financing the infrastructure to support alternative fuel vehicles

Financing the Infrastructure to

Support Alternative Fuel Vehicles

Joshua Cregger, Center for Automotive Research

Ellen Hughes-Cromwick, Ford Motor Company

Global Society of Fellows

Global Interdependence Center Conference

Richmond, Virginia April 9, 2013 The information contained herein does not constitute the Company’s forecast of financial performance and

has been prepared solely for business planning purposes to determine actions the Company may take to meet its plan

The information contained herein does not constitute the Company’s forecast of financial performance and


SLIDE 1

INFRASTRUCTURE INVESTMENT FOR

ALTERNATIVE FUEL VEHICLES

Using Public Investment or Public-Private Partnerships Could Advance Goals

of Energy Independence and Sustainability

Good Fiscal Policy In Any Global Setting

• Most major markets globally are using some form of public support to

achieve expansions of infrastructure necessary to support growth

• Role for public investment in supporting infrastructure build outs

• Job creation and manufacturing retention rates

Convergence of Public Finance Principles, Policy and Politics

• Sustainability

• Energy security

• Energy independence

• Competition and productivity

• Innovation



SLIDE 2

FUTURE MOBILITY ATTRIBUTES AND WHY

INFRASTRUCTURE SUPPORT IS CRITICAL

China Has Set a Goal of 5 Million NEVs by 2020

China

• Government goal to achieve 5 million “new energy vehicles” (NEVs) by

2020

• Reduction in pollution a top priority (20% comes from transport)

• Already China imports over 50% of their domestic oil consumption

• At the current pace of transportation growth, by 2020, China would be

importing 80+% of oil consumption

Technology Development and Infrastructure

• Battery switching stations

• CNG options for taxis, busses, heavy trucks

• NEVs all have common attributes of reducing particulate matter and

greenhouse gas (GHG) emissions



SLIDE 3

ALTERNATIVE FUELS OVERVIEW

Variety of Alternative Fuels, this Analysis Will Focus on Four: CNG, E85,

Electricity, and Hydrogen

Electricity

Compressed Natural Gas (CNG) Ethanol (E85)

Hydrogen

Images taken from:

wheels.blogs.nytimes.com

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=3xE6-wk0Evf_KM&tbnid=Pi6kMqnlh-i1EM:&ved=0CAUQjRw&url=http://wheels.blogs.nytimes.com/2009/06/27/e85-ethanol-in-every-car/&ei=X7BiUcLTPMis2gWc5YD4Bw&bvm=bv.44770516,d.b2I&psig=AFQjCNEL7qj7KMSf9R0jAiuy6T83R595qw&ust=1365508565155287

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=6bs_YcqCwgvfUM&tbnid=sEGM4W-xr5_9jM:&ved=0CAUQjRw&url=http://wheels.blogs.nytimes.com/2011/11/16/in-los-angeles-driving-the-dark-horse-in-the-green-car-of-the-year-sweepstakes/&ei=ALBiUbiOEsPO2wWg1YCIBw&bvm=bv.44770516,d.b2I&psig=AFQjCNHX-UzaaRb6wYlT62fX3DlXAUE2LQ&ust=1365508450555189


has been prepared solely for business planning purposes to determine actions the Company may take to meet its plan SLIDE 4

Based on the Equation Used in California Clean Fuels Outlet Regulation

STATIONS REQUIRED

Number of Stations Required =

𝐴𝑉𝑀𝑇 ∗ 𝐿𝐷𝑉𝑀𝑃𝐺/𝑒

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐹𝑢𝑒𝑙 𝑉𝑜𝑙𝑢𝑚𝑒 𝑝𝑒𝑟 𝑆𝑡𝑎𝑡𝑖𝑜𝑛

𝐿𝐷𝑉

𝑅𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑆𝑡𝑎𝑡𝑖𝑜𝑛=

𝑀𝑃𝐺/𝑒 ∗ 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐹𝑢𝑒𝑙 𝑉𝑜𝑙𝑢𝑚𝑒 𝑝𝑒𝑟 𝑆𝑡𝑎𝑡𝑖𝑜𝑛

𝐴𝑉𝑀𝑇

Simplified Clean Fuels Outlet Equation

Rewritten in Terms of “Vehicles/Station”

Where: AVMT = Average vehicle miles traveled

LDV = Number of light-duty vehicles

MPG/e = Miles per gallon equivalent



Number of Vehicles Supported by a Single Station Varies by Fuel Type,

Difference Between Actual/Projected Vehicles Supported by Gasoline Stