Electric Vehicles: Market opportunities and new business models for industry stakeholders

good morning everyone it’s nice to see so many people here early on a Monday morning thank you for that my name is Usha Srinivasan I’m the director of the market intelligence team here at Mars and it is my pleasure this morning to launch the first Mars market insight series which will be run quarterly to educate entrepreneurs and other stakeholders on specific market and industry dynamics and today we have a distinguished that set of panel members and moderator and it is my pleasure to introduce to you the moderator for your for this morning Jon doctrine who’s our clean tech advisor here at Mars Jon has many years of experience in the Evie space and was most recently with hydrogen X as a director of BD prior to that John was with temping Pamina Institute please join me in welcoming him to the podium Jon thank you very much yeah thanks again everyone for coming there’s no doubt that we’re seeing a resurgence in electric vehicle technology in 2009 this industry so electric vehicles batteries and fuel cells saw venture capital investments in excess of a billion dollars putting it right at the top of the clean tech investments so this sector is has been moving along really well now you can see there’s about a million Toyota Priuses on the road worldwide lots of other auto manufacturers have introduced battery gasoline vehicles and what’s happened is now there’s a supply chain for electric components the automotive OEMs and new car manufacturers that are starting to be formed are now talking about plug-in hybrids taking us one step further in electric dominant designs and with alternative fuels and battery chemistry is moving at the pace that they are there is the possibility of moving to a hundred percent electrification it’s great to see so many Canadian automotive suppliers and energy storage companies starting to get involved in the field and a lot of those companies are here today and with the renewed interest there’s a huge opportunity for entrepreneurs in the field and a great opportunity for investors and governments that are supporting them we have three really knowledgeable speakers here today to give their perspective on the market just before I get to introductions there there’s a few people here that I wanted to mention part of what we’re doing here is is giving everyone a chance to meet and we have some of the leading minds and electric vehicle technology and Ontario here today we have al Cormier with electric mobility Canada Martin Rover with better place one toss tow with Toyota Graham Baldwin with Zen cars John Brodhead with Metrolinx so and many more with that I just want to introduce our first speaker sauron Singh so Sauron is a recognized thought leader in electric mobility and he’s being engaged with some of the world’s leading organizations helping them to evaluate and implement growth strategies in the market he joins us from frost in Sullivan where he leads the automotive and transportation practice globally thank you John very good morning very good morning to your ladies and gentlemen the theme of my presentation is to start with giving a little bit of the megatrends talk about some of the mega trends which will impact personal mobility and which will impact the car of the future I’m going to talk a little bit about the market overview the road roadmap some forecasts but the key part of my presentation today is to focus on the business opportunity not only for the automotive companies but also for the value chain and everybody in the ecosystem so let me start first one of the big main trends and this trend will

really drive electric mobility is the urbanization we see three main trends in urbanization the first one is development of what we call mega cities cities with more than 10 million population the second big trend we see is the development of mega regions what I mean by this is cities suburbs and daughter or neighboring cities are coming together and becoming one big mega region a great example of this is Joburg Pretoria if you’ve been to South Africa Pretoria is about 60 minutes drive Joburg Pretoria and growth hung region is becoming one big mega region and the locals already have a name for it they call it your Toria the other big trend we see in terms of organization is the development of mega corridors a mega corridor is a city or couple of cities which are over a distance of hundred kilometers a great example of a mega region is the Hong Kong Shenzhen the area around there which is over 100 kilometres in distance population of 160 million heavily very good infrastructure already in place this trend and let me talk a little bit about how urbanization will change and the impact it brings if I just start from the 50s there that’s a typical downtown small downtown with little roads coming in if i zoom you into 2000 today we see inner and outer ring roads in all major cities and if I just take example of the city I come from London the Outer Ring Road is the m25 which is about 25 mile radius typically the outer ring roads are at the radius of 25 miles and if you look at how the city has expanded it has expanded all the way to the m25 if i zoom you into 2020 how the city is going to develop and this is the case of all major cities the cities are expanding beyond these ring rows to the third and fourth tier belt which typically today is a rural belt let’s look at the implication of this expansion to personal mobility for example we see a trend in the future whereby the amount of traffic coming in and out of the city during rush hours will be very similar we already see an example of that in Chicago we see people living in cities will be people with high income no kids and a very services based economy whereas people living outside the city will will possibly be most most likely be with families and drive conventional vehicles as a result we see polarization of waco sizes and that’s really driven by a number of factors the two important factors is congestion charging in Europe we expect 13 cities to have congestion charging we expect New York to have congestion charging in this in the near future we expect over 150 cities in Europe to have low emissions owns as a result the type of cars the type of commercial vehicles in cities will be small city cars most likely will be hybrid or electric we also see hub and spoke logistic centers coming in as you see on this picture which might mean their access for big trucks to cities will be restricted as a result of this we see electric cars city cars really growing and we also see a market where new personal mobility models will come in and let me just talk about one very exciting new personal mobility model which is car sharing today in your–in us we have about 26 car sharing clubs in Europe we have over 100 car sharing clubs we expect over 9 million members in Europe and North America together being members of car sharing clubs we found in our study 40 percent of people who join car sharing clubs gave up ownership of cars every car that went went into a car sharing Club took seven to nine cars off the road if you look at the Auto leap program which is coming out in in France 7 a program will be run the first one is going to be run in Paris they expect to have 3,000 cars all-electric now what is interesting with with car sharing is we are finding car companies as well as car rental companies companies coming into this business and more and more we’re seeing car companies say they’re not in the business of making cars they’re in the business of providing personal mobility and here’s a great example of a company which has been very innovative pecheur in in in France has launched a program called the MU program what this program is all about is you get a card it’s a loyalty card you get a number of points on it and you can form use any form of transport so if you’re going on the Underground or using a car-sharing or a bike sharing you can use this card it gives you more loyalty points and during weekends you can hire any car and if you like to drive a Ferrari on the weekend you can hide it from your well not really like at the moment but you can technically in future so what they’re doing is they’re integrating all forms of their transport so the two wheeler business the four wheeler business and they’re really using electro mobility to bring this new kind of driving experience to the customer let me talk a little bit about volumes it’s highly debated Carlos Gerson says there are attempts and cars we by 2020 we in Frost & Sullivan believe under two different scenarios it could be anywhere between 7 to 12% of total cars produced globally this is our Frost & Sullivan scenario which is more the mid scenario which suggests about 1.3 million cars fully electric so these are cars which can be plugged into the mains and

charged we see a little difference between regions we believe Europe will go in for more battery electrics 100% electric cars whereas in u.s. we might see range extender and plug-in hybrids being as popular as the full plug-in cars now what is interesting is the number of car companies coming in and a number of models being launched we expect about 47 OMS to launch about 75 models by 2015 and again what’s interesting is they will not compete in one or two segments like the Prius but they will compete across segments so you can see here on this graph you have you have a penetration of electric cars in almost all forms all segments of vehicles what is another interesting thing is the Chinese OEMs we expect 35 Eevee models to be launched by Chinese OEMs in the next three to five years but at the same time you don’t expect China to really be a big market in the next three to four years I think we’ll pick up mostly around 2015 but China is a threat and if you look at the technology and the model plants it could be a threat for the future sometimes when we talk about electron mobility we talk too much about cars I think we need to understand there are other forms of transport which will have much higher volumes and it’s very important if you’re looking at a business case for electric mobility to also look at the two wheeler market about twenty five million two wheelers which were electric were sold in so last year over ninety percent of these were pushed bikes over ninety percent of these were sold in China but it is expected these numbers will grow globally it is expected that in China in cities like Beijing and Shanghai legislation might push you to say that you can only drive electric two wheelers below a certain size and that’s just imagine the impact will have on the market let me talk a little broader business model and that’s what we here for this is roughly what the chain is of the industry on the right hand side you see the traditional manufacturers the OEMs we’ve seen system and battery manufacturers come in on the left-hand side you see the utilities and charging station manufacturers come in and this is a great business opportunity for them but what I find and I feel is very important is to have somebody what we have termed as an integrator a good example of today of an integrator is better place this is the organization which brings the value proposition of electric mobility to the customer and it combines the whole value package we believe three and four electric cars will be sold using a new business model the cost of the battery today is almost the same as the cost of the car so how do you package it when you buy a car today do you pay for three years of fuel you don’t so the only way the OEMs can really leverage this and bring make more profits is to go down the route of an integrator so what really is this integrator we’ve clubbed an integrator to maybe offer about five services charging stations is the first one they might source charging stations they might build their own charging stations but they will do installation and maintenance of these charging stations again you can have this charging station at public places semi public places but also you could have these at homes for every car we believe in the first year you have between two and a half to three times charging stations so if you have 8 million cars in 2010 20 we believe by open 2020 the ratio will be about 11.5 you can imagine there will be 20 million charging station out there the other book market is battery now again with battery it’s very important to look at the whole lifecycle of the battery battery second life battery recycling will be very important markets of the future we believe the battery recycling market will be worth about 3 billion globally by 2020 of course it’s not gonna pick up for the next 3 to 5 years because we’re not gonna have enough batteries out there in the market but it’s definitely a long-term business then you have electro mobility some integrators like better place and it’s rate will also sell cars we are seeing a large number of new players interested in this market Best Buy which is the big electronic retailer as you know in UK is opening 10 super stores and they want to sell electric cars in their super store and they want to sell them using a very new value proposition which is the car comes free but you need to pay 300 euros per month to access Li the energy package and if you buy electric car we will package with it some combined heat power plants or a solar plant plant to go with it in terms of electricity there’s a huge business case for utilities the business case is not to have batteries but it’s to do load balancing it’s very important for utilities to understand what is a daily driving profile of a customer what is the charge profile and what does that mean in terms of load profile you can balance a large proportion of your load very efficiently using electric vehicles and of course then you have telematics and value-added services so an integrator can offer all of these services or some of these

services and this will be a very important we believe in the future a comparative ground for competing the right companies just briefly we did some work on looking at the business model for utilities very interestingly we found and these are numbers for Europe looks at about 250,000 cars in operation all electric roughly about 25 kilowatts in power we found four utilities the business case is not about selling energy especially in the u.s. it’s $0.08 a unit you don’t make money so the business for utilities the return on investment will come from other value-added services like selling charging stations maintaining and installing them things like retailing advertising load balancing garage raffles data downloads so if you are a utility you really need to think out of the box in terms of how do you you know exploit this opportunity one of the other interesting trends we see I’m guessing a lot of you have Apple iPhones you’ve seen how what application stores done to you application store is coming to cars now already if you go on the iPhone you can see a large number of mobility based applications we see a lot of these applications coming into the car and a lot of these will be integrated as part of your a mobility function already we see shared vehicles for example part of it in terms of electric vehicles we’ll get things like electric vehicle billing booking charging station locator even preconditioning of the car using your Apple iPhone so again there’s an opportunity for entrepreneurs to launch specific applications for this market one of the other key interesting opportunity is to develop an IT infrastructure a lot of people I have been in touch with believe to have electric vehicles you need smart grids the answer really is no you do not need a smart grid all you need is an efficient command and control center and I’ve seen the command and control center a better place I’ve seen one on leaf and really if you look at how they manage it by connecting every car every charging point every battery and managing a load profile of a customer it’s pretty efficient so again there will be opportunities in the future to work with this with companies if you look at the auto leap program to manage 3,000 electric cars and charging point that is a substantial investment in IT infrastructure looking at some of the technologies within the car sorry I apologize for the size of the font here but you have access to these slides for entrepreneurs there’s opportunities for taking certain technologies which never came in cars for example by wire systems but also there’s opportunities for new technologies in cars like a range extender so we will see with electric mobility a lot of new technology and evolving technologies coming inside the vehicle at the same time there are a number of opportunities outside a lot of electrical products like like charging station receptacles power electronics will be used a lot in vehicles also outside the way so again I think the important thing to understand the electric wakers is the obvious opportunity is not making cars the opportunity is really in the ecosystem from end to end looking from right from the raw materials to recycling if you look at the whole value chain there are substantial opportunities for a number of companies and players to enter this market thank you thanks very much our next speaker is Dave Pascoe Dave participates in Magni internationals electric and hybrid vehicle development and integration programs as a VP for Magna ECAR systems he also manages the corporate engineering group at the global headquarters in Aurora for Magni car good morning and thank you for having me with you here today I’m going to talk about electric and hybrid vehicle challenges and opportunities so first I want to give you a very brief introduction about Magna International we’re the largest auto parts manufacturer in North America third largest in the world and most diversified of any auto parts manufacturer in the world our core groups shown on this slide each have an average of about 30 manufacturing divisions and in addition to making components and subsystems for our customers we also manufacture complete vehicles for them under our brand some of you may drive vehicles made by Magna International but may not realize it so founded in 1957 in Toronto Canada we moved into the United States and Europe quickly and then more recently into Europe into Asia and South America today

