ARB ZEV Technology Symposium Plug-In Hybrid Electric Vehicle

ARB ZEV Technology Symposium Plug-In Hybrid Electric Vehicle and Lifecycle Costs Quantifying the Affordability Structure from Both the Supply and End-User Perspective Using Value Analysis All information, numbers and estimates represented in this study are developed from proprietary analysis, generally available industry data and discussions with industry analysts September 27, 2006

PHEV Cost Study Objectives Evaluate the business case for Plug-In Hybrid Electric Vehicles (PHEVs) using a selected case study • • Total cost to produce Purchase price for consumers Payback potential for consumers Long-term potential for PHEV technology All information, numbers and estimates represented in this study are developed from proprietary analysis, generally available industry data and discussions with industry analysts 2

Agenda • Introduction: Study Collaborators – ASG Renaissance – Ricardo • A Case for PHEVs – Benefits – Customers – OEMs – Potential for growth • Power Split Transmission PHEV Evaluation – Cost Analysis – Sensitivity Analysis – Cost/Benefit Analysis • Dual Clutch Transmission PHEV Comparison • Summary • PHEV Powertrain Architecture Selection – Vehicle Platform Selection – PHEV Architecture Selection – Powertrain Sizing 3

Agenda • Introduction: Study Collaborators • A Case for PHEVs • PHEV Powertrain Architecture Selection • Power Split Transmission PHEV Evaluation • Dual Clutch Transmission PHEV Comparison • Summary 4

PHEV Study Team Critical Skill Sets • ASG Renaissance: A full function consulting firm with over 18 years experience in working in the Automotive sectors, including OEM and critical supplier levels • Ricardo: One of the largest automotive engineering service firms in the world. Capable of strategic consulting, design, prototype development, program management, engineering analysis and low volume product manufacturing of engines, transmissions, hybrid powertrains in commercial and military segments 5

Agenda • Introduction: Study Collaborators • A Case for PHEVs • PHEV Powertrain Architecture Selection • Power Split Transmission PHEV Evaluation • Dual Clutch Transmission PHEV Comparison • Summary 7

Market Drivers and PHEV Benefits--continued PHEVs Provide: • Savings in cost of operation (MPG improvements of 50 -75%) • For a C/D size sedan w/gas ICE getting 24 MPG city, a PHEV could achieve a 12 -18 MPG improvement, or 36 -42 MPG city. • (Directionally consistent with consumer expectations which range up to 28 MPG in the J. D. Power research. ) • Reduction in the dependence on imported petroleum • Reduced operating costs as gasoline prices rise • Emissions reductions (afforded by greater EER*) • Vehicle-to-Grid (V 2 G) capabilities (power back to the grid) • Energy spinning (using off-peak recharging) – Almost 100% of California Public Utility power generation uses cleaner energy sources (Hydroelectric, Nuclear, Natural Gas) • PTO operation in electric mode (commercial applications) • Ability to drive in an enclosed environment, such as ambulance to emergency room or airport shuttle to the gates * Electric-Equivalent Range 9

Automotive Industry Perspective • OEMs have embraced a variety of initiatives including: • • • Clean, modern, low-emission diesel DI engines and turbo charging Charge-Sustaining Hybrids Plug-In hybrids Fuel Cells • Significant progress has been made over last 5 years in chargesustaining hybrid production: • About 200, 000 units will be produced for the US market in the 2006 CY, which represents a significant growth rate • Battery technology is improving—Lithium Ion expected to replace Ni. MH with increased power and energy at reduced weight • Electric motors are becoming more efficient • Some cost efficiencies are being realized… 10

Automotive Industry Perspective--continued • Challenges: • Present Plug-in Hybrid business equation and affordability does not offer incentive for new investment – Plug-in technology requires major changes to hybrid vehicles • • • Low customer awareness and understanding of technology Concerns about fuel economy label versus real-world experience Stronger electric motor required with solution to overheating Lithium-Ion battery safety Lack of robustness in component supply base and infrastructure • Opportunities: • Improving fleet fuel economy is important to the resurgence of domestic manufacturers in the marketplace • PHEVs provide a window for product leadership • These factors appear to be increasing in importance in the OEM product cycle planning • The electric drive/energy storage supplier network is growing/becoming more sophisticated 11

Agenda • Introduction: Study Collaborators • A Case for PHEVs • PHEV Powertrain Architecture Selection • Power Split Transmission PHEV Evaluation • Dual Clutch Transmission PHEV Comparison • Summary 12

PHEV Analysis Process 13

An HEV C/D class car, at an affordable price point that delivers the fuel economy, will be perceived as value added C/D Class Car Representative C/D Class Car Performance Attributes Example--Fusion • C/D segment: size and popularity –Over 75% larger than the D/E segment –C/D segment 3 Million & growing –More sharing of platforms across brands –Most likely platform for HEV expansion 1: MSN Autos, http: //autos. msn. com, Automotive News, Ricardo Analysis 16

