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How Not to Get Shocked, Jolted and Fried by the Coming Shift in Automotive Power Sources

Analysis developed by the team at Paul Eichenberg Strategic Consulting

October 5, 2023

Purpose and confidentiality statement:

This document is prepared for potential clients of Eichenberg Consulting, LLC. The contents of this document are for informational purposes only and shall not be considered consulting advice. The recipient of this document shall not disclose to anyone outside of his/her company without the consent of Eichenberg Consulting, LLC.

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Megatrends shaping auto

2

Vehicle Electrification

Connected Cars

Autonomous Vehicles

Shared Mobility

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Time horizon for the presentation

3

Planning focused on short-term operational budgets used to guide the activities of the day-to-day operations and functions of the organization.

Description

12-18 Months

8-12 Years

3-5 Years

Annual sales plan - targets
Operational budgets
Department budgets
Detailed tasks to get done next year

Focuses on a three-to-five-year growth agenda for the enterprise used to highlight significant capital investments required and other financial needs of the enterprise.

Long-term vision for the company is focused on investment and growth, aligning resources around “big bets” or higher growth transformative opportunities.

Strategic Planning

Operational Planning

Business Planning

3-5 years sales/revenue plan
Financial Planning
Capital Planning
HR Planning

Vision & Mission
Strategic Plan
Portfolio Analysis
Future Needs/Gap Analysis
Valuation Analysis

Activities

Source: Desk research; Eichenberg

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New vehicle architectures

4

Source: Expert Interviews, OEM websites

Micro HEV (Stop/Start)	Hybrid Electric Vehicle (HEV)		Plug-In Hybrid Electric Vehicle (PHEV)	Battery Electric Vehicle (BEV)
	Mid HEV (MHEV)	Full HEV (FHEV)

ELECTRIFICATION

DISRUPTION

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Disruptions Impact

5

Mechanical – Today

Internal Combustion

Engine

Transmission

Fuel/Air/Exhaust

System

Electric Drive Motor

Electric Charger

Electrical – Tomorrow

Electric Battery

Source: Desk research; Eichenberg

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Disruptions Impact

6

More than 125 moving parts vs. less than 25 moving parts

ICE – Cadillac Escalade

BEV – Tesla Model S

vs.

Source: Desk research; Eichenberg

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Disruptions Impact

7

2020 Nisan Leaf SV

Vehicle weight: 1,588kg

EV Drive

Power Electronics

Battery

Transmission

Exhaust

Engine

2020 Grand Cherokee

3.6-litre Pentastar V6

Vehicle weight: 2,153kg

550 Parts

300 Parts

vs.

Source: Desk research; Eichenberg

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Table of contents

01

Overview of automotive electrification market forecasts, trends, and drivers

02

Impact of Disruption

03

Electrification opportunity example – battery pack

04

05

Inflation Reduction Act (IRA) of 2022

Automotive Fastener Impact

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Overview of automotive electrification market forecasts, trends, and drivers

01

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Accelerating global legislation to ban gas- and diesel-vehicles

10

Source: Paul Eichenberg global research, ICCT, Expert Interviews

Notes:

1. Proposed level to be incorporated between 2025-30 2. Japan meets this level today 3. Stated target for major cities, not nationwide

Europe

Japan

China

USA

Corporate CO2 emissions target (g/km)

Fuel efficiency target (km/l)

Corporate CO2 emissions target (g/km)
Potential for fleet ZEV credits like CARB

CAFÉ (mpg)
GHG (g/mi)
CARB (ZEV Credits)

2012

2030

2020

2025

-47%

2013

2020

2025

95³

117³

-44%

2025

2013

2020

-46%

2013

2025

2020

TBD

122²

-32%

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Accelerating global legislation to ban gas- and diesel-vehicles

11

Source: Paul Eichenberg global research, ICCT, Expert Interviews

Notes:

1. Proposed level to be incorporated between 2025-30 2. Japan meets this level today 3. Stated target for major cities, not nationwide

Europe

Japan

China

USA

Corporate CO2 emissions target (g/km)

Fuel efficiency target (km/l)

Corporate CO2 emissions target (g/km)
Potential for fleet ZEV credits like CARB

CAFÉ (mpg)
GHG (g/mi)
CARB (ZEV Credits)

2012

2030

2020

2025

-47%

117³

2013

2020

2025

95³

-44%

149

2013

2020

2025

149

-26%

122²

2013

2020

2025

TBD

-32%

Trump Proposal of August 2018

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Eichenberg Insider Forecast methodology – compliance based

12

The EV model solves for GHG performance be leveraging both conventional powertrains and EV/PHEV powertrains

Source: Eichenberg EV Insider model

Eichenberg, https://www.eea.europa.eu/data-and-maps/data/co2-cars-emission-13#tab-figures-produced

