO2 red
2000
Homogeneous Charge Combustion Ignition (HCCI)
$100 / %CO2 redFrom low to high-end
1500
Lean
Camless
Strong downsizing+turbo
Base Segment B/C
1000Multi-valve OHC
GDI
B A
$50 / %CO2 red
Ai /E h t500
Start-stop
Cylinder deactivation
EPS Low-friction
Stoechiometric GDI
VVL
VVTEGR
Mild downsizing+turbo
Base segment A
ControlArchitectureInjectionAir/Exhaust
8
0CO2 reduction (%)220151050
Optimized cooling
1. Estimated 2020 price to customer before VAT -- Assume 1% decrease in manufacturing costs from 2010 to 2020 and OEM mark-up ranging between 50 to 100% 2. Max plausible potential for CO2 reduction Source: Expert interviews, BCG analysis
Comparison of different technologiesNorth America 2020 view – average passenger car
Gasoline ICE Diesel Hybrid EVCNG
TailpipeCO Emissions
ICE
-40%
Diesel
-40%+
Hybrid
-65%
EV
-100%
CNG
-60%CO2 EmissionsReduction vs. '10 gasoline ICE
40% 40% 65% 100%60%
Price Increase vs.'10 vehicle price
$2,000 $4,000(Includes
$1,500 cost of post treatment)
$5,000 $10,000$5,000
Price per % CO2 reduction
$50 $100 $80 $100$85
9Source: BCG
BCG expects pack costs for OEMs will fall to ~$360-440 per kWh by 2020
Cell cost per kWh Pack cost per kWhCell cost per kWh Pack cost per kWh
$/kWh 1500 $/kWh 1500
-64%
1000
-60%650–790
1000
990–1,220
77%
500
270–330
46%31%
69% 500 360–440
48%
52%
23%
77%
054%31%
02020
48%
2009
23%
2009 2020Battery volume independent costsBattery volume dependent costs
10
Notes: Assumes annual production of 50,000 cells and 5,000 batteries in 2009and 73 million cells and 1.1 million batteries in 2020. Numbers are rounded.Source: BCG Batteries Tier 1 report January 2010 (BCG interviews, BCG analysis, Argonne); OEM interviews in Jan 2011
Agenda
Technology, costs and emissions
Consumer perspective
Market forecast and implications
Q&A
11
BCG conducted consumer research on green auto technologies in four regions
Customer survey in four key regionsQuestions on green automotive
technologies
Attitude toward different green automotive technologies
SampleMarket1
• Level of interest and knowledge• Reasons for interest in technology
USA 1,027
5 016 Willingness to pay for green technologies
• General willingness to pay more upfront or over the life of the vehicle
Europe 5,016(Top 5 countries1) 2
J 746 • Amount willing to pay more upfront• Amount willing to pay more over the life
of the vehicle• Payback expectationsChina
550(Top 20 cities2 vehicle
Japan 746Data from previous survey used for market modelMost recent survey not conducted due to tsunami
12
y pChina (Top 20 cities2, vehicle owners & intenders)
1. Germany, France, UK, Italy, Spain 2. Online car buyer survey: weighted to be representative of car buyer population and actual car price ranges by marketSource: BCG Consumer Barometer March 2011, N = 1,027 in US, N = 5,016 in Europe; BCG Automotive Survey of car owners and intenders in China N = 550
Car buyers are most interested in hybrid and electricChinese car buyers show a preference for electric
How do you view the USA EU Chi
Clean diesel14%
47%
yfollowing technologies? USA EU China
10%68%
8%77%
Rank
5
Rank
3
Rank
5
Compressed natural gas30%
20%50%
Clean diesel40%
47%
27%17%
56%
22%68%
8%14%
79%
15%77%
4
5
4
3
4
5
Biofuels / ethanol 29%
14%57%
30%16%
55%9%
12%80%3 5 3
Electric (battery plug-in)29%
7%64%
Hybrid19%
8%73%
24%7%
70%
15%10%
75%
5%3%
91%
6%11%
83%
2
1
2
1
1
2
13
( y p g )29%
Not interested Don’t understand Interested
24% 5%
Note: EU is weighed 28% Germany, 19% Italy, 10% Spain, 24% France and 20% UK by 2010 vehicle sales.Source: BCG Consumer Barometer March 2011, N = 1,027 in US, N = 5,016 in Europe; BCG Automotive Survey of car owners and intenders in China N = 550
6% of US and 9% of EU consumers are willing to pay more over the life of the vehicle for green cars; ~50% are unwilling
Would you purchase an environmentally
56%% respondents
environmentally friendly car if...
