Chemicals & Materials are the Key to the Future Success of Electric Vehicles

Brian Balmer, Industry PrincipalRobert Outram, Research Program Manager

Chemicals & Materials in Transportation

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Highlights

• Introduction to Electric Vehicles• Electric Vehicle Market & Forecast• Drivers & Restraints• Regional Analysis• EV Batteries Market Forecast• Value Chain• Project Case Studies

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The Context

The need to enhance functionality &

performance

Globalisation of people, products and processes

Development of a low carbon economy

Improvements in health & wellness

Construction & Utilities

Food, Drugs & Cosmetics

Transportation

Chemicals &Materials

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Mega Trends Create Opportunities and Threats for Chemicals and Materials

Primary research through the global value chain, technology and legislation drivers, qualitative and quantitative analysisPrimary research through the global value chain, technology and legislation drivers, qualitative and quantitative analysis

Drive to lower CO2 emissions

UrbanisationGlobalisation

Growth in electric vehiclesNew OEMs emergingSmaller, lighter, greener vehiclesHigh speed rail50% of automobile sales from BRIC

Opportunities for:PolymersBattery materials and

chemicalsGreen fuels and lubricantsAdvanced adhesives

Threats to:MetalsMetal treatment & coatingGlassAdditives for fossil fuels

Mega Trends

Transportation Trends

Impact for Chemicals and

Materials

Mega Trends

Transportation Trends

Impact for Chemicals and

Materials

• Drive to lower CO2 emissions

• Urbanisation• Globalisation

• Growth in electric vehicles• New OEMs emerging• Smaller, lighter, greener vehicles• High speed rail• 50% of automobile sales from BRIC

Opportunities for:• Polymers• Battery materials and

chemicals• Green fuels and lubricants• Advanced adhesives

Threats to:• Metals• Metal treatment & coating• Glass• Additives for fossil fuels

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Electric Vehicles –Battery Chemicals to be One of the Key Factors Enabling the EV Revolution

Battery MaterialsLaminatesElectrodesElectrolytesCasing

TransmissionCooling fluidsGear oilsClutch fluids

Electronics/wiringHigh tension cablesCharging portsCable sheaths

Passenger comfortHeaters (as no heat from engine)Insulation of interiors

Chassis and skinsLightweight plasticsCompositesBioplastics

GlazingPanoramic roofSide windowsPolycarbonatesAcoustic laminates

Rolling resistanceTyre additives

Battery MaterialsLaminatesElectrodesElectrolytesCasing

TransmissionCooling fluidsGear oilsClutch fluids

Electronics/wiringHigh tension cablesCharging portsCable sheaths

Passenger comfortHeaters (as no heat from engine)Insulation of interiors

Chassis and skinsLightweight plasticsCompositesBioplastics

GlazingPanoramic roofSide windowsPolycarbonatesAcoustic laminates

Rolling resistanceTyre additives

EV Market: Opportunities for Chemicals and Materials (World), 2010-2016

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Electric Vehicles and Material Demands Vary by Category

Electric Vehicles

Electric vehicles use electric motors instead of an internal combustion engine (ICE) to propel a vehicle. The electric power is derived from a battery of one of several chemistries, including lead acid, nickel metal hydride (NiMH) and lithium-ion (Li-ion).

Neighborhood Electric Vehicles (NEVs)

NEV is a US Department of

Transportation (DOT)

classification for vehicles

weighing less than 3,000 lbs

(GVW) and having a top speed

of 25 mph. NEVs are restricted

to run on streets where the

speed limit is 35 mph or less.

A city car is a European

classification for small and light

vehicles intended for use in

urban areas although they can

operate in mixed city/highway

environment. In Japan, city

cars are called kei cars.

Extended-range Electric Vehicles (eREVs)

These are plug-in hybrid

electric vehicles (PHEVs) with

an ICE or other secondary

sources connected to a

generator to supply power to

batteries. Their drive range

and speeds are comparable to

those of ICE vehicles.

High-performance Electric Vehicles (HPEVs)

These are sporty PHEVs or

battery electric vehicles

with top speeds exceeding

100 mph and driving range

exceeding 100 miles. Their

price is expected to reach

or exceed $100,000

GEM e2, e4 and e6, REVA

G-Wiz I, ZENN, ZAP etc

Smart EV, Th!nk City, BMW

Mini and others

Chevy Volt, Toyota Prius

PHEV, Chrysler Sedan and

others

Tesla, Venturi’s Fetish and

Lightning GT

City Electric Vehicles (CEVs)

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Global Electric Vehicle Demand Analysis – Potential Sales of 2.2 M in Frost & Sullivan Scenario by 2017

Electric Vehicle Market: Sales Forecasts Scenario Analysis (World), 2009-2017

Scenario's 2009 2010 2011 2012 2013 2014 2015 2016 20172020

(% of Total Car Sales)

Optimistic

Scenario4,500 23,100 123,800 289,500 665,000 1060,400 1,714,500 2,220,300 3,202,000 10-12%

F&S Scenario 4,500 16,500 72,000 193,000 453,000 792,000 1,287,500 1,736,000 2,203,000 5-7%

Conservative

Scenario4,500 13,500 35,600 82,500 150,300 195,100 300,500 450,000 670,000 3-4%

Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan

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64%

22%

10%

69%

22%

1%

2%

49%

35%

3%2%

2.2 Million

60%

28%

3%1%

2009 2017

4,500

7%7%

83%

2%

63%

20%11%

1%

• Japan and China are the key markets for APAC=> likely 80% market share. China expects major share from the local OEMs and potential for strong growth in India.

• eREV and PHEVs likely to account major share in the North American market driven by the virtue of demographics and customer driving characteristics => GM & Chrysler OEMs for eREVs. On the other hand, CEVs suit the demographics for the Europe.

EV Breakdown By Region - CEVs to Account for 69% Share In Europe; NA to Witness More PHEVs with a 35% Share

4%

6%

11%

8%

EV Breakdown By Region – Sales Estimates (World), 2017

Note: All figures are rounded; the base year is 2009 Source: Frost & SullivanNote: All figures are rounded; the base year is 2009 Source: Frost & Sullivan

5%

Un

it S

hip

men

ts

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Value is Driven by the Cathode and Separators but Binders and Laminate Resins are a Less Technical Way to Enter the Market

LaminatesThey hold the contents of the cell together. They consist of aluminum coated with PET resins to impart chemical

resistance. Corrosive chemicals are the biggest challenge to

construction

SeparatorsThey form a critical structural element, which is constructed of polymer films or ceramics. They act as a reservoir for

electrode active materials and separate the cathode from the

anode.•PP based seperaters are the most commonly used EV battery material.•Multilayers sperators are also gaining ground.•Newer technologies are emerging such as Aramid based technology and PVDF which offers high temerature stability

Anode Active MaterialIt plays a major role in

energy generation and is dominated by carbon-based

technologies.

Cathode Active Material Technology developments in a battery are mainly related to this material, and it accounts for a major share of the total

cost of the system.

BindersThese are typically high-

temperature polymers such as PVDF, which are used

to make a slurry of electrode active materials before being coated on to

current collectors.

ElectrolytesElectrolyte systems act as a

carrier of ions between electrodes.

Electrolytes are typically Lithium salts such as Li PF6

dissolved in EC or DEC solvents

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Technology Improvements and Grants Drive the MarketHigh Costs and Performance Restrain the Market

Improvements demanded in battery performance in terms of energy, power density and charging frequency

Note: Length of the arrows indicate the degree of impact of the factor. Source: Frost & Sullivan

Government initiatives to accelerate R&D and market growth

Environmental sustainability being the key trend in the transportation industry

Need to reduce the dependency on oil driving investment in alternative propulsion technologies

Introduction of novel technologies and entry of new suppliers in the growing Europe and US markets

High cost

Need to prove and test the safety aspects of emerging battery technologies

Battery technology

Total EV Batteries Market: Market Drivers and Restraints (World), 2010-2016

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Company TechnologyLocation

Ele

ctro

lyte

DOE Grant($ Million)

• Elyria, Ohio • 24.6 • Production of nickel-cobalt-metal cathode materials for Li-ion batteries

An

od

e

Sep

arat

ors

US DOE’s Grants for Lithium-ion Battery and Component ManufacturersDOE Grants are Excellent Sources of Plant Capital

