China Is Building a Market for Electric Vehicles

China Building a Market for Electric Vehicles –What are the Hot Prospects?

China to be One of the Hot Regions to Adopt Electric Vehicles

Anjan Hemanth Kumar, Team Leader

Automotive & Transportation

29th November 2012

© 2012 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.

Today’s Presenters

5 years of automotive research and consulting

Anjan Hemanth Kumar

Team Leader

Jason Huang

Research Manager

2

5 years of automotive research and consulting

experience, with a focus on hybrid and electric

vehicles. Authored/co-authored more than 20

industry reports and worked on over 15 opportunity

assessment and strategy formulation engagements

with Global clients. Specific expertise in:

• Electric Vehicles market forecasting and models

• Batteries and electric motor technologies for

hybrid and electric vehicles

• New market entry and diversification strategies

• New business model analysis and evaluation

5.5 years of strategy consulting experience, more than

40 significant strategy design & implementation

projects. Particular expertise in:

• Value creation strategy: Product Portfolio Review,

Market Entry & Geographical Expansion, New

Business Models, Strategic Planning

• Operational strategy: New Product Development,

New Product Launch, Business Modeling &

Planning

Agenda

Key Findings and Market Overview

Influence of Chinese Government on Electric Vehicles

Electric Vehicle Market Trends and Forecasts

3

Overview of Charging Station Infrastructure

Electric Vehicle Powertrain Analysis

Key Findings of the StudyThe highest government subsidy (up to $9,500) along with other supporting policies, as well as 18-25% lower manufacturing cost in China are expected to drive the market for Electric Vehicles.

Chinese Electric Vehicle Market: Chinese Electric Vehicle market of 5,512 units in 2011 is expected to grow to 1.06 million units by 2020 accounting for up to 3.4% of annual vehicle sales.

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Low Manufacturing Cost: Manufacturing electric vehicles in China can be 18-25% cheaper than EU, NA due to the low labor, manufacturing and material costs.

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3

EV Availability: More than 75 electric vehicle models can be expected by 35 vehicle manufacturers by 2020.

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Source: Frost & Sullivan analysis.

Government role and support: China has the highest direct cash incentive of up to $9,500 for a purchase of EV, more than North American incentive of $7,500 and European average of $6,180.

Charging Station Infrastructure: China has more than 10,000 AC charging spots established in the 25 pilot cities and about 10 battery swap stations.

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Technology:. More than 8 battery manufacturers and 10 electric motor/inverter suppliers are expected to compete in Electric Vehicle Market post 2020.

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Chinese Electric Vehicle Market OverviewChinese manufacturers are likely to dominate the EV market with 58% of market share by 2020 driven by low production, labor and raw material cost.

Electric Vehicle Market: EV Unit Shipment Sales,

China, 2011, 2016 and 2020

900,000

1,200,0000.0% 1.0% 3.4%

Electric Vehicle Market Breakdown by Segment,

China, 2020

A Basic, 12.0%

B Subcompact,

10.3%C Compact, 35

D/E -Midsize, 9.9

%

SUV/MPV, 3.2%

Unknown, 29.1%

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Electric Vehicle Market: Key Suppliers of battery packs

and electric motors, China, 2011

Powertrain Manufacturer

Battery PacksWanxiang, Lishen, BYD, ANX, A123 System, LG Chem, MGL, Skyenergy, etc

Electric MotorsJing-Jin, Dajun,Shanghai

Edrive,Wanxiang, etc

Note: All figures are rounded; the base year is 2011. Source: Frost & Sullivan analysis.

0

300,000

600,000

2011 2016 2020

CEV PHEV Others

Compact, 35.5%%

Influence of Chinese Government on EV Chinese government will invest about $16 billion (100 billion RMB) from 2012 to 2020 to sponsor R&D, develop battery and electric motor technology and gradually industrialize the new energy cars in China.