NOTE: g/km performance does not include “eco-innovation” technology credits (e.g. LED lights)

Assumed GHG performance (g/km)

81g/km - 2025

59g/km - 2030

0

95g/km - 2021

130g/km - 2018

Petrol (4+-cyl)

Petrol (4-cyl)

HEV

Diesel

Petrol (3-cyl)

mHEV

PHEV

EV

0

123

1

2

Key steps for analyses

Solve for corporate avg. GHG performance of conventional powertrains including HEV, mHEV, diesel, and petrol engines (based on the # of cylinders) based on I.H.S. portion forecasts through 2030
Solve for GHG regulations by leveraging EV/PHEV volume to fill the GHG gap between conventional and target

1

2

Conventional powertrains

Super Credit vehicle - <50g/km

Solve for GHG�compliance

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N. America – GHG/CAFE/ZEV regulations

To book end scenarios, we evaluate three scenarios to capture the difference in the three administrations and the impact on ZEV policies – to model all scenarios, we identify g/mi targets through 2030 for comparison purposes

13

0% YoY from 2021-2026
Continues through 2030

Proposed

(Trump)

1

-4.4% YoY from 2017-2025
Continues through 2030

Incumbent (Obama)

2

-8.2% YoY from 2021-2030
Achieves 107g/mi by 2030
Achieves 47g/mi (100% ZEV) by 2035

New Green Deal

(Biden)

3

Source: Eichenberg

U.S. light duty vehicle standards – PC+LT combined (g/mi)

3 scenarios for N. America

Current Legislative Direction

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USMCA – EV/PHEV model forecast

In Scenario #1 (proposed – Trump), EV/PHEV will not be required through 2030 – even with ~22% HEV/mHEV in 2030, the fleet exceeds minimum regulations by ~4%

14

If Trump’s “preferred alternative” is implemented, OEM’s will have very little incentives to implement EV/PHEV’s at scale
By 2030, the U.S. automotive industry could be significantly different from the rest of the world in terms of GHG reduction technologies

15.8

15.3

15.1

15.3

15.4

15.6

15.8

16.0

16.4

16.5

16.2

0.3%

1.3%

3.1%

0.6%

0.5%

0.2%

0.0%

EV/PHEV % of total

244

235

227

241

240

Corporate avg. GHG regulation (g/mi)

-0.6%

-2.4%

-4.9%

+1.2%

+1.9%

+2.9%

+3.3%

+3.6%

+4.2%

+4.5%

+4.1%

+4.0%

+4.3%

GHG gap to target without EV/PHEV (%)

Source: Eichenberg, EV Model

Assumes 10g/mi off-cycle credits and 18g/mi(PC)/24g/mi (LT) A/C efficiency credits from unadjusted GHG performance
EV/PHEV ratio is 2.5 in 2019 and reduces to 1.5 (PC) and 1.2 (LT) in 2030

Light vehicle production in USMCA – PC+LT combined (Mill)

Proposed

(Trump)

1

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USMCA – EV/PHEV model forecast

In Scenario #2 (Incumbent – Obama), ~45% EV/PHEV’s (7.2 Mill) would be required by 2030

15

The incumbent regulations goes through 2025 resulting in ~28% EV/PHEV’s
Assuming the same -4.4% YoY reduction through 2030, ~45% results

15.8

15.3

15.1

15.3

15.4

15.6

15.8

16.0

16.4

16.5

16.2

EV/PHEV % of total

Corporate avg. GHG regulation (g/mi)

GHG gap to target without EV/PHEV (%)

Light vehicle production in USMCA – PC+LT combined (Mill)

Incumbent (Obama)

2

Source: Eichenberg, EV Model

Assumes 10g/mi off-cycle credits and 18g/mi(PC)/24g/mi (LT) A/C efficiency credits from unadjusted GHG performance
EV/PHEV ratio is 2.5 in 2019 and reduces to 1.5 (PC) and 1.2 (LT) in 2030

147

-38%

42%

1%

240

-2%

2%

230

-4%

4%

222

-6%

9%

207

-12%

16%

198

-16%

20%

188

-19%

24%

179

-23%

28%

170

-26%

31%

164

-29%

34%

158

-32%

38%

152

-35%

142

-40%

45%

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USMCA – EV/PHEV model forecast

In Scenario #3 (Green New Deal – Biden), ~60% EV/PHEV’s (9.6 Mill) would be required by 2030 – this represents current legislative direction

16

A 60% EV/PHEV penetration in 2030 could lead to a 100% zero emission vehicle status by 2035 (Buttigieg’s campaign statement and likely Biden administration outcome)
100% zero emission vehicle status by 2035 is current UK and California legislation

0%

1%

3%

7%

14%

19%

21%

29%

35%

41%

47%

53%

60%

244

235

227

215

203

191

179

167

155

143

131

119

107

-1%

-2%

-5%

-10%

-14%

-18%

-23%

-28%

-33%

-38%

-43%

-49%

-54%

Source: Eichenberg EV Model

Assumes 10g/mi off-cycle credits and 18g/mi(PC)/24g/mi (LT) A/C efficiency credits from unadjusted GHG performance
EV/PHEV ratio is 2.5 in 2019 and reduces to 1.5 (PC) and 1.2 (LT) in 2030

Light vehicle production in USMCA – PC+LT combined (Mill)

EV/PHEV % of total

Corporate avg. GHG regulation (g/mi)

GHG gap to target without EV/PHEV (%)

New Green Deal

(Biden)

3

15.8

15.3

15.1

15.3

15.4

15.6

15.8

16.0

16.4

16.5

16.2

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USMCA – EV/PHEV model forecast

When comparing the 3 scenarios, scenario #2 (incumbent – Obama) is aligned with global trends @ ~45% EV/PHEV’s by 2030

17

U.S. GHG regulations by scenario (2030)

# of EV/PHEV’s in 2030 (Mill)

PHEV

EV

Source: Eichenberg, EV Model

Proposed

(Trump)

1

Incumbent (Obama)

2

New Green Deal

(Biden)

3

This model suggests that a significant acceleration of the EV/PHEV’s adoption, which in line with recent announcements in the UK, European Union, and China, thus displaying alignment with these global trends

60%

45%

0%

% of total sales in 2030

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Zero Emission Vehicle (ZEV) mandates

18

Many governments are mandating ZEV at the national-level, state-level, & city-level

New ZEV sales mandate (%)

Timeline

‘25

‘30

‘35

‘40

‘50

National

level

Province/

State level

Asia

Europe

N. America

Timeline

‘30

City

level

Asia

Europe

N. America

S. America

Fleet ZEV mandate (%)

Source: Expert interviews; Eichenberg

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Eichenberg EV Insider Global Forecast Model*

19

3

‘23

3

‘24

3

‘25

3

‘26

3

‘27

3

‘28

3

‘29

3

‘30

84

87

90

92

94

96

EV

PHEV

HEV

mHEV

ICE

EV/PHEV%

Electrified% �(EV/PHEV/HEV/mHEV

Global passenger car market (Mill)^1,2

17%

19%

25%

27%

29%

32%

33%

40%

38%

46%

54%

59%

63%

65%

66%

70%

1 All regions are passenger cars only except N.America. N.America market includes passenger cars + light trucks 2 Volume weighted averaging of the 3 major markets (China, Europe, N.America) are projected onto Japan/Korea and half the %electrification on the RoW (S.Asia, S.America, Middle East, Africa) 3 Includes engine start/stop (ESS) *Adaptation using compliance model rates with updated Nov’22 S&P forecast

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Inflation Reduction Act (IRA) of 2022

02

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Inflation Reduction Act (IRA) �of 2022

Overview

EV adoption tailwinds (passenger & commercial vehicles) driven by stable incentives beyond 2030

Allows for EV purchase price parity (as compared to the ICE) as soon as mid-decade...

...provided that automakers can rapidly regionalize supply chains to qualify for incentives

Will re-make how EVs are priced — new sales, leases, and used vehicles — as well as which vehicle segments and models' automakers prioritize

Improves the business cases for many critical minerals and EV charging projects

Reshapes supply strategies (e.g., network design, make/buy) and value pools across the battery ecosystem

21

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IRA Impact to the �Automotive Industry

Overview

Fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40 percent by 2030

Objective

Provides consumer tax credit for lower/middle income individuals to buy new and used clean vehicles. Additionally, incentivizes the sale of clean heavy- duty vehicles and promotes green hydrogen

Key pillars relevant to auto

22

Act is expected to be in effect at least through 2032 and is to be largely paid for through revenue increases in corporate tax rate

Offers tax credits and grants to build new or retool EV manufacturing facilities as well as new EV charging and/or fuel cell stations

Incentivizes domestic content and seeks to decouple US EV and battery sectors from supply chains led by ‘foreign entities of concern’

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The Act provides both supply and demand incentives in order to drive US domestic EV growth

Act highlights the national interest to compete on the scale with foreign entities of concern such as China

Passenger vehicles incentives: Up to $7,500 for new purchases, up to $4,000 for used

Commercial vehicles (incl off-highway) incentives: $40,000 for new purchases

Supply chain and infrastructure incentives (capex and opex): Over $30B available—as grants & loans for EV manufacturing & charging, and as production tax credits for battery components & critical minerals

Disqualifies vehicles that are imported or built with battery materials sourced from ‘foreign entities of concern’ (namely, China + Russia) Increases domestic content requirements over time (+10% per year)

Takes effect in 2023 and is in force at least through end of 2032, supporting long-term demand generation and localization

23

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An introduction to the IRA Two-Part clean vehicle credit

NOTE ON FURTHER GOVERNMENT ACTION TAKEN

The US Treasury and Energy Departments issued implementing guidance on the day the President signed the IRA into law, limiting vehicles eligible for the EV tax credit in the remainder of 2022.

Effective immediately, only EVs whose final assembly is conducted in North America are eligible for the existing credit. The result is that far fewer vehicles sold from August 17 to the end of calendar year 2022 will be eligible for the existing credit.

For OEMs like VW, Mercedes, BMW, Toyota, Hyundai and Nissan which rely heavily on US based sales – expect a shift in strategy from Europe and Asia based supply chains to US based localization.

New clean vehicle credit: EV manufacturers and suppliers to benefit

Key provision of the IRA is to expand tax credits for electric vehicles (EVs) by expanded tax credits of up to $7,500 for purchasers of certain new EVs

Two-part clean vehicle credit

The IRA establishes new clean vehicle credits, where eligible battery-powered EVs must meet critical mineral and battery component content and other requirements to qualify for credits of up to $7,500 per vehicle. Vehicles that meet one of the requirements, but not both, are eligible for a credit of $3,750.

24

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Two-Part Credit - Details

Certain materials used in a vehicle’s batteries must be extracted, processed, manufactured and/or assembled in the US or in certain US-allied countries

YEAR	Battery Minerals�(% “domestic content”)	Battery Components �(% “domestic content”)
2023	40%	50%
2024	50%	60%
2025	60%	60%
2026	70%	70%
2027	80%	80%
2028	80%	90%
2029 and beyond	80%	100%

To qualify for the first $3,750 credit, a percentage of the value of applicable critical minerals contained in a vehicle’s batteries must be extracted or processed in the US or in a country with which the US has a free trade agreement or must have been recycled in North America. Applicable percentages increase from 40 percent prior to 2024, to 80 percent after 2026. Qualifying critical minerals include aluminum, cobalt, lithium, nickel, and graphite, among others

To qualify for the second $3,750 credit, a certain percentage of the value of the battery components in an EV must be manufactured or assembled in North America; applicable percentages increase from 50 percent prior to 2024 to 100 percent after 2028. Separators are included in this category

Further, after calendar year 2024, a clean vehicle will not qualify for the tax credit if it contains any critical minerals that were “extracted, processed, or recycled by a foreign entity of concern” – including companies owned by, controlled by or subject to the jurisdiction of the government of the People’s Republic of China and Russia

After December 31, 2023, a vehicle may not qualify for the credit if any “components” contained in its battery are “manufactured or assembled by a foreign entity of concern”

25

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IRA – Impact

Accelerates EV adoption by improving total cost of ownership for US based content vehicles

Drives subtle vehicle design changes, too (e.g., higher ride height to classify as an SUV) - Ties incentives to regionalization of EV manufacturing & battery material production

Accelerates build out of N. American infrastructure and regional circular economy; Nearly 100% of battery supply chains route thru China today, which will take years to decouple; Also limits growth of Chinese battery and EV players with US aspirations Provides longer-term certainty that makes business cases for new production projects more attractive to investors

Opens big opportunities, in a short window, for players participating in value chain where N. America has limited existing production capacity, e.g., in critical minerals processing

No longer penalizes automakers that were first to market with plug-ins - Prioritizes EV affordability by focusing on passenger cars below $55K and SUV/ Trucks below $80K (MSRP). Furthermore, incentivizes emerging used �EV market

IRA will lead to additional PHEV/BEV share by 2030 vs no-incentive case - Expands OEM participation by eliminating volume cap (previously 200k �units sold)

26

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Impact of Disruption

03

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Traditional powertrain component market declines

28

Powertrain

Transmission

Engine

Traditional powertrain components

Casting

Forging/Billet

Gasket/hoses

Piston head
Connecting rod
Crankshaft
Camshaft
Valve lifter
Exhaust/intake valve

Planetary gear set
Ring
Shaft
Spring assembly
Crown
Gears

Block
Cylinder head
Cam cover
Oil pan
Cover
Water pump housing

Main housing
Rear housing
Hydraulic block
Oil pan

Cylinder head gasket
Crankshaft seal
Intake manifold seal
Exhaust manifold seal

Axle seal
Parking interlock seal
Oil pump seal

In addition to forgings, machined from billet, castings, and gaskets component, other types such as bearings, front end accessory drive (FEAD), fuel injection, control module, stampings, and engine mounts can expected to be disrupted by vehicle electrification

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Traditional powertrain component market declines

29

Powertrain

Transmission

Engine

Hybrid Electric

(Chevrolet Volt example)