with over 72,000 employees we’re operating in 25 countries so on the electric and hybrid vehicle topic I want to cover four areas including the business case packaging components and systems and then our group and project structure how we accomplish things in Magna so like any vehicle program for electric and hybrid vehicle programs there are fixed in variable costs higher volume is and will be the key to making winning hybrid and electric vehicle programs sustainable it’s the goal of most vehicle programs to sell high volume because you have to pay for your upfront research and development you have to pay for your capital equipment and tooling and so on and so without having high volume it’s very very difficult to do this with high upfront costs and high variable costs especially with regard to batteries this is challenging indeed our strategy is to carry electric systems across several vehicle platforms to try and bring up the volume and then bring down the unit costs also one has to respect the buying patterns of consumers where high-priced vehicles tend to sell in lower volumes this is US market data from 2008 high fixed and high variable costs tend to drive electric vehicles range-extended vehicles and hybrids to a higher price point than conventional vehicles so if we’re to sell vehicles above the average curve the green curve there which is the operating area for electric and range-extended vehicles and we still want to achieve good volumes we need to have a unique selling proposition for the consumer so while government incentives may help for a while ultimately reduce gasoline or diesel consumption versus electricity is the opportunity and the selling proposition that we have to give to consumers so let’s look at today’s business case for the consumer setting vehicle branding styling and other factors aside what’s the payback period for the consumer buying an electric vehicle the graph shown reflects a payback period which depends on several factors including on cost for a specified technology whether it’s electric or hybrid or plug-in and so on price of fuel price of electricity and miles driven per year and the effects larger battery and higher electricity cost gives you a longer payback period higher fuel costs and higher mileage miles driven gives you a shorter payback period one of the things we learned doing this study is fundamentally that the smaller is the battery the more vehicles we’ll be able to sell on that for a given platform so what’s the tipping point for the consumer we would all like for there to be a high volume alternative to petroleum powered vehicles and I can say when electric vehicles have similar range performance and cost to an internal combustion engine product I will definitely use them if we can achieve this then there will be a tipping point where we can get to the mainstream consumer and people will switch in high-volume to hybrid electric vehicles and these cars can take a much more significant share of the market so on the graph you can see if we look here on this green curve the bottom of the green curves a three-year payback and tops a six year payback so if you look at a three-year payback you basically have to have a nearly $5 per US gallon for any of the vehicles to to give you a proper payback and at six years there’s a number at today’s prices for example a hybrid electric vehicle it can pay back in a six year time period on the packaging side so each type of vehicle has a unique set of challenges in a vehicle conversion that is starting with an existing platform that is a carryover internal combustion engine platform we have to take advantage of space that is vacated by the powertrain and by the fuel cell or the fuel tank with a purpose-designed vehicle that is a ground-up blank sheet of paper designed vehicle we have much more packaging freedom but we have a much higher upfront cost today most or all electric vehicle programs are low volume and so that’s a very challenging business case to make indeed and typically vehicles that are being done by us and by our customers are coming off of existing IC powered vehicles so here we have the typical major systems for an electric vehicle in a possible package configured configuration and magnet ECAR systems is capable of the integration of all of

these systems so that they work with each other and we make most of the content already we’re in production on some of these types of systems we also have production Awards which are slated for the next year or two to launch with some of these systems as well so this is the packaging architecture for an electric vehicle in addition to physical physical packaging making the subsystems work together is another challenge so you can see looking on the top right we have the plug-in a/c from grid which comes from your 120 or 220 port going into the AC charger and then the large block in the the orange section is the high-voltage section the large block in the middle is really the heart of the electric car four hundred volt battery packed with cells and that powers just to the left of it the three orange boxes the high-powered components on the vehicle so the inverter motor controller drives through to the traction motor and gearbox driving the vehicle that pulls the vehicle along that’s obviously a high powered part and below that are the heating ventilating and air-conditioning functions which also drive draw a significant power on the right side of the battery pack you see the DC to DC converter which takes energy down to a conventional 12-volt led us at battery which powers low power components like the electric vacuum pump electric water pump vehicle control unit and electric power steering headlights interior lights and some of the smaller accessories it is exciting from an engineering point of view to see some of the new developed products which historically were always on cars like water pumps which have to be electrified now and are being redesigned to suit electric and hybrid vehicles so on the components and system side we want to as a group we want to provide a full array of major required subsystems for electric and range extended vehicles and hybrids and we want to provide complete integration of these systems and subsystems for our customers so we want to be a one-stop shop for our customer it gives us a competitive advantage at Magna and being large we’re able to do that we want to solve the cost volume issue by providing common components across multiple platforms and multiple customers so that everybody gets the same part hopefully and we bring the volume up and we’re able to deal with the cost issue because it is a it is a very big issue for us and and our customers on the product portfolio side we’ve been working on electric and hybrid vehicle products for probably over 10 years we’ve done prototypes as much as over 20 years ago I worked on electric vehicles back then so this is my second time around at it examples we have been our portfolio on-board chargers generators chassis traction motors battery management systems lithium-ion battery packs modular powertrain cradles electric oil pumps since all and then I’ve spoken about the battery being the big challenge it is from a cost perspective the battery doesn’t cost almost as much as the car at the OEM level it costs more than the rest of the car for an electric vehicle battery with decent range so it makes challenges for us what we’ve done is we’ve tried to divide the battery into different different types to keep as few architectures as possible and again to try and keep the volume up so we did an analysis on the power and energy use of different types of lithium battery lithium battery vehicles so if you look in the bottom left box with mild hybrids full hybrids heavy-duty truck and bus plug-in hybrids and electric vehicles we basically bundled these and you can see in the graph here where we have energy on the vertical axis power on the horizontal axis we’ve bundled them such that we’re able to offer three basic architectures to meet the needs of these types of vehicles each architecture uses a different chemistry and a different cell cell form and also a different cooling system to meet these needs at the bottom you’ll see some of our history we did our first generation lithium-ion battery pack in 2006 we went into production in 2009 with lithium-ion battery packs and then we’ve got another award as well on the way that’s not a note yet so I can’t give any details at this time on that so cells as well if you’re Mayan and and others LED acid and nickel metal hydride they have an interesting behavior there I like in them a little bit to be like people so if you want the lithium-ion battery pack to work well it’s like having a bunch of people trying to row a boat and if some of them are lazy and some of them are strong the boat goes in circles and so operating a lithium ion battery pack with the battery management systems a little bit like that and so we have to understand all of the stress sores on the cells what it does to their behavior because we want them to behave the same