Electric Vehicle Market: Cities Offering Financial Subsidies (China), 2012

Beijing

Changchun

Dalian

Jinan

Tianjin

TangshanShenyang

HuhehaoteR&D andIndustrialization

$ 7.93 billion

Government Investment in Electric Vehicle Industry, (China), 2011-2020

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• 11 of the first series of 13 cities are provincial capitals, except Dalian and Shenzhen.

Source: Ministry of Finance People’s Republic of China

Shanghai

ChongqingHangzhou

Jinan

Wuhan

Shenzhen

Hefei

Changsha

Kunming

Nanchang

Haikou

Xiamen

Suzhou

Guangzhou

Zhengzhou

Chengdu

Nantong

Xiangfan

First Series of 13 Cities (2009) ->Second Series of 7 Cities (2010) ->Third Series of 5 Cities (2011) ->

$ 4.76 billion

$ 3.17 billion

Vehicle components development

Promoting and Demonstration

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

Un

its

Electric Vehicle Market—Unit Shipment Scenario AnalysisThe Chinese market for electric vehicle sales is expected to grow to 1.06 million vehicles by 2020 accounting for 3.4% of total vehicle sales.

Electric Vehicle Market: Unit Shipment Sales Scenario Analysis, China, 2009-2020

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0

200,000

400,000

600,000

800,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Optimistic Scenario Frost & Sullivan Scenario Conservative Scenario

Note: All figures are rounded; the base year is 2011. Source: Frost & Sullivan analysis.

Chinese Manufacturers to Account for 58 Percent of Electric Vehicle Market Share in China by 2020BYD and Volkswagen are Projected to be the Biggest Players of the Market

Chinese

Share of Sales in Electric Vehicle Market, (China), 2020

Others

Others

Ford

Honda

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Chinese Vehicle

Manufactures, 58%

International Vehicle

Manufacturers, 6%

Joint Ventures, 36%


Zoyte

Great Wall,

Geely,

JAC

Chana

FAW

Chery

BYD

GM

Toyota

Renault Nissan

Daimler

Volkswagen

Note: EV = Electric Vehicle; All figures are rounded.

Charging Facilities in ChinaThree type of Charging facilities are being built in China. A Charging station would have many rapid charging points which will operate similar to a gas filling station.

Electric Vehicle Charging Infrastructure Type of Charging Facilities, China, 2012

Charging Facilities

Charge Spot Charging Station Battery Swap Station

Item Specifications

Coupler IEC/GB

Type Area (m/sq)

Charger spec. Power capacity (kVA)

Item Specifications

Area ~1500 m/sq.

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Coupler IEC/GB

Access/Billing RFID/IC Card

Power 220V

Output Single phase. 220V, ~32A

Installation Vertical Wall mount

Communicationinterface

RS485/2G/3G

Elevation <2000m

(kVA)

Large (>4 charge spots)

1,50-2,000 DC (large)

500V,400A

DC (medium)500V, 200A

DC (small) 350V, 100A

>500

Medium (4charge spots)

500-1,000

100-500

Small (2-3 charge spots)

50-100 <100

Area ~1500 m/sq.

No. of chargers 180

No. of swap devices 2

No. of service for automobiles

30

Power supply ~3,000 kVA

No. of battery packs 180

No. of battery pack racks

2

Swapping time 10-15 minutes

Source: Frost & Sullivan analysis

China Europe North America

Defined as • Charge spot, Charging station and Battery switch station

• Mode 1,2,3 and DC charging

• Level 1, Level 2 and DC Charging

AC Charging Standard GB/T 18487 : Part 2 IEC 62196 – 2 SAE J1772

DC Charging Standard GB/T : Part 3 Chademo (widely utilized not bot a standard)

Chademo

Government Incentives

• The Beijing and Shanghai government are planning to offer

• Government incentives vary country wise

• Tax credit of >$1,000 to install a residential charging station

Charging Station Infrastructure Comparative AnalysisChina is expected to lead in terms of Charging infrastructure with government plans of setting up 4000 charging facilities by 2016.

Electric Vehicle Charging Infrastructure : Comparative Analysis, China, Europe and North America, 2012

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Incentives government are planning to offer up to 30% and 20% of the total cost respectively as subsidies to infrastructure builders

country wise a residential charging station

Business Model • Pay-as-you-go (charging station and battery swap station)

• Subscription based

• Pay-as-you-go• Subscription

• Pay-as-you-go• Subscription• Revenue sharing

Key Participants • Better Place, China Southern Power Grid, State Grid Corporation etc.

• ABB, Chargemaster, EDF Elektromotive, ENEL, RWE etc.

• Aerovironment, Coulomb Technologies, Delphi, DBT Ecotality etc.

Planned/Estimated Charging Facility(2016)

• ~4,000 Charging Facilities**

Planned

• ~300,000 Charging points

Estimated

• ~350,000 Charging points

Estimated

Source: Frost & Sullivan analysis**Charging facility can contain many charging points ranging from hundreds to a thousand

Who Supplies Whom Analysis BYD produces both battery system and electric motor system in-house, while other manufacturers cooperates with multiple suppliers for battery and electric motor systems.

VMs

Battery System Electric Motor System

Battery Cell BMS Battery Pack Electric Motor Motor Control Unit

BYD BYD BYD BYD BYD BYD

Chery Wanxiang EV Wanxiang EV Wanxiang EVShanghai Edrive,

Shanghai Edrive

Electric Vehicle Market: Who-Supplies-Whom Analysis, China, 2012

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Chery Wanxiang EV Wanxiang EV Wanxiang EVShanghai Edrive,

AnandaShanghai Edrive

DongfengAESC, NEC, Wanxiang EV.

Skyenergy

AESC, NEC, Wanxiang EV,

Skyenergy

AESC, NEC, Wanxiang

EV,Skyenergy

Nissan, XiangfanSpecial Electrical

Machinery

Nissan, Wanxiang EV

FAW Wanxiang EV Wanxiang EVWanxiang

EV,ChunlanWanxiang EV, JJE Wanxiang EV

SAICShanghai Jiexin,A123Systems

Shanghai Jiexin, A123Systems

Shanghai Jiexin, A123Systems

Bosch, Shanghai Dajun

Bosch, Shanghai Dajun

Geely A123 Systems A123 SystemsA123 Systems,

Positive

Lynx Motors, Shanghai Edrive,

JJE

Lynx Motors, Shanghai Edrive

Source: Frost & SullivanImage Source: Google

Key Conclusions and Future OutlookOpportunity for global suppliers to invest in Chinese EV powertrain manufacturing and VMs to establish vehicle production facilities.

Opportunity for businesses to invest in battery swap station as China is the only country exclusively developing the switch stations.

GovernmentWorld's highest direct cash

incentive of $9,500 with additional exemption from annual taxes

So What ?So What ?

InfrastructureUtilities have been supporting

battery swap stations but VMs are not in favour at present

Early market entrant will get the first mover advantage and utilize government subsidy.

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stations.

Opportunity for global suppliers to invest in Chinese EV powertrain manufacturing and for VMs to establish vehicle production facilities. Potential for huge margins.

Joint VenturesJVs between foreign and Chinese VMs is expected to take up 36%

market share

Raw Materials and Supply Chain

EV Battery and motor raw materials are abundant and cheaper by 30%

Foreign VMs should leverage domestic VMs good supply chain, dealership, distribution network and understanding of the local market.


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For Additional Information

Katja Feick

Corporate Communications

Automotive & Transportation Europe

+49 (0) 69 7703343

[email protected]

Anjan Hemanth Kumar

Team Leader


+91 80 6702 8035

[email protected]

15

Jason Huang

Research Manager

Automotive & Transportation, China Operations

+86 21 5407 5780

[email protected]

Sarwant Singh

Partner


+44 207 915 7843

[email protected]