Traditional

(Jeep Grand Cherokee example)

Full Electric

(Nissan Leaf example)

V6 engine

8-spd Automatic Transmission

I4 engine

Hybrid powersplit transmission

Motor/gearbox assembly

$400 billion global market

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Insights – electrification components requiring forge/machining

As autos shift from traditional transmissions to electrified transmissions, the value of forged components could drop by as much as ~75%

30

*Gearbox and Motor

Sources: Eichenberg Research, OEM websites

Example Vehicle

Transmission Type

# of Forgings or Machined parts

9-speed Automatic

7-speed DCT

Powersplit HEV

Continuous Variable

Electric Vehicle

~36

~15

~12

~9*

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Insights – electrification components requiring forge/machining

9AT/FWD based: Contains 4 planetary gear sets, several spring assemblies, crowns, rings, and an internal differential

31

Sources: Eichenberg Research, OEM websites

PGS Assm.

Planet gears

Sun gears

PGS Rings

Shafts

Spring assm. /crowns

Differential

PGS #4 (140x130mm)

Pinion gear 4x (~25mm)

Lay shaft drive gear (132mm)

Drive �(160x130mm)

2^nd crown �(125mm)

Diff ring �(215mm)

PGS #3

(172mm)

Pinion gear 4x (~25mm)

Axle link �(62x77mm)

Retainer �(156mm)

Diff axle (18x113mm)

PGS #2

(158mm)

Pinion gear 4x (~25mm)

Sun gear

(52mm)

PGS Ring �(181mm)

Input shaft (38x315mm)

2^nd spring assm. (170mm)

Side gear �2x (74mm)

PGS #1

(146mm)

Pinion gear 4x (~25mm)

Sun gear �(57x72mm)

PGS Ring �(200mm)

Oil pump shaft (116x91mm)

Spring assm. (170x63mm)

Bevel �2x (55mm)

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Insights – electrification components requiring forge/machining

We use three high volume engines as examples for deep dive analysis to understand forging/billet opportunities and market impact

32

Sources: Eichenberg Research, OEM websites

2014 Chevrolet Silverado

2017 Chrysler Pacifica

2016 Honda Civic

5.3L EcoTec3 V8 w/ 8AT

3.6L Pentastar V6 w/ 9AT

1.5L I4 Turbo w/ CVT

GM

FCA

Honda

4-cylinder

6-cylinder

8-cylinder

48 forging components

71 forging components

70 forging components

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Insights – electrification components requiring forge/machining

Engine component analysis for 6-cylinder - 2017 Chrysler Pacifica – 3.6L V6

33

Sources: Eichenberg Research, OEM websites

Forging/Billet

Piston (6x)�(95x53mm

Intake valve (12x)�(39x109mm)

Valve lifters (24x)�(12x43mm)

Cam sprocket (4x)�(81x45mm)

Crankshaft�(175x480mm)

Crankshaft (4x)�(45x380mm)

Pulley hub�(46x57mm)

Crankshaft sprocket�(67x46mm)

Exhaust valve (12x)�(30x112mm)

Connecting rod (6x)�(86x213mm)

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Excess capacity at powertrain suppliers – forge/machining

$325/vehicle of the powertrain forging $ content may be eliminated in the long term in lieu of EV – $8 Billion powertrain forging market reduction by 2030

34

NOTE: Traditional powertrain averages 9AT and 8AT; V8 and V6, Hybrid averages parallel and powersplit; V6 and I4

Sources: Eichenberg Model & Analysis

Short term

Mid term

Long term

Traditional powertrain

Hybrid

Full EV

Forging component $ value per engine+ transmission

(Full value: forged, machined, heat treated)

Powertrain Forgings

Excess capacity

$75 (-20%)

ICE downsizing/turbocharging occurs in the short term to boost fuel economy
Smaller I4 engines w/ N.A. Atkinson Cycle in the mid term to assist powersplit HEV motors
Transmission component excess manufacturing capacity is shifting to EV/HEV shafts/rotors among suppliers, evident by numerous R&D projects announced in 2017
Excess capacity is largely the 4 planetary gear sets and its ~18 pinion and sun gears in 8-10AT
Other than shafts/rotors, the differential assembly integrated within the EV motor/gearbox or Powersplit transmission will remain steady

Engine

Transmission

$400

$325

$75

Excess capacity:

$325 (-80%)

Non traditional

Power electronics/

battery pack content grows

ICE’s are eliminated in the long term as drastic industry shift to power electronics (inverters, DC/DC converters, chargers) and battery packs

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Excess capacity increases at powertrain suppliers - castings

Castings represent the largest portion by $ content for internal combustion engines ranging from $400-$650 per engine

35

Sources: Eichenberg Model & Analysis

Example Vehicle

Engine used for analysis

# of casting components

$ value per engine (fully machined/)

GM 5.3L EcoTec3 V8

35

$650

FCA 3.6L Pentastar V6

33

$550

GM 1.5L Voltec I4

V8

V6

I4

26

$400

Engine castings used iron-based alloys for its high strength, high wear resistance, and low cost, but many engine castings today use aluminum-based alloys for weight reduction

Casting components (for V6 engine):

Cylinder heads (x2)
Cam cover (x2)
Engine block
Front cover
Upper oil pan
Camshaft support (x16)
Lower oil pan
Fuel rail
Water pump housing
Side housing
Crankshaft caps (x4)
Belt tensioner support
Belt tensioner

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Excess capacity increases at powertrain suppliers

$460/vehicle of the powertrain casting $ content may be eliminated in the long term in lieu of EV – potential for more than a $11 billion powertrain casting market reduction by 2030

36

Sources: Eichenberg Model & Analysis

Short term

Mid term

Long term

Traditional powertrain

Hybrid

Full EV

Casting component $ value per powertrain

(Full value: casting, machined)

$650

$590

$190

Powertrain Castings

Excess capacity

$60 (-9%)

Excess capacity:

$460 (-71%)

EV motor/gear box have similar casting $ content as automatic transmissions but have different components:

EV motor/gearbox: Motor housing, gearbox housing, water jacket housing, cover
Auto Trans: Housing, torque converter, valve body/housing, oil pump, oil pan

Power electronics components also have casting content will range from $75-90 per vehicle:

Inverter
DC/DC converter
Charger (only PHEV/EV – not HEV)

Engine

Transmission

Power electronics

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Examples of new and lost plastic content/parts from electrification

37

Other additions/�subtractions (net)

Engine

Body frame

Golf ICE plastic

Air System (full)

Transmission

Bumpers

Fuel system (full)

xEV system

Cooling sys (water)

8

e-Golf plastic

Air Intake Manifold

Air Systems

2-6 kg per vehicle

Engine Components

2-6 kg per vehicle

Engine Cover

Selected plastic additions and subtractions

(Example 2015 Golf ICE vs. 2015 e-Golf EV, kg)

Potential impact of shift from ICE to EV ~30 kg per vehicle

Examples of key plastics systems to be eliminated with the ICE

Potential impact of elimination of ICE is ~750 KT of annual plastic resin production by 2030

Source; A2Mac1; Eichenberg

Fuel Systems

10-17 kg per vehicle

Fuel Tank

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Electrification opportunity example – battery pack

04

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Optimization is just starting – �some more than others

39

Modular

Scalable to accommodate various body styles, battery sizes (e.g., GM Ultium can be 50-200 kWh)
Simplified assembly
Fewer variants
Fast model launch
Flexibility in cell type, layout

Integration

Skateboard integrated into chassis (structural)
Power electronics integrated with e-motor (shared housing, thermal management
Efficient packaging

Optimized

Weight reduction, complexity reduction underway
Battery volume less critical
Low center of gravity
Wiring to decline
2-motor/2-axle for max regeneration
Fewer permutations (e.g., GM >500 to 19)

High volume

>3 m units p.a. (e.g., MEB)
Cost reduction is key
Platforms could last a decade
Possibly shared among OEMs

Source: Interviews;; VW; Desk research; Eichenberg

Jaguar Land Rover's new electric vehicle platform

Future EV designs are converging around “skateboard” platforms, that are typically modular, optimized, integrated, high volume; These should be high priority targets

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Nissan leaf (2018)

The Nissan Leaf platform (both Nissan Leaf and Renault Zoe) sold ~150k units globally in 2019, a top selling EV model

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Battery

EV Drive

Power Electronics

HVAC/Cooling

2018 Nisan Leaf SV

Vehicle weight: 1,588kg

This 40kWh battery pack consists of 192 56.3Ah pouch cells contained within 24 modules (8 cells/module)

This vehicle is FWD with one 3-phase synchronous motor/generator unit with a single-speed gearbox

2^nd generation inverter is smaller and more compact – converts battery DC to motor AC during acceleration and vice-versa during regeneration

Nissan Leaf leverages heat pump technology which leverages the A/C system to heat the cabin in order to improve heating efficiency

Renault Zoe EV (Europe)

Source: Desk research; Eichenberg

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Nissan leaf (2018)

This analysis targets structures at the battery pack and sub-pack levels – these structural components represent ~110kg for the Nissan Leaf

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2018 Nisan Leaf SV

Vehicle weight: 1,588kg

HV cables

Power electronics

Battery modules

Battery sub-pack plates

HVAC/Cooling

EV Drive System

Pack electrical

Pack structures

Systems

EV specific systems by weight (kg)

Priorities for Light Weighting

Battery

Cells

Sub-pack

Pack

We focused on enclosures, structure components and brackets as there is substantial materials (~110kg) which are either currently the focus of further light weighting

The EV specific systems is ~29% of the total vehicle weight (1,588kg)

Other EV systems

Total weight of EV specific systems: 457kg

Source: Desk research; Eichenberg

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Nissan leaf (2018)

The battery pack contains 3 “sub-packs” where several steel plates support the 24 modules – sub-pack steel plates are ~50kg

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2018 Nisan Leaf SV

Battery packs

Battery sub-pack (x3)

2 x subpack #1

1 x subpack #2

Modules (x24)

Pouch cell (x192)

Material

# of piece per vehicle

Weight per piece (kg)

Total weight per vehicle (kg)

Structural components in the sub-pack

Subpack #1 –

base plate

Subpack #1 –

Lower support

Subpack #1 –

Upper support

Subpack #2 –

Front plate

Subpack #2 –

Rear plate

Steel

8.92

3.26

3.25

2.56

2.81

2

1

31.67

6.52

6.50

2.56

2.81

TOTAL: 50.0kg

Source: Desk research; Eichenberg

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Nissan leaf (2018)

The Nissan Leaf battery pack (not including battery modules) has ~59kg of steel for enclosures and brackets

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Nissan Leaf SV battery pack

Total weight: 295kg

Weight (kg)

Battery pack

components

44.5

Material

Steel

TOTAL: 59.2kg

Bottom enclosure

3.1

Steel

Brackets (#1-#7)

Steel

1.7

Front bracket

10.0

Steel

Top enclosure

Source: Desk research; Eichenberg

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Automotive Fastener Impact

05

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Global automotive fastener market (USD bn)

China is increasingly becoming the leading region for the >USD 20 bn automotive fastener market, raising strategic questions for fastener suppliers in other markets

45

Growth will be driven by advances in China, which has been the world’s largest motor vehicle manufacturer since 2009.
In order to reduce cost and weight, automakers have begun to utilize carbon fiber and other composites for structural components. Because these materials are incompatible with traditional fasteners, which are designed for sheet metal, components suppliers have created new fasteners that work effectively with them. This is will be reason why developed nations will see an increase in specialty fastener demand vs. developing nations.
China will lag slightly behind developed markets in content per vehicle.
Fastener sales in Japan will stagnate.

Market Growth Forecast (billion USD)

Key Insights

Source: IHS; Market model; Freedonia; PE Strategic Consulting

* Does not include Commercial Vehicle, which represents an additional USD 1-2 bn p.a.

2025

2015

2020

Middle East/Africa

South America

Japan/Korea

$19.0

$22.4

$25.7

2030

South Asia

North America

Europe

Greater China

$30.3

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Fasteners market is growing …

Most individuals in the industry believe the addressable market may be smaller than actual, with >2000 fasteners counted in typical vehicles – in depth analysis shows xEV has a positive impact on the market

46

Focus

Edge

Explorer

Escape

Tesla S

F150

Fusion ICE

Fiesta

Fusion PHEV

Fusion HEV

2,000: Previously assumed

avg. fasteners per vehicle

Ø 3,061

(avg. of set)

253

Estimated fastener content (USD)

229

268

255

189

191

224

260

211

254

Source: Eichenberg Model

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Fastener market growth is clear

Fastener quantity appears to have risen by 10-50% between recent generations among selected vehicle models

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Ram-06/13

Camry-11/18

Volt-11/16

Traverse/Acadia-11/17

LaCrosse-11/17

Highlander-11/15

F150-04/12

Escape-13/17

Sorento-13/17

Cruze-11/16

+20%

+8%

+27%

+15%

+24%

+22%

+47%

+9%

+13%

+17%

Old

New

(4)

+6

n/a

+16

+28

+121

n/a

(36)

(59)

(51)

+5

(0)

+7

+1

+3

+10

+9

(2)

(9)

+0

Estimated change

Content (USD)

Weight �(kg)

Quantity of fasteners appears to have risen, but the impact on estimated content is varied
Evidence suggests fastener content (in parts) is actually growing in vehicles
Content estimates are based on constant pricing assumptions

Comments/caveats

Source: Eichenberg Model

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Fastener market growth is clear

Fastener market growth is seen from generation to generation …. but primarily in plastics and non-threaded

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2,324

Highlander-15

LaCrosse-17

2,996

Camry-18

219

Camry-11

Cruze-16

4,055

90

Cruze-11

2,418

Sorento-17

Escape-13

Escape-17

70

157

Highlander-11

4,646

147

Volt-16

LaCrosse-11

100

2,999

Sorento-13

143

Traverse-11

2,618

Acadia-17

3,591

Volt-11

4,211

2,821

3,390

3,814

183

27

3,758

3,844

142

4,571

3,512

92

48

29

111

137

47

Plastic

Metal

Other

3,390

3,844

2,821

2,996

2,418

2,618

4,646

3,758

3,814

2,324

4,211

4,571

3,591

4,055

2,999

3,512

Bolts

Other

Nuts

Source: Eichenberg Model

Note: Metal includes metal-plastic combinations; Plugs are in “Other”