so we do testing on cr8 which is the energy usage rate temperature range state of charge which is from discharge to full charge up and down peak power relationship of charge to discharge current state of charge set point if you said if you have the state of charge to high you have side reactions which reduces the life of the battery duty cycle used versus rest time temperature gradient through the cell has an impact and micro state of charge which is fundamentally launching accelerating and regen breaking which can be in the millions of cycles so our group and projects structure to operate this we want to find a way to use our electric vehicle portfolio to provide these systems to our customers and we want to coordinate work between our operating groups so again this is the Magna operating groups historically they’re fairly independent so we have to have a way to be able to get everybody to work together and March in cadence to the programs that we have that we have awarded and so we developed a new group called Magna ECAR systems which is responsible for the integration of vehicles systems and subsystems using components and systems from the magnet groups and from other suppliers and this is a different representation of that so we have inside of our portfolio manufacturing portfolio batteries and cells we do the integration we pull from Magna and outside companies and just before I finish I just wanted to mention as well we do in Magna also have an electric bike drive operating group we do make the best electric drive system for bicycles in the world with lithium-ion battery packs we did 50,000 units last year eighty thousand as I think projected for this year so it’s quite a growing and interesting business for us as well it’s really fun if anybody’s interested to get connected with electric bikes you can come and talk to me afterward okay thank you very much thanks a lot Dave our third speaker is Joe carnelli Joe is the founder and chief technology officer of hydrogen excoriation one of Ontario’s successful startups to emerge on the global electric vehicle market Joe has been the recipient of numerous awards for the innovations that have taken place at Hydra geniux the company is now the world’s largest provider of on-site hydrogen via electrolysis and also a leader in the industry in providing proton exchange membrane complete fuel cell systems join me in welcoming Joe good morning everyone and thanks for the intro John I’ll be able to skip the hydrogen X introduction slide today I’m going to be giving you a general overview on fuel cell technology I’ll be talking a little bit of on where it was where it is and where it’s going I will also be talking about the German hydrogen plan it’ll be very interesting to see what Germany is doing with hydrogen and hydrogen fuel cells as Germany was one of the leading countries to really take off with solar and wind and finally I’ll be giving you an overview with specific to Germany on the relationship between hydrogen and renewable energy and we’ll see how the renewable energy issue in Germany hydrogen as an energy carrier and fuel cell electric vehicles really tie in and why they will be successful in Germany as John already introduced hydrogenic so I’ll skip this slide and get right into the challenges that have been faced by fuel cell electric vehicles so on the technology side we’ve had numerous challenges the they’re summarized by power density so that’s how big is a fuel cell so in the 10 years ago a 50 kilowatt fuel cell probably would have been the size of half of this table today 50 kilowatt automotive fuel cell is about the size of a microwave so that that refers to power density so how much power are you able to get out of the fuel cell so today we’re at a practical point where a fuel cell can be practically integrated into a vehicle durability was another major issue for fuel cell electric vehicles again speaking 10 years ago the life of a fuel cell meaning the hours that it would be able to operate in the car was probably in the order of 50 to 100 hours over the years material scientists have worked on the issues and today I can say that durability for fuel cells is in the range of 5,000 to 10,000 hours so we’re at a practical point now where fuel

cells can be introduced into electric vehicles the second issue was hydrogen storage so you need to get a certain amount of energy on an electric vehicle in order for that vehicle to have a practical range 10 years ago the storage pressure for hydrogen electric vehicles was about 350 bar or 5,000 psi gage today that technology has moved to 700 bar or 10,000 psi gauge in hydrogen electric vehicles and we’ll see the impact that has on the range of the vehicle I’ve talked about packaging how that was an issue and the cooling system was an issue fuel cells operated at fairly low operating temperatures and that would require you to have very large radiators on a fuel cell electric vehicle so now we’re on to costs and certainly we have the infrastructure costs and I’ll talk a little bit about infrastructure and how the cost will come down later in my presentation we had hydrogen costs and that was basically the cost of hydrogen so how much does a kilogram of hydrogen cost either to make or to be delivered to a fueling station we also have the fuel cell cost and that is directly linked to volume so today there’s probably 2,000 fuel cell electric vehicles on the road at that volume you can imagine how hard it is to drive the cost down but as we have high volume initiatives introduced that’ll drive the cost of the fuel cell down we have system costs and hydrogen storage costs associated as well the hydrogen storage costs are on the vehicle side as well as on the infrastructure or fueling station side on the infrastructure side the challenges faced for reliability you can imagine as you’re introducing your first hydrogen fueling stations you have submissions to work out today we have numerous hydrogen fueling stations deployed throughout the world operating reliably availability and focused network are sort of tied together you need to have a certain amount of infrastructure deployed or you end up with that sort of chicken and egg scenario where the automobile manufacturers won’t be introducing fuel cell electric vehicles in any large number because the infrastructure is not there the infrastructure companies aren’t going to introduce the infrastructure because the vehicles aren’t there so that sort of seems to be the issue that were in in the fuel cell electric vehicle industry just about every major automobile manufacturer today has a fuel cell program some have been working in the field for over twenty years others are just getting into the field and we’re seeing numerous platforms being deployed in in specific areas in geographies of the world this is the Honda FCX Clarity vehicle it was introduced in 2007 by Honda now understand through this vehicle to be introduced in 2007 it was probably 2005 2004 fuel cell technology and probably the most or the two most interesting points to me on the respect that we have here for the vehicle are the curb mass and the range so six hundred and twenty kilometer range this does use 700 bar hydrogen tanks and you can see that we have a what I would call a relevant electric vehicle here a vehicle that is the same size as your family sedan that has what I would call relevant autonomy or or range just a brief note on buses there are numerous buses numerous bus deployments in Europe in various cities you can see some of the major bus manufacturers that are actually deploying fuel cell buses Mercedes van Houle techno bus and Ram PE the bottom or the bottom two buses that you see in the slide are manufactured and assembled using hydrogenic steel cell technology so why are fuel cells relevant and I’ll be getting into why Germany is pushing hard with hydrogen and fuel cell electric vehicles to me this slide sort of illustrates why fuel cell vehicles are relevant so on the left of the slide here is a gasoline hybrid vehicle a 2009 Toyota Highlander you fill the tank up you get 710 kilometers in terms of range with an average fuel economy of about nine liters four hundred kilometers the cost to fill up at ninety five cents per liter approximately sixty four dollars on the right is Toyota’s 2009 fuel cell Highlander vehicle you fill the tanks up with hydrogen you get six hundred and ninety kilometers of range it’s an average fuel economy when converted to gasoline equivalent of three point four liters per hundred kilometers the cost to fill up with eight dollars per kilogram of hydrogen is approximately fifty one dollars and I can tell you that you can order and have hydrogen delivered today at eight dollars per kilogram so this is why as I get into my presentation and you see why Germany is pushing ahead there’s great interest in