...you have to pay more over the life of the
USA EU China
44%48%
% respondents53%
% respondents
38%vehicle?
...you pay more upfront but make it back over time?
44%
13%1
34%
6%N/A: not willing to pay more upfront
Average upfront premium illi t ($)
4,600 3,900 0
9%
5,400 3,800 0
13%
5,800 3,700 0willing to pay ($)
Average premium willing to pay over vehicle life (%)
10% - - 11% - - 18% - -
14
Average required payback (years)
- 2.9 - - 3.0 - - 2.5 -
1. Step down by city size – 31% in top 10 cities, 23% in cities 11-20, 14% beyond top 20; weighted average of vehicle owners and intenders / first-time car buyersNote: EU is weighed 28% Germany, 19% Italy, 10% Spain, 24% France and 20% UK by 2010 vehicle sales.Source: BCG Consumer Barometer March 2011, N = 1,027 in US, N = 5,016 in Europe; BCG Automotive Survey of car owners and intenders in China N = 550
Green consumers and those seeking payback are willing to pay $4,000-$6,000 more upfront
How much extra would you be 'willing' to pay upfront USA EU China1
$6,000 16%$4,000 40%$2,000 32%
19%36%
30%
25%30%
25%
rs w
illin
g to
ov
er th
e lif
e ve
hicl
e
% respondents, of those willing to spend more over vehicle life
$20,000 or more 2%$15,000 0%$10,000 10%$6,000 16%
5%19%
5%4%
2%8%10%
25%
Con
sum
erpa
y m
ore
oof
the
Ø $4,600 Ø $5,400 Ø $5,800
48%$2,00035%$4,000
10%$6,000 10%37%
47% 56%27%
10%rs e
xpec
ting
k ov
er ti
me
% respondents, of those willing to spend more if paid back over time
$20,000 or more 1%$15,000 2%$10,000 3%
, 10%
1%1%
4%
1%2%3%
Con
sum
erpa
ybac
k
Ø $3,900 Ø $3,800 Ø $3,700
15
1. Weighted average of vehicle owners and intenders / first-time car buyersNote: EU is weighed 28% Germany, 19% Italy, 10% Spain, 24% France and 20% UK by 2010 vehicle sales.Source: BCG Consumer Barometer March 2011, N = 1,027 in US, N = 5,016 in Europe; BCG Automotive Survey of car owners and intenders in China N = 550
Green consumers are willing to pay 10-20% more over the life of the vehicle
How much would you be 'willing' to spend more
% respondents, of those willing to spend more over vehicle life
be willing to spend more over vehicle life USA EU China
r the
0-5%
18%5-10%
30%
pay
mor
e ov
erve
hicl
e
30%
28% 2%
23%
50%10-20%
2%20 30%ers
will
ing
to p
life
of th
e v
32%
5%
50%
6%
> 30% 0%
2%20-30%
Con
sum
e
5%
5% 6%
18%Ø 11%Ø 10% Ø 18%
16
Note: EU is weighed 28% Germany, 19% Italy, 10% Spain, 24% France and 20% UK by 2010 vehicle sales.Source: BCG Consumer Barometer March 2011, N = 1,027 in US, N = 5,016 in Europe; BCG Automotive Survey of car owners and intenders in China N = 550
But those seeking payback expect their upfront investment to be amortized within 2-3 years
After how many years do
time
After how many years do you expect a payback USA EU China1
% respondents, of those willing to spend more if paid back over time
3 years 26%
2 years 33%
A year maximum 12%
payb
ack
over
27%
31%
11%
35%
29%
21%
6 0%
5 years 15%
4 years 12%
3 years 26%
ers
expe
ctin
g
2%
14%
12%
27%
0%
6%
8%
35%
8 years or more 1%
7 years 0%
6 years 0%
Con
sum
e
1%
1%
2%
0%
0%
1%Ø 3.0Ø 2.9 Ø 2.5
17
1. Weighted average of vehicle owners and intenders / first-time car buyersNote: EU is weighed 28% Germany, 19% Italy, 10% Spain, 24% France and 20% UK by 2010 vehicle sales.Source: BCG Consumer Barometer March 2011, N = 1,027 in US, N = 5,016 in Europe; BCG Automotive Survey of car owners and intenders in China N = 550
Agenda
Technology, costs and emissions
Consumer perspective
Market forecast and implications
Q&A
18
Starting position: 2010 powertrain mixPercent of passenger car sales
US Europe Japan China
2 3 0
46
100
01
95
46
909995
54
90
US Europe Japan China
19Source: BCG analysis, Edmunds, ACEA, Autonews, The Daily Yoimuiri
GasolineDieselHEV
ICE will still dominate global passenger car sales in 2020Europe and China will be the largest markets for EVs in 2020
North
Powertrain projections (% of 2020 passenger car sales)
217
521
72 8 12
Japan
814
5
11
China
69
11 47
America Europe Total
9
89
6
212
29
2
18
2
1714 11 11 611
81
98
1
8588
HEVEV
29 28
82 81 848876 73
GasolineDieselCNGHEV
44 42
20
$180$130
Note: EV=Pure battery electric vehicle, RE (range extender), and plug-in HEV; HEV=Hybrid (mild and full, incl. diesel HEVs); CNG=compressed natural gas; gasoline includes micro hybrids and flex fuelSource: BCG analysis