• BASF Catalysts LLC

• Albany, Orlando• Production of high-energy density

nano-carbons• EnerG2, Inc. • 21.0

• Goose Creek, South Carolina

• Toda America • 35.0• Production of nickel-cobalt-metal

cathode materials for Li-ion batteries

• Silver Peak, Nevada• Chemetall Foote Corp. • 28.4• Production of lithium carbonate

and lithium hydroxide

• Sanborn, New York• Pyrotek, Inc • 11.3• Production of lithium carbonate

and lithium hydroxide

• Buffalo, New York • 27.3 • Production of LiPF6 salt for Li-ion batteries

• Honeywell International

• Zachary, Los Angeles • 20.6 • Electrolyte production• Novolyte Technologies

• Charlotte, North Carolina

• Celgard, LLC • 49.2• Production of polymer separators

for Li-ion batteries

Cat

ho

de

Ele

ctro

de

Act

ive

Mat

eria

ls

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• Development of manufacturing infrastructure across the industry

• Building relationships with suppliers

• Building relationships with end users

• Managing the trade-off between safety, performance and economics

• Developing a global presence

• Increasing battery life to match vehicle life

Infrasturucture and Value Chain Still to Fully Develop

EV Battery

Chemicals and

Materials

Key Industry Challenges

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Geographic Analysis of the Total Market

•Currently, Asia is the key region driving the demand for chemicals and materials in EV batteries, accounting for more than 80 per cent of the existing global demand.

• Within Asia, the major technology hubs are in Japan and South Korea, though China is emerging as a strong manufacturing location as well.

•Most of the leading market participants in the individual component segments such as separators, electrolytes and electrode active materials are based in Japan.•This is largely because of the intense outsourcing of battery production which happened in the beginning of this millennium, following the shifting of electronics manufacturing base to countries with low production costs.•Even in the batteries market, some of the leading participants such as A123 have their manufacturing facilities in China and South Korea.

Major Locations of Chemical and

Material Suppliers to the EV

Batteries Market in Asia

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•The United States and Europe will emerge as the significant markets for EV battery chemicals, due to government initiatives to promote many companies to set up production facilities in these regions.•Europe is also witnessing rapid development, which is signified by Nissan’s announcement to develop its electric cars in the United Kingdom. •Restrictions on air shipment of certain chemicals such as electrolytes, due to their inflammability, demand local production of such chemicals.

• These production facilities will, therefore, be set up in locations such as the United States and Europe where there is a huge end-user base.?

•GM and Chrysler are in the advanced stages of their EV rollout in the United States. Companies such as Daimler, PSA and BMW have major bases in Europe. These developments will foster the growth of the whole supply chain in these regions.

Geographic Analysis of the Total Market (Contd…)

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0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

6000

6500

2008 2009 2010 2011 2012 2013 2014 2015 2016

0

50

100

150

200

250

300

350

400

450

500

High Growth Market but from a Small Base

YearRevenues ($ Million)

Revenue Growth Rate (%)

2008 12.1 -

2009 22.3 85.0

2010 104.1 367.0

2011 262.2 152.0

2012 1,030.1 293.0

2013 1,891.4 84.0

2014 2,995.8 58.0

2015 4,515.8 51.0

2016 6,450.3 43.0

Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan

CAGR (2009-2016): 125.0%

Re

ve

nu

e G

row

th R

ate

(%

)

Re

ve

nu

es

($

M

illi

on

)

Revenues ($ million)

Revenue Growth Rate (%)

EV LIB Market: Revenue Forecasts (World), 2008-2016

YearYear

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Distinct Functions in Value Chain but Lots of Vertical Integration

OEMsGM

and Ford

Battery Pack Integrators

Johnson Controls and NEC

Battery Cell ProducersA123, LG Chem, Saft and Toshiba

Chemical and Material SuppliersCelgard, Tonen Chemicals, Merck, Dow Europe and BASF

Raw MaterialsLithium Metal and Polymers Chemetall, FMC Lithium and

Arkema

Processed InputsLithium Salts and Solvents

Honeywell, Stella Chemifa, Kanto Denka Kogyo and Morita

Chemicals and MaterialsElectrolytes, Electrode Active

Materials, Separators and Collectors

Source: Frost & Sullivan

Total EV Batteries Market: Value Chain (World), 2009

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Value Chain Analysis:Hitachi presents an excellent case study of a highly integrated participant in the EV lithium-ion battery anode materials market.

