Electrification is challenging the European automotive market Dr. Thorsten Mehltretter International Conference on Circular Economy in Automotive Industry Bratislava, 06 th November 2017 Wholesale Banking
“Due to the limited amount of chauffeurs there will never be more than 5,000 cars worldwide.“ Carl Benz, automotive pioneer, 1910 Image: Daimler International Workshop on Circular Economy in Automotive Industry | Thorsten Mehltretter | November 06, 2017 1
“My money‘s on the horse – the automobile is […] just a passing fad.“ Kaiser Wilhelm II, last German emperor, 1916 Image: Pferdekosmos International Workshop on Circular Economy in Automotive Industry | Thorsten Mehltretter | November 06, 2017 2
Global emission regulations force OEMs to increase fuel efficiency and to introduce alternatives to combustion engines 180 Today 170 160 Emission Standard Targets (g CO2 /km) 150 140 130 120 110 100 90 2010 2012 2014 2016 2018 2020 2022 2024 Japan EU India USA (Car) China (Car) Source: ICCT International Workshop on Circular Economy in Automotive Industry | Thorsten Mehltretter | November 06, 2017 3
European CO 2 regulation creates the need for electrification In 2016, all major OEMs went below their 2015 CO 2 target 2015 170 130 g CO2 /km 165 Sales Weighted CO 2 Emission [g/km] on NEDC 160 155 150 145 140 135 130 125 2021 120 95 g CO2 /km 115 110 105 100 95 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 2100 2200 Running Order Mass [kg] Source: preliminary data from EEA (2016) International Workshop on Circular Economy in Automotive Industry | Thorsten Mehltretter | November 06, 2017 4
Electrification will be core, but other factors will also play an important role 90 Charging Future NO x of 80 Diesel 70 Battery Range Cost 60 Oil price (in million) 50 Incentives 40 CO 2 30 20 10 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Source: ING Research, PWC, Roland Berger, Morgan Stanley, Statoil, ExxonMobil, BNEF International Workshop on Circular Economy in Automotive Industry | Thorsten Mehltretter | November 06, 2017 5
The industry is reacting to the regulatory framework A large number of EV model launches have been announced Comparison of BEV share forecast to OEM announcement 100 10 new EVs Most OEMs do not plan EQA beyond 10 years until 2022 (max. 2030) 90 EQC EQE & EQS saloons & SUVs 80 Q4 e-tron BEV share of new sales (%) e-tron Sportback 70 Q6 e-tron 80 new 60 models across Mission E Macan Mission E Volkswagen 50 Group e-Golf facelift I.D. SUV 40 I.D. hatch, Crozz & Buzz 30 Mini E Countryman 20 25 EV modell i8 Roadster i3 & i8 upgrade 10 by 2025 i3 range upgrade X3 i5 0 2020 2025 2030 2035 2040 2015 2016 2017 2018 2019 2020 2025 Medium Scenario Source: Morgan Stanley, own research International Workshop on Circular Economy in Automotive Industry | Thorsten Mehltretter | November 06, 2017 6
While EVs are picking up speed, they face challenges too Looking at the three most mentioned barriers: (Fast) Charging Points are being built up around the world BEV cost parity will be reached 2021-2024 depending on cost increase of ICE 300 US$250/kWh Battery Cost USD/kWh 200 ICE cost increase US$140/kWh ~ 4,000 ~2,000 100 US$100/kWh ~1,000 0 2015 2020 2025 2030 BEV ICE Range is steadily increasing, cap at ~500km (real) range of midsized cars 800 All Electric Range (km) 600 400 200 0 2014 2016 2018 2020 2022 Source: CharIn, Morgan Stanley, own research International Workshop on Circular Economy in Automotive Industry | Thorsten Mehltretter | November 06, 2017 7
The electrification is changing the powertrain production drastically Comparison of drive trains – Complexity combustion vs. electic ~4,000 parts Fuel Air and gasoline Crankcase, Multistage tank intake systems crankshaft gear Power train ~320 parts Battery Electronic Electronic Singlestage Engine gear Source: PwC Analysis International Workshop on Circular Economy in Automotive Industry | Thorsten Mehltretter | November 06, 2017 8
Supplier product impact from BEVs and Connected Cars Supplier product impact Tech shift Power electronics Batteries Thermal/HVAC Displays, Interior electronics infotainment Electric motors Transmission Electrical Autonomous Battery thermal sensors management Axle Connectors Engine components Lightweight materials Brakes Steering Loss of content Increased content Exhausts Minimal impact Body-in-white Lighting Exteriors Tires Seating Passive safety Source: Own illustration based on Morgan Stanley, manufacturers’ images International Workshop on Circular Economy in Automotive Industry | Thorsten Mehltretter | November 06, 2017 9
Can challenges be turned into opportunities through circular economy? 3.3mln EV @ end of life 80% of batteries 2025: enter 2 nd life (Medium Scenario) Production and usage ≈ 42 MWh 46mln EV in car park throughout lifetime ≈ 1300 MWh batteries Second Life in Lifetime: 8 years stationary applications Re-/Upcycling of components and ≈ 11 MWh to be recycled materials Source: Own estimation based on Medium Scenario shown before International Workshop on Circular Economy in Automotive Industry | Thorsten Mehltretter | November 06, 2017 10
ING is strongly committed to Sustainability … Long track record in sustainable financing First Sustainability Creation of Launch of Start carbon Start of ING issues its first report Groenbank Sustainability Sustainable Green Bond offsetting Lending Team Equity Fund 1996 1997 1998 1999 2000 2005 2007 2010 2012 2014 2015 2016 Sustainability Partnership with Rated as the world most First ESR policy Launch of Sustainability embedded in sustainable bank & Strategic UNICEF Business Principles targets strategy and sustainable dialogues with purpose clients ING is classified as Industry Leader by Sustainalytics. Of a peer group of 393 publicly listed banks, ING ranks 4th on corporate sustainability and ESG performance. Sustainable financing has become increasingly visible in the markets and completes existing green financing solutions Instrument Terms & Conditions Proceeds are solely used for • Green bond specific green purposes Similar framework to green • Green loan bonds Sustainability Facility is linked to the ING is widely recognised for its efforts in sustainability and is a front • related lending company’s Sustainalytics score runner in this field with recent Sustainability Coordinator roles proposition International Workshop on Circular Economy in Automotive Industry | Thorsten Mehltretter | November 06, 2017 11
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