Germany before I get into this slide I’ll tell a little story here many of you probably aren’t aware that in I think it was May of 2009 the Secretary of Energy of the United States dr Steven Chu went on record by saying that fuel cell electric vehicles will never come to market that essentially they need for I think it was a for miracles for the fuel cell electric vehicles to come to market so that was May 2009 in September of 2009 the automobile manufacturers that you see on this slide basically got together along with the German government and basically signed a Memorandum of Understanding saying that they’re gonna pick 2015 as the date that they’re gonna have large-scale deployments of fuel cell electric vehicles and what they did is they picked a local or a they picked a specific geography to focus on currently today fuel cell electric vehicles are deployed in various cities throughout the world and if you think of that chicken and age how do you focused infrastructure it makes it very difficult to focus the infrastructure so in September the these automobile manufacturers signed up to a major release in Germany of fuel cell electric vehicles at the same time of that announcement several infrastructure companies also made a Memorandum of Understanding and they signed up to an infrastructure buildup plan in Germany and what we’re seeing here is the German high roadmap plan of 2013 2050 and 2017 and you can see the that tax Thailand is the German name for fueling station and you can see that they’re gonna be adding roughly ten fueling stations in 2010 142 to 218 in 2015 and over a thousand fueling stations in 2020 and you can see where they’re peppering the fueling stations located around the major cities in Germany in May of 2009 hydrogenic was awarded one of those fueling stations as they’re rolling out this is a vattenfall fueling station that in fall being third largest utility in europe this fuelling station is a 1 megawatt electrolysis fueling station situated in the heart of Hamburg and it will be used as one of the fueling stations that will fuel the deployment of fuel cell electric vehicles as well as buses ok now on to what’s the relationship between hydrogen and and renewables and why is Germany’s so bullish on hydrogen and to do that we’re gonna look at a case study we’re going to look at a time slot in 2008 to better understand what’s going on in Germany as we get into these slides I’m sure everyone here is aware of the call it the issue with renewable energy that intermittency not knowing exactly when the wind will blow or whether you will have that energy and certainly not being able to call upon renewable energy like you can with conventional generation generating capacity so Germany is divided up into a few regions in term of utility control in 2008 there were over 20,000 weren’t turbines deployed in Germany with a total nameplate capacity of about 23,000 megawatts so that was 2008 German plans are calling for doubling that wind install base in Germany so it’s expected to go to 50,000 megawatts by 2020 which is pretty impressive in 2007 there were 40 terawatt-hours of electricity produced and that by wind energy and it equalled roughly 7% of Germany’s annual electricity consumption the area that we’re going to look at is the Eon control area where 40% of Germany’s installed wind base is located so this is a two-week period in the Eon control area that we saw on the map and you can see the the wide fluctuations of wind energy that come on the German grid this is fairly typical and you can imagine what this will look like when they move to 50,000 megawatts of nameplate capacity in Germany so this is a major problem for utilities how do they manage the the large spikes and wind and then how do they manage when the wind drops off suddenly so everyone’s talking about energy storage energy storage will be the way that we handle bringing on more renewable energy and handling handling the fluctuation so here we’re looking at one form of energy storage which is the Pumped hydro so to give you an idea the little box that you see there is the amount of energy that would be stored by this pumped hydro facility and the area under the wind curve is really the energy that you would need to store to help solve the problem so you can see you’re gonna need a lot of Pumped hydro storage facilities and in order to solve the problem today in one region of

Germany and that area that little square that you see there is roughly the amount of energy that would be that would be required to refuel 1 million Chevy electric vehicles so the Chevy Volt you would need a thousand those vehicles to be able to soak up a million of those vehicles sorry to soak up that amount of energy so now I’ll go to another form of energy storage that we’re hearing a lot about and that’s called compressed air energy storage so the image on the right is a salt cavern and today we use salt caverns to store natural gas and the thought is we’ll have lots of salt caverns and we will store renewable energy in salt caverns so this is a fairly large salt cavern you can see it’s not not very efficient you can see you’re storing roughly 4,000 megawatt hours of energy again really not solving the problem in one area of Germany now when you take that same salt cavern and rather than filling it with compressed air you fill it with hydrogen you can start seeing now that hydrogen starts matching up to the size of the problem so the square now is huge you’re really able to soak up all that energy and that’s one cell counter and that one salt cavern will be able to store enough hydrogen to fill 3.6 million fuel cell electric vehicle so you start you start seeing why Germany’s so bullish on hydrogen and driving hard on fuel cell electric vehicles the utilities have a problem the problem is fairly large and you can see the impact that hydrogen has in terms of an energy storage solution just circling back to this slide when you start looking at all these hydrogen fueling stations and you can imagine that at least half of them will be electrolysis every electrolysis fueling station inherently has hydrogen storage in order to fill the vehicles you can see that the hydrogen fueling stations will be the salt cavern you basically have distributed fueling stations utilities will be able to call upon those fueling stations to shift renewable energy into hydrogen into storage so in summary why hydrogen and fuel cell electric vehicles in Germany I talked briefly about fuel cell electric vehicles and how they’re they have predictable performance and they have long driving range which makes them relevant you can get a family-size again capable of being a primary vehicle it is zero emission mobility and of course you get the fast refueling with hydrogen fuel cell vehicles but probably the most important thing to leave you with is the future of hydrogen as an energy storage medium and how hydrogen really fits with storage problems certainly in Germany with that I’ll I’ll leave you thank you thanks very much thanks to all our speakers we want to open the floor up to two questions and there are microphones situated at the front if people just want to step forward in the meantime I want to ask a couple questions as well it’s great to see the example of what’s going on in Germany and how utilities are getting engaged there’s no doubt that electric vehicles are going to really change the relationship and dynamics between energy distribution and transportation fueling one question that I have is in other regions maybe where renewables aren’t so much a situation for utilities how do we do about getting power companies to cooperate and getting them more engaged in the introduction of electric vehicles I think this is a major challenge especially in North America in the u.s. I guess there are about 3000 utilities and if you want to bring in electron mobility it’s absolutely important that utilities cooperate with each other number of challenges you need specifications we cannot have three four different types of specification just for charging the vehicle for example also the customer has to be able to drive the vehicle across different cities across different states so there has to be some sort of mechanism whereby utilities can cooperate in certain countries especially like in Germany and the UK in France we’re seeing a lot more cooperation I would say than we have in the US so I think one of the session that I have is absolutely important entities cooperate and maybe the best way of doing this is to have some sort of government mandate I mean a great example is the country I come from in the UK where the government’s taken a number of initiatives set of departments bodies which are supporting the implementation of electro mobility across infrastructure with subsidies plus also setting up working loops to operate and bring this to market thanks alright they’d be mentioned in

your presentation that you you kind of been involved with electric vehicles in the past and I think everyone here would agree we’ve sort of seen this surge in enthusiasm and momentum for electric vehicles before and then it sort of trickles off after a couple years what what I’m wondering is is there anything different this time why has that happened in the past and can we expect the momentum to actually continue this time around okay that’s a good question you know I did work on electric vehicles back in around 1990 and then I had worked on several of the things within Magna since then but I’m back on to electric vehicles now the enthusiasm wanes for three reasons one is cost life like for the battery life the vehicle and range so range is a significant adjustment to people when they realize they can’t drive somewhere far on the weekend or so on so it’s it’s limiting and use of the vehicle so certainly life has gotten better cycle life with lithium-ion batteries range has gotten better cost has not really gotten better lithium-ion batteries are more expensive than let us it as I call it an upfront investment on a per charge basis they’re less expensive because they have more charges but the challenge there is is having a system or an offering to the public that says I need you to pay more for your vehicle as a piece of capital equipment and wait till it wait wait over time for a payback what was what we’ll see going forward is probably a large growth in mild hybrid vehicles where you have in micro hybrid where you have simply stop start with almost no enhancement to the battery mild hybrid where you may have a small battery which drive maybe 500 watt hours to one kilowatt hour as opposed to 2230 which you seen electric vehicles because the cost for the consumers the on cost is much smaller and there is a payback to that so the the cost-benefit analysis is is pretty reasonable there today and if you look at what’s in the car company’s product portfolio what’s coming out that’s very prominent and what’s going to come out over the next five to ten years electric vehicles are a good noble goal and as an industry we’re working on them the main thing driving electric vehicles in our industry right now is legislation and so if you look to California and some of the other states that may take on the same legislation in California you cannot is a large volume manufacturer you cannot sell cars without selling zero emission vehicles so the the lowest cost solution for the car companies is to go to electric vehicles and of course this gives us a bit of an opportunity because this legislation there to see let’s say see what we can do as an industry and to try and work together to get cost down to the point where it can go big at today’s prices it won’t but the costs are coming down and so there is hope for the future in questions my name is John Bangka and I’m the founding president of the sustainable Urban Development Association and this question is addressed whoever’s brave enough to take it on I see the development of the technology in Europe as being far far ahead of us here and I think the main reason is is that we are very afraid of taxing gasoline more it would be the end of society as we know it I think it’s what most people would think and yet I see that as possibly being a way of making electric vehicles much more cost competitive I want what comments of any of the speakers would be on that so in Europe you see this much more this acceptance of technology in vehicles and so in our business we have basically and have had for many years a list of technologies that are available to us at a certain cost and so as car companies and the suppliers we dip into those technologies as the cost of fuel comes up we dip in more aggressively into those technologies which drives up the price the vehicle and takes down your usage of fuel but the main driver for European acceptance of these new technologies is the price of fuel there is significantly more than it is here which was I think the point that you made and certainly a