PHEV Architectures Evaluated • Parallel Hybrids – 1 & 2 Electric Motor Designs qw/Auto Transmission q 1 w/Automated Manual Transmission (AMT) Alternatives selected – Power Split Transmission with 2 Electric Motors – Dual Clutch Transmission with 1 Electric Motor – 1 & 2 Electric Motor Designs with Belt Starter Generator and Electric Axle system and Automatic Transmission • Series Hybrid – 2 Electric Motor Design with Downsized ICE 19

PHEV Parallel Architectures Studied • Power Split Transmission* – Strengths: Ø High city MPG Ø Advanced technology image – Weaknesses: o Lower highway MPG benefit o Cost of 2 electric motors • Dual Clutch Transmission with 1 electric motor ( Power Shift) – Strengths: Ø Higher highway MPG benefit Ø Advanced technology image – Weaknesses: o Limited global capacity o Requires investment for transmission *Initial detailed study focused on Power Split Transmission based PHEV 21

Agenda • Introduction: Study Collaborators • A Case for PHEVs • PHEV Powertrain Architecture Selection • Power Split Transmission PHEV Evaluation • Dual Clutch Transmission PHEV Comparison • Summary 23

PHEV Performance Specifications PHEV Configuration PHEV 20 Specification 24

Electric Motor Sizing Electric Drive needs to have >42 k. W EM 2 peak power C/D class car Energy Vs. Power Profile over FUDS Assumptions Duration at Power Levels (sec) • Drive Cycle: FUDS with 0% grade • PHEV test weight: 4058 lbs • Rolling Resistance: 1. 0% • Cd. A: 0. 765 m 2 • Power split configuration: Input split • EM 2 base speed: 1500 rpm • Driveline efficiency: 81% EM 2 -out Power Levels Source: Ricardo Analysis • Electric drive sized to 60 k. W – Provide all motive power while traversing FUDS – Assist engine during heavy acceleration – Allow smaller engine size (V 6 to I-4 Atkinson) • Driving FUDS requires – Peak propulsion power: 42 k. W – Peak regenerative braking power: 30 k. W 25

IC Engine Sizing for Sustained Grade Engine power required for sustained grade is >53 k. W C/D Car Road/Grade Power Profile Assumptions 10% • PHEV GVW: 4658 lbs • Rolling Resistance: 1. 0% • Cd. A: 0. 765 m 2 • Driveline Efficiency: 95% Wheel Power (k. W) 8% 6% 4% 53 k. W 2% 65 MPH @ 6% 0% Vehicle Speed (MPH) Source: Ricardo Analysis 26

IC Engine Sizing for Acceleration Reduced power Atkinson cycle I 4 engine augmented with 60 k. W electrical machine can provide acceptable acceleration Peak Torque: I-4 Atkinson and V-6 Engines EM 2 Peak Torque Source: Ricardo Analysis, Scaled generic 6 and 4 cylinder torque data • For full throttle events, engine plus electrical machine power should provide power to match acceleration with increased vehicle weight • 60 k. W EM 2 capable of providing 381 Nm of torque assist, however, EM 2 is located downstream of transmission, thus reducing its effective torque addition 27

Battery Power and Energy Sizing PHEV 20 requires 70 k. W battery power and 7. 25 k. Wh total electric energy capacity • Vehicle energy consumption: 0. 29 k. Wh/Mile • Battery Usable Capacity: PHEV 10 2. 90 k. Wh PHEV 20 5. 80 k. Wh • Usable Battery State of Charge: 80% • Battery Total Capacity: 3. 63 k. Wh 7. 25 k. Wh • Battery Power Requirement: – Required Peak Electric Motor Power: 60 k. W • UDDS driving sizes electric motor – Peak battery power = 60 k. W/0. 85= • Assuming 85% electric drive efficiency at max power Source: Ricardo Analysis 70 k. W 28

Agenda • Introduction: Study Collaborators • A Case for PHEVs • PHEV Powertrain Architecture Selection • Power Split Transmission PHEV Evaluation • Dual Clutch Transmission PHEV Comparison • Summary 29

Battery Cost Estimate (Volume Sensitivities) All estimates for 2012 CY, in 2006 Dollars: Modules: $250 -500/k. Wh Non-Modules: $200 -$400/pack Source: Ricardo Analysis, NREL, EPRI Estim ate 30

Electric Accessory Cost Estimate (Volume Sensitivities) Estim ate Estimates in 2006 Dollars, Includes: Electric Air-conditioning Electric Power Assist Steering Electro-hydraulic brake system 30, 000 Source: Ricardo Analysis, Frost & Sullivan, Supplier Quotes 100, 000 31

Transmission Cost Estimate (Volume Sensitivities) Estimates in 2006 Dollars Includes: Estim ate Electric Motors Power Electronics Planetary Gearset 30, 000 Source: Ricardo Analysis 100, 000 32

Support Electronics Cost Estimate (Volume Sensitivities) Estim ate Estimates in 2006 Dollars Includes: DC/DC converter Hybrid Control Unit Off-board charger High-voltage distribution Electric Catalyst Heater 30, 000 Source: Ricardo Analysis 100, 000 33

Variable Costs, Conventional vs. PHEV System with Leveraged Accessories and Support Electronics (100 k/year volume) Estim ate $4, 328 Total $4835 $8, 222 $9, 163 Source: Ricardo Analysis All information, numbers and estimates represented in this study are developed from proprietary analysis, generally available industry data and discussions with industry analysts 35

Fully Accounted Cost: Conventional versus PHEV Systems with Leveraged Accessory and Support Electronics, 100 k/year volume Est $5, 447 Source: ASG-Renaissance / Ricardo Analysis imat e All estimates in 2006 Dollars, based on available industry data All information, numbers and estimates represented in this study are developed from proprietary analysis, generally available industry data and discussions with industry analysts 36

Desired RPE: Conventional versus PHEV System with Leveraged Accessory and Support Electronics, 100 k/year Estim ate $6, 497 Source: ASG-Renaissance / Ricardo Analysis In 2006 Dollars, based on actual dealer invoice analysis and triangulated with a bottom-up variable cost to MSRP multiplier of 1. 3 to 1. 9 to account for various overheads and margins All information, numbers and estimates represented in this study are developed from proprietary analysis, generally available industry data and discussions with industry analysts 39

PHEV Vehicle RPE Estimates, with Leveraged Accessories and Support Electronics (Volume Sensitivities) Estim ate 30, 000 100, 000 300, 000 Source: ASG-Renaissance / Ricardo Analysis All information, numbers and estimates represented in this study are developed from proprietary analysis, generally available industry data and discussions with industry analysts 40

Base ICE C/D Class Car Life Cycle Costs Estim ate Source: Ricardo Analysis 42

PHEV Operating and Maintenance Cost with Changes in Gasoline Prices Estim ate Source: Ricardo Analysis 44

PHEV Payback Period Sensitivity to Energy Prices PHEV 20 Life Payback Period with Gasoline Price Increases Dire cti onal PHEV 20 Life Payback Period with Electricity Cost Increases Dire ction al Source: Ricardo Analysis • Doubling gasoline price ($3 $6/Gallon) increases the operating costs by 10% for PHEV as compared to 30% for ICE, while payback period is in 1 -4 year range • PHEV Life Cycle Cost is much less sensitive to a 400% increase in electricity price (4 c to 20 c/k. Wh), increasing only by about 10% (48 k to 50 k), while payback period is in 2 -5 year range 47

Over the 10 -year/150, 000 mile life of the PHEV 20, the benefits are significant at 100 k/year volumes Lifetime Cost Savings Vs. Gasoline Prices Dire ction al $6/Gallon $5/Gallon $4/Gallon $3/Gallon PHEV 20 $2100 Source: Ricardo Analysis $3450 $6497 48

PHEV 20 life cycle cost savings more than offset its price premium at 100 k/year volumes Lifetime Cost Savings vs. Electricity Prices Dire ction al PHEV 20 $2100 Source: Ricardo Analysis $3450 $6497 49

Agenda • Introduction: Study Collaborators • A Case for PHEVs • PHEV Powertrain Architecture Selection • Power Split Transmission PHEV Evaluation • Dual Clutch Transmission PHEV Comparison • Summary 50

DCT vs. Power Split PHEV Comparison of Key Parameters Source: Ricardo Analysis 51

Agenda • Introduction: Study Collaborators • A Case for PHEVs • PHEV Powertrain Architecture Selection • Power Split Transmission PHEV Evaluation • Dual Clutch Transmission PHEV Comparison • Summary 52

Opportunities for Further Investigation • Effect of base vehicle efficiency improvements – Tire – Aerodynamics – Light-weight materials • Secondary use of batteries • “Blended” strategy for battery sizing optimization • Value chain optimization for minimum RPE - work on all aspects of PHEV economics • Specifications Design Assembly Sales Disposal • Business model efficiencies 54

Summary • PHEVs provide an important hedge against dramatic increases in gasoline prices • PHEVs compare favorably to ICE engine lifetime operating costs per mile and provide several incremental intangible benefits • A gap exists between the consumer’s willingness to pay for this beneficial technology versus industry’s ability to meet business obligations and allocate investment and infrastructure relative to other alternatives • Opportunities exist to bridge the gap as industry volume, technology, learning curve and infrastructure improve. Reduced gap will accelerate commercialization of PHEV technology 55