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Disruption to fastener content by vehicle system

~40% of fastener content in ICE vehicles may be disrupted or possibly replaced with new designs or changing operating conditions with the switch to skateboard-based, full EVs

49

Clutch System

Engine

1

Body

1

Seats

0

Fluids

2

19

16

Heating System

5

2

Exhaust

6

Accessories

Steering

23

Suspension

0

1

Transmission

2

AC System

Air System

2

3

Interior

Fuel System

Brakes Mechanism

Electrical

Safety System

Cooling Sys - Water

3

100

2

Total

1

11

Pedals System

1

Limited effect

Impact

Elimination

Impact of electrification on fastener content by vehicle system in sample ICE SUV, (% of fastener kg)

Source: Desk research; PE Strategic Consulting

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2030 CPV Analysis

50

$300 �Automotive fastener

$120�Powertrain fastener

$30�Electrification impact

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Interior

Suspension

Engine

Electrical

Cooling Sys - Water

Total

Transmission Sys

Brakes

Body

AC Sys

Seats

Heating Sys

Safety Sys

Accessories

Pedals Sys

Steering Sys

Temporary Parts

Tesla powertrains seem to use more fasteners than those of other EVs

Bolt-17

Leaf-17

Tesla S-13

Tesla X-16

9

Disruption to fastener content by vehicle system

Source: Eichenberg Model

43

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Example: Chevy Bolt EV

xEV powertrains will also add certain types of fasteners in new systems and components, which have differing needs vs. ICE powertrains

52

New and changing materials (to join)
Weight reduction emphasis
Different ecosystems and operating conditions (crash, environment, temperature)
Estimated content from EV systems: ~USD 50-100 per full EV
2030 global fastener market for EV systems in full EVs: USD 1-2 bn p.a.

4

108

80

79

14

137

High Voltage Cables

High Voltage Battery Pack

AC DC Inverter

0.0

DC DC Converter

Total

0.3

High Voltage Junction Box

0.7

HVAC and Cooling Systems

0.0

Hybrid/Electric Vehicle ECU

0.4

Onboard Charger System

Transmission/EV Drive System

Fastener weight (kg) and count (#) by selected EV system

Comments

Source: Desk research; PE Strategic Consulting

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Example: VW e-Golf EV

However, EVs powertrains will likely largely rely on existing fastener types s as much as possible

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Common fastener types in EV powertrain systems include:

Hex screws with flanges
Female torx screws
Torx socket head screws with washers
Hex socket head cap screws with washers
Hex screws with washers
Hex nuts with collars
Cross recessed screws
Allen screws
…

Fastener weight (kg) and count (#) by selected EV system

Comments

Source: Desk research; PE Strategic Consulting

29

39

84

54

AC DC Inverter

DC DC Converter

High Voltage Battery Pack

0.2

High Voltage Cables

High Voltage Junction Box

0.0

HVAC and Cooling Systems

0.3

Hybrid/Electric Vehicle ECU

Onboard Charger System

Transmission/EV Drive System

Total

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Automotive Disruption Framework

Business Case

Strategic Plan

Technology Roadmap

A market focused plan highlighting what a winning future position for the organization

Detailed roadmap and new engineering requirements for clarifying key steps to fill gaps and implement strategic plan

Justification for alignment of key resources around “big bets” or organization alignment necessary to execute the plan

“Winning position” and priorities identified
Gap analysis
Sales plan based on initial customer discussions, selection, and engagement
Action plan (with key activities, timeline/deadline, and responsible party) to pursue opportunities and fill gaps

Timeline of expected technology / market innovations
List of potential product segments (battery, power electronics, …) and new engineering requirements to pursue (medium term, long term)
Shortlist of selected (prioritized) opportunities with (team leader) assignments to begin exploration

Short list of selected (market) opportunities (short term, medium term, long term)
Benchmark (internal) product and market development budgets
High level cost exercise to fill gaps
Ranking exercises for priorities based on limited CAPEX

Market Research

Research phase focused on market forces in terms of value-chain, new segments, and key new customers.

Market drivers
OEM value proposition
Value-chain evolution and OEM willingness to outsource systems & components
Key new systems and requirements
Identification of new entrants and company profiles
Competitive factors – incumbent players and new competitor strategies

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Thank You

T: (248) 670-9108

E: peichenberg@chief-strategist.com

www.linkedin.com/in/pauleichenberg

Web: www.PaulEichenberg.com