Battery Systems

Module and Control Systems

Battery Pack and Cell

High-performance Materials

Processing Equipment

•Coating and dispersion technologies for the high-speed production of electrodes were developed by Hitachi Maxell. Other divisions such as Hitachi Plant Technologies also have a role in process design.

•It is the market leader in carbon anode materials. It also has capabilities of supplying high-purity copper foil to electrodes. •The active material is supplied as a powder to cell manufacturers that, in turn, mix it with the binder and coat it on to the electrode metal foil.

Started Battery production through subsidiaries such as Hitachi Vehicle Energy (HVE). HVE was established in 2004 to develop lithium-ion batteries for use in HEVs. The company has already sold 600,000 batteries in this market. Apart from battery systems, it also offers inverters and motors for HEV applications.

Source: Frost & Sullivan

EV LIB Anode Materials Market: Value Chain Analysis (World), 2008-2016

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Lithium Ion is Ideal Due to High Power Density

•The choice of battery material involves a trade-off between power, energy and safety.•The type of battery used and battery chemistry are different in EVs, HEVs and PHEVs.•In HEVs, the presence of ICE means that the range of the vehicle is not as important as its power.

• This creates opportunities for batteries with lower energy densities such as nickel metal hydride (NiMH).

•However, in EVs, battery capacity is a very critical factor for the vehicle to cover longer distances between recharges.

• This requires much high performance from the batteries, thereby creating opportunities for Li-ion battery technologies.

• Li-ion batteries are also expected to substitute NiMH batteries in HEVs largely in the long term of the forecast period. Source: mpoweruk

Energy Densities of Major Battery Chemicals

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Technology Trends:Different chemistries are competing for adoption in the EV lithium-ion battery cathode materials market.

Source: Frost & Sullivan

EV LIB Cathode Materials Market: Technology Trends (World), 2009

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Power & Energy Density are the Holy Grail

Source: Batteryuniversity.com

Attributes that Deliver Market Value

• Increase Power Density• Increase Energy Density• Longer Battery Life• Shorter Charge Time• Lighter Weight• Lower Manufacturing Cost

Methanol fuel cells can potentially be refilled faster than charging a battery. Supercapacitors have charge stored as electrical energy already available to be dissipated on demand – high power density

Energy Density

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Laminates for Outer Covering of Lithium-ion Batteries

•Although the laminates that are used to bind the contents of the cell appear to be a simple ‘coffee bag’ type of packaging, they are one of the critical structural elements in a lithium-ion battery.

•Currently, only two companies supply these globally on a commercial basis.

•Dai Nippon Printing is the leader with a market share of 70 per cent.

•The rest of the market is accounted for by Showa Denko.

•One of the main technical challenges for laminates is to withstand the highly corrosive electrode materials and electrolyte, which can quickly degrade them.

•Other critical physical properties include gas barrier, heat resistance and workability.

•Dai Nippon Printing has patented its process for laminate production, which involves the usage of a soft aluminium foil as the gas barrier and has an inner resin coating layer to provide the laminate with the necessary chemical resistance.

•Major companies in the aluminium packaging industry are targeting this lucrative market, and they are expected to enter into it in the medium-to-long term of the forecast period. Source: Showa Denko

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Binders for Electrode Materials

•Binder resins are used in electrode construction in lithium-ion batteries.

•These are used to make a slurry of the electrode active materials, which is then coated on to current collectors.

•Some of the key requirements for chemicals to act as binders include the following:

•High purity levels

•Thermal resistance

•Resistance to solvents in electrolytes

•Excellent adhesion of electrode active materials and collectors

•Processability

•Polyvinylidene fluoride (PVDF) is one of the most commonly used binders in EV batteries.

•Leading participants in this market include Kureha of Japan and Arkema.

•PVDF suppliers are also planning to develop separators out of their films.

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Separator Materials for EV Lithium-ion BatteriesMarket Overview

What Makes a Good Separator?•Separate the anode and cathode, sustain ionic conduction and act as a reservoir for the electrolyte.•Low acid solubility, good oxidation resistance and low electrical resistance.•High porosity and low thickness of the separator enable better permeability of lithium ions and, thereby, generate more energy.•Good mechanical strength to prevent run-aways

Source: Evonik

Ceramic Separion Separators

Battery Separators

Ceramic Polymer

PP

PP/PE/PP Trilayer

PE

PVDF (In Development)

Celgard &UBE

Evonik

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Market Growth Immense market growth is expected for all the components of EV batteries. The lithium-ion technology will largely supersede NiMH-based technologies

in HEVs and EVs over the long term of the forecast period.

Technology Trends

Geographical Trends

Growth Strategies

Acquisitions and joint ventures with technology companies and close relationships with key end users will have a major influence on ensuring market share and growth.

Vertical integration in the value chain will generate higher profit margins and control over technology.

Leveraging government grants and incentives are the key to reduce the capital expenditure burden in the start-up phase for market participants.

Findings and

Conclusions

Key Challenges

Rapid ramping up of components production capacities to meet the very high forecast growth rates in EV and battery production will be the significant challenge

The market will face high levels of price pressure from downstream companies, and increasing competition from low-cost production locations will augment the profit margin reduction for chemical suppliers.

Leading participants are mostly based in Japan; however, more US and European companies will emerge over the forecast period.

Nevertheless, South Korea, Japan and China will continue to have a major impact on technology and manufacturing in the market.

Investing in the appropriate technology will also be a major challenge for market participants. This is because the market is currently in nascent stage and is supporting a wide range of chemistries and technologies, but this support will narrow down as the market matures.

Key Findings and Conclusions:EV Battery Chemicals and Materials Market

Source: Frost & Sullivan

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How We Help Our Clients

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Typical Client Questions

• How do I capitalise on this key growth market?• In such a fast paced market do I understand who the winners and

losers will be?• Who should I partner with or target to develop products?• How do I cross sell products into other power storage sectors?• Where should I focus my R&D for the best returns?• What will be the next battery technology chemistry?• Will there be new market players and customers?• What will the business model look like?

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EV Battery Materials – Opportunity Analysis

• Client: • Leading Global additive and materials company, not currently active in the

electric vehicle battery materials market.• Scope:• Identify and confirm areas of the EV batteries market in which there are

unmet needs• Evaluate which products in the clients portfolio may be able to add value to

existing battery manufacturers• Quantify the market value of developing a product to address each specific

unmet need• Discuss and shortlist key market players and thus potential routes to market

for any future product developed• Methodology:• Strategic workshop format. Frost & Sullivan presented the roadmap and

development of the electric vehicle market and then, more specifically, the demand for chemicals and materials in the batteries. Growth opportunities specific to the client were then discussed and evaluated using inputs from Frost & Sullivan research and the clients in house data.

• Result: • Identification of multiple growth opportunities• Clear understanding of the size of each opportunity• Understanding of the market value of each opportunity and thus the price

that could be achieved if a product was developed to address a need• Understanding of likely revenue and profitability• Confirmation that an R&D campaign is worth investing in

Battery Systems

Module and Control Systems

Battery Pack and Cell

High-performance Materials

Processing Equipment & Chemicals

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EV Battery Components – Strategic Sourcing

• Client: • Leading Japanese automotive vehicle manufacturer with ambitions to supply

its EU electric vehicle plant with batteries produced in house from its own facility in the EU. The client wanted EU suppliers for the battery plant.

• Scope:• Identify existing suppliers of battery components in the following key areas:

• Cathodes• Anodes• Separators• Laminates• Electrolytes• Collectors

• Understand which new market players will be entering the market, the timeframe of commercialisation and likely supply capacity.

• Understand which companies can supply to the tight specifications laid out by the client.

• Research:• Interviews with battery component suppliers, battery assembly companies

and chemical companies identified as potential new market entrants.• Result: • Clear understanding of the EU supply potential for the battery plant• Understanding of potential new suppliers and new products being developed• Understanding of potential bargaining power in the purchase process• Company profiles of key players to further understanding of potential

partnerships and strategic fit

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Green fuels and lubricants

Electric vehicles and batteries

Recycling / end of life

Light weighting

Emerging Markets

Chemicals and Materials in Transportation Platform2011 Key Themes

Green Fuels and Lubricants

Electric Vehicles and Batteries

Recycling / End of Life

Light Weighting

Emerging Markets