$180$130 $130 $180 $180$130Oil price $130 $180
Greener scenarios could increase EV penetration by 6%Either through a combination of peak oil with incentives or lower battery costs
S iti it G & EV/RE/
Change Top 4 region penetration (percentage points)
Drivers Base Value
$130 / barrel
SensitivityValue
Gas & diesel HEV
EV/RE/PHEV
$180 / barrelOil pricess -3 0 0 4 2 6$130 / barrel
0
$180 / barrel
$2,000
Oil prices
EVincentivesid
ual l
ever
s
0.0
-3.0 0.4
-2.2
2.6
2.2
$400 / kWh $300 / kWhBattery costsIndi
vi
-0.6 -1.7 2.4
$130 / barrel0
$130 / b l
$180 / barrel$2,000
$180ombi
ned
cena
rios
Oil price +
Oil price + EV incentives -3 -3 6
21Source:: BCG
$130 / barrel$400 / kWh
$180$300 / kWhC
o sc Oil price +battery costs -4 -2 6
China will be a major wildcard for EV salesMarket success will be highly dependent on continued government support
AutomotiveOEMs2
Batterymanufacturers
Customers
• Tax schemes favoring e-cars• Management rules on qualified new
energy vehicle manufacturers and market access
Chinese Government goals(draft plan)
• 2015: Parc of 500k EVs
• Local favorable policy to support battery manufacturers
• Central government subsidy scheme expanded to 25 cities
– Incentives vary by battery size; RMB 3,000 per kWh up to RMB 60,0001
Coordination with industry
• 2020: Parc of 5M EVs • Additional local government incentives of up to RMB60,0001
• State Grid of China with plans• Coordination with industry• R&D funding (100Bn RMB for EV R&D 2006-10)
R&D Electricityprovider
• State Grid of China with plans to build ~ 2,300 charging & change stations and 220,000 charging poles by 2015
22
1. Most incentives are for lower values2. Financial support for OEMs is strict: FAW, SAIC and Yutong were granted support but budget unknown, DFM got 50Mn Rmb interest discount, Chery got 10Mn Rmb, Source: BCG analysis, press clippings, government websites
Government established SASAC alliance – a cross functional initiative of OEMs, battery manufacturers and utilities
OEMs should meet 2020 standards through ICE advancementMeeting 2050 ambitions will require electrification
ChinaNorth America Europe Japan
CO2 emissions (g/km)350
300
250
200
150
Expected2020 tailpipe
standard
100
50 2050 well-to-wheelambition2
02050
EV only12020 Base
2010
Implied ICE share 97% 91% 0%
2050 EV only1
2020 Base
2010
100% 75% 0%
2050 EV only1
2020 Base
2010 2050 EV only1
2020 Base
2010
90% 82% 0% 100% 89% 0%
23
1. 2050 power mix , assumes mix per region changes at same rate between 2035 and 2050 as between 2020 and 2035 2. US and Europe have stated ambitions to reduce GHGemissions by 90% from 1990 levelsSource: BCG analysis
Tank-to-wheel (tailpipe)Well-to-tank
We can imagine at least three different paths forwardHigh degree of uncertainty
The Pragmatic Path The Breakthrough Path The Green Path
• Energy independence and economic considerations
• Battery technology improves significantly to cost $250 per
• Oil prices surge to over $250 per barrel
prevail
• Well-to-wheel CO2 emissions drive environmental decisions
Kwh or below
• Oil prices remain in line with market expectations of $130 per barrel
• Governments invest in EVsand clean sources of electricity
• A mix of small-model EVs anddecisions
• Oil prices remain at $100 per barrel or below
Ad anced ICEs and h brids
per barrel
• EVs including plug-ins for longer ranges ultimately take a significant share of the market (10 30% b 2020)
A mix of small model EVs and larger-model HEVs could capture up to a third of the market by 2020
If prices deco ple from oil
24
• Advanced ICEs and hybrids dominate; moderate EVshare as hedge against rising oil prices
market (10-30% by 2020) • If prices decouple from oil, CNG/LPG can represent a larger share of the ICE market
Navigating among possible pathsImplications for OEMs, suppliers and regulators
All market participants have to prepare for and retain the flexibility to switch among the different paths the industry could take
OEMs have to learn to manage more complex and dynamic technology portfolios• How to reduce variance and complexity in mature technologies?• Where to partner and where to develop proprietary intellectual property?• When and where to invest in manufacturing capacity for batteries and e-motors?• What go-to-market model to choose for e-cars – basic (car only), extended (services, infrastructure)?
S li h i h i h l f liSuppliers have to review their current technology portfolios• How to be best positioned for new growth areas (advanced ICE, EV and HEV components)?• What is the value proposition compared to OEMs and new players (e.g. chemical companies, start-ups)?
R l t h t b l d d d t i t f t h l iRegulators have to be clear on roadmap and reduce uncertainty for new technologies• How to weigh goals of emissions reduction, energy independence and support of domestic industries?• How to bring, and sustain, new technologies at sufficient scale to lower costs?• How to best incentivize desired consumer behavior?
25
Agenda
Technology, costs and emissions
Consumer perspective
Market forecast and implications
Q&A
26
Appendix
27
Definitions
Internal-Combustion-Engine Vehicles (ICEs)• Fueled by gasoline diesel compressed natural gas or biofuelsFueled by gasoline, diesel, compressed natural gas, or biofuels• Includes micro-hybrids (i.e. simple start-stop automatic)
Hybrid Electric Vehicles (HEVs)• Have both an internal-combustion engine and an electric motor but no external charging. • Includes mild (e.g. Honda Insight) and full hybrids (e.g. Toyota Prius)
El t i V hi l (EV )Electric Vehicles (EVs) • Have an electric motor and can be charged externally• Includes pure battery, range-extended (RE), and plug-in hybrid electric vehicles (PHEVs)
28
Glossary
Abbreviation Description
NEDC Cycle
CAFE Cycle
New European Driving Cycle
Corporate Average Fuel Economy Cycle
EPS
VVT/L
EGR
Electric power steering
Variable valve timing / variable valve lift
Exhaust gas recirculationEGR
GDI
Multi-valve OHC
Exhaust gas recirculation
Gasoline direct injection
Multi-valve overhead camshaft
CNG
LPG
Compressed natural gas
Liquefied petroleum gas
29
Governments using taxes, incentives to drive consumer uptake of EVs, hybrids; but many set to expire before 2020
Diesel, hybrids, AFV tax credit up to $3.4k (reduced: up to $4k)
2010 2011 2012 2013 2014 2015 20162009 ...2020
Transferability of credits across model years & companiesy p ( p )
EV tax credit up to $7.5k (for first 200,000 vehicles per OEM); addtl. state-level incentives1
Gas guzzler tax (not applicable to minivans, trucks and SUVs) up to $8k
Not meeting CAFE standards fines - $5 per 0.1 mpg/car
USFuel cell LD & HD truck tax credit up to $8k
Off-cycle proven CO2 reductions
Plug-in hybrids and EV incentives – varies by country3
Early adoption of EU emissions standards incentives – varies by countryEach vehicle sold must comply with emissions policy to be offered (except CO2 which is fleet-wide target)
Upto 1.2 mpg FFV credit2 & 0 g/mi for EV/PHEV/FCV electric portion of emissions
Transferability of credits between companies
Home AF charging station tax credit Home e-charging station
Fines for exceeding CO2 standards – up € 95 per CO2 g / km car
Tax/price reduction if meeting CO2 and fuel economy standards
EU
CO2 tax / incentives – varies by country
CO2 super credits for low emissions vehiclesUp to 7 CO2 g/km CO2 reduction technologies credit
Transferability of credits between companies
Not meeting emissions standards = no circulationHybrids and EV tax exempted
Vehicles must comply with fuel economy standards to be offered (domestic vehicles only)
Larger taxes for larger engines – up to 40% of vehicle value
Hybrids and EV incentives up to $8k
Japan
China
30
Consumer Disincentive
ConsumerIncentive
1. US states offer multiple financial and non-financial incentives for electric and hybrid vehicles 2. Declines from 2014 to 2020 by 0.2 mpg/yr 3. Example: UK up to £ 5k for vehicles with emissions below 75 CO2 g/km, currently only hybrid and EVs qualify for this grantSource: ICCT, EPA, The Motor Industry of Japan 2010, EU Commission, BCG analysis
Hybrids and EV incentives – up to $8k
OEMDisincentive
OEMIncentive