taxing gas here there’s a resistance because it affects lifestyle and people like certain types of vehicles but you know that I guess is a policy discussion whether whether something is done there or not did I answer your question yeah okay yes I’m al carbee of electric mobility Canada congratulations in the Iceland workshop could the panel comment on the availability of lithium and rare earths for electric motors is there enough probably that they have a supply situation in the future okay let your minds there’s there’s a lot an awful lot of lithium in the world in Canada North America a lot of places there’s lithium in rock spewed I mean it’s not really the best source for batteries because it contains other elements and it’s a bit difficult to extract useful in the manufacture of glass there’s salt beds down in South America which is the main economic source of fairly pure lithium which is he useful in batteries we’ve identified sources and I don’t know if you guys are aware Magna has a small investment in one of the lithium mines in in South America to secure our supply going forward but if you want talking to the lithium miners Association there anticipation is even given the future up come up bringing up of batteries and electric cars that there’s going to be a oversupply over availability of lithium for the foreseeable future and so we don’t see any risk there for the lithium itself there are other elements in battery cells that cobalt for example that are fairly expensive and may we may see price fluctuations but for lithium the the some of the richer mines could supply easily the across a few mines supply the automotive industry for the you know reasonable foreseeable future so I don’t think there’s an issue there hi my name is Bob staska from the Ontario Center of Excellence and I just want to raise an issue which I’m curious to see how the panel reacts to this which is we’re looking at tipping points as you mentioned David for making cars cost competitive capital and operating cost but then there are certain advantages maybe it’s hard to cost them out that favor electrification and I’m thinking things like you get to charge your car at home so you’re you fuel at home that’s a big plus for a lot of people you get to choose your supplier you could buy it from various generators buy a packaged plan or you could make your own with solar panels or wind and and finally there’s there’s the issue of decarbonisation and the fact here in Ontario at night we pretty much have emission free electricity and so that’s a big plus in terms both from legislation but also personal choice some people will favor that and be willing to pay extra so I’m just saying how would those factors come in do you think in terms of helping to tip over into large-scale adoption so yeah with regard to some of the soft benefits I mean that’s up to the consumer because ultimately they’ll be given a proposition by the car companies that says here’s the price for the vehicle do you want to pay it and so if they see those benefits and they’ll they’ll go ahead and pay for that with regard to a decarbonisation as I said there’s a lot of technologies that we can use to bring down the carbon usage of vehicles so the question would be for example should I spend an extra fifteen thousand dollars to make my one electric car electric or if I spread that fifteen thousand dollars across a thousand cars and put fifteen dollars into each what I save more fuel and today generally the answer is if I go to the less expensive technology and get a few percent off of each car I’ll save more fuel that way so that’s one of the counter-arguments to electric vehicles at this point in time not to say that we shouldn’t move in that direction it’s it’s as I said it’s a noble goal and we and we ought to be working in that direction we’ve got to get the cost down to make it all work different business case for the government’s a case in point if I take is the case of Denmark ninety five percent of Denmark’s Energy’s comes from wind power absolutely new go they actually have more power than they need

and they exported to neighboring countries like Germany for them the business case is to sell that power in their own country with an electron mobility at the premium price plus it provides the benefits like load profiling so if you look at some of the early adopter countries in the world you need to really carefully look at the energy portfolio look at Portugal look at the UK in UK’s case is quite the opposite they don’t have very good renewable energy sources very coal power driven so you’re absolutely right you know looking at the energy portfolio some of the country’s drivers can lead to development of effective legislation which can help push electrons t-thanks norm Letta lick from Borden Ladner’s herb a walking over this morning I noticed a bit of a nip in the air which you know for all Canadians is a bit foreboding because we know our winter is coming was wondering if there are any particular challenges that Canada’s cold winter presents either for battery technology or for the fuel cell to recharge the batteries so maybe just briefly on the fuel cell the fuel cell is a is an electrochemical device very similar to a battery it also produces water as a by-product which would sort of make you think is it well-suited for for winters and a cold environment ten years ago cold starts and operating in cold weather was an issue for fuel cells not from a basic electrochemistry or materials point of view simply from the fact that if you’re producing water inside a fuel cell and the fuel cell is made up of a numerous plates assembled together if you design or if you designed your fuel cells such that water got trapped inside your fuel cell and then it froze and that water when freezing would expand there was the possibility that you would damage your stack today I would say most fuel cell designs most automotive fuel cell designs certainly are rated for freezing meaning the fuel cell is able to shut down and freeze and then it’s able to startup so for fuel cells it’s really not an issue certainly down to minus 40 did I lose some there we are okay with electric vehicles and lithium-ion batteries actually most batteries there’s a reduction of ion transport at colder temperature and so that does need to be managed the way we deal with that is sometimes you can have a battery pack heater in the car while it’s being charged other things you can do is you can put a call it computer limit on the performance of the vehicle when it’s cold until you’ve used it a little bit and then it then it warms up with use and then you release the limit so the vehicle goes back to its normal peak power and performance one question that I have to to all of the panel members it’s always difficult to introduce a new product and when you’re trying to introduce a new product into an industry that is developing it’s even more difficult we have a lot of entrepreneurs here and I’m wondering what advice you would provide to someone that has something innovative maybe on the chemistry or battery side or within power electronics how do they go about getting into this industry where do you try to try to start with it maybe I can start I think the number of ways and I think it’ll be the electric vehicle what I’ve seen is last year we saw private equity companies not funding because of the recession and we certainly saw organizations themselves and we worked with a number of organizations and you’ve seen how battery companies are buying car companies or startup car companies and vice versa so one of the recommendations that I have is of course private equity companies are the first source and easy source of funding but at the second but at the same time you’re seeing lot of organizations globally funding electromobility secondly we’ve seen with car companies especially they have set up venture capitalist organizations I mean you must have heard of GM has one I know howdy has a venture capitalist firm so you’re seeing a lot of car companies itself either through the venture capitalism firm or if they are seeing an innovative technology doing development contracts need to be sometimes a little bit careful because you lose a lot of control if you do that at the same time you’ve seen governments globally I mean the US government you know which is twenty five billion funding of course it’s a bit challenging if you’re a start-up but there are a number of fundings in in the UK I give the example of Technology Strategy Board and if you might have heard Gordon Murray who’s got a new very innovative megacity car

design which will be electric has got funding of three million pounds from the UK government to develop that so what we’re seeing is globally through various channels governments car companies plus also major manufacturers and suppliers we are seeing that you can actually approach a number of organizations to get your idea off the ground and that is something very special with electric vehicle that I’ve seen so the practicality of doing this what I would suggest is first you make you sure your intellectual property as well in order because if you have a great new technology people will want to get their hands on it one way or the other I think on the selling side you can go directly to the OEMs which is you know for GM and Chrysler here in North America or one of the eurasia ones to get there to get at least their input and their interest because they will give you a feedback they will take the time to look at your product if it’s new interesting and useful for them and then finally to hook up with a an existing supplier because if that you’re doing a start-up I think to set up that kind of supply base is a pretty big thing you could go for funding but I think going with an existing supplier can make some a lot of sense as well and ultimately if you’ve been to the OEM first your product and and your idea will be much more interesting to the supplier if the OEM customer in in our business our customer is saying I like that product I want that product that makes it much more interesting for us because I have been somebody to sell it to okay maybe just add I’d maybe take a slightly different approach I find OEMs typically can be extremely slow with moving with ideas maybe another approach could be to approach the the C of system integrators that are out there that are involved with vehicle integrations of one type or another thereby allowing you to sort of cut your teeth and refine your idea or your product so the system integrator approach might be faster quicker to market where you can get the learning cycle happening a lot faster and another question it was to a couple times in the presentations the the cost issue that new technologies face both batteries and with fuel cells so I’m wondering what what sort of volume is it going to take to get down to a reasonable price point maybe what is a reasonable price point and are there other key advancements on the technology side that we think are going to make a lot of headway on the capital cost I’d be interested in hearing hearing from my colleague on the cost per kilowatt of hydrogen fuel cells after I make my comment but one of the just for me it’s useful information right for we’re looking forward one of the things that’s one of the main things right is the cost per installed kilowatt and most things that we’ve looked at on stationary we’ve looked in magnet we look mainly inside automotive that’s our focus but we keep an eye on what’s going on stationary power and so on small micro and small installations typically $1.00 to $7 per kilowatt of power installed the thing that keeps us buying all of us you me and everybody else buying internal combustion engine powered cars one kilowatt of power there’s one the two cents right so if somebody says you’re gonna drive your car with this new technology it costs a dollar a kilowatt hour then you’re looking at it could be a half a million dollar motor or something like that right so you have to fundamentally you have to be economic to to be able to operate in the high volume area so on the volume side you had mentioned what was a good volume what would get us there I think a couple things have to happen right volume helps but we have to there still is a need for new technology in the battery area in order to bring the cost down I think the rest of the electric and hybrid vehicles the costs are fairly reasonable manageable and if we move them down incrementally we’ll get there and then once we do that once we have a new battery technology that gets the cost down I think then everything can go forward from there so so maybe janta just your question on what the volume should be it needs to be a lot more than what it is today that’s for sure when you look at the German announcement it was a hundred thousand vehicles more than a hundred thousand vehicles combined buy or put together by about

six or seven automobile manufacturers in terms of bringing the price down it will it’s a bet by the automobile company if you look at what Toyota did with the Prius they started manufacturing Prius is at a loss in order to build up the volume the hydrogen and fuel cell industry will require a more organized deployment so you saw in Germany they’re deploying the fuel cell vehicles but at the same time they’re organizing and deploying the infrastructure that’s key or it won’t take off as when you get up to those volumes for a fuel cell vehicle fuel cell technology of a hundred thousand type vehicles that will drive the supply chain so today we have all the suppliers all the suppliers for all the various subsystems exist and they’re innovating iterating and deploying but it’s in very low volume so it will literally take deployment of a hundred thousand vehicles where each automotive manufacturer that steps up to the plate and deploys fifteen thousand vehicles in year one will be able to start rolling the supply chain and getting that cycle going maybe just in terms of cost comparison where the fuel cell industry is at fuel cells are again I said very similar to batteries and that their electrochemical but they’re different in that they separate the power and energy so we’re able to add more fuel if you will to the vehicle without doubling the size of the fuel cell as you would in a battery electric vehicle where if you want to double your range you’ll have to more than double your energy therefore you’ll have to double your fuel cell or double your battery so fuel cells don’t suffer from that the power and energy is separate and fuel cell technology today after maybe 20 years years of focus has gotten to the point where a lot of the processes are what they call reel-to-reel so for membrane manufacturing the high-volume manufacturing has been developed on the key structural component inside the stack the bipolar plate it used to be machine graphite then it went to molded graphite and now it’s gone to stamp metal so the fuel cell industry has iterated and moved towards high-volume manufacturing techniques and it’s really at the point now where it needs a high-volume deployment and when it does that the promises is that the costs of fuel cells were literally dropped down to 50 to $100 a kilowatt and to really believe that to understand how low the cost could be you’d need to look at a fuel cell and see what the basic parts are and then convince convince yourself that if we can make an internal combustion engine for two thousand dollars with all the pieces and the tolerances that are on a internal combustion engine can we make a fuel cell for that price I’m I’m absolutely convinced and so are the major automobile manufacturers because they’re still driving forward with their fuel cell electric vehicle programs my colleague said for Martin from the studies we’ve done price of the batteries today lithium-ion is between 500 to $600 per kilowatt hours we believe if you can reach 50 million cell production which is roughly about hundred thousand vehicles which is what my colleague said you can ride on the economies of scale very sharply and bring prices down 50 to 70 percent so the magic number there really is how as you as a cell or a battery manufacturer can bring in production up to hundred thousand now let’s remember the cost of manufacturing battery the labor costs is less than ten percent so it’s not about low cost manufacturing but more about high-tech manufacturing Thank You Craig Ballinger I’m wondering what the the the load on on the Society for electricity will do to the cost and competition for electricity in society when you go big comets we’ve done a number of studies working with utilities to look at the impact of electric vehicles on on the grid and the answer is if we had one point three million cars or in 2015 or if we even had a million cars as of now up to 2020 you do not need extra power plants with the volumes that we are forecasting yes if the market was to double then these forecasts then you would need additional capacity what will it do to energy prices as of now it’s not very clear if energy prices would go up for electric vehicles now there are some utilities like in Germany who are putting different prices if you’re charging a vehicle you might even have a scenario whereby like you have a gasoline when you fill your patrol up you can pay a premium and have maybe more high powered gasoline and some of us do put it you might have a system whereby you are paying a little premium for energy price but the reason you praying that paying that is the companies then taking that funds and putting in more wind power or

solar power so as of now – I can say that there shouldn’t be any impact if the forecasts that are being predicted on on power plant capacity at least or not for the next 10 years and also in terms of pricing it should fairly remain stable they might be slight premium pricing but again nothing very worrying thanks very much I want to thank all of you for coming and I want to once again thank all of our speakers for great insight into the industry in the market and if you have any other questions they’ll be around for a little longer as well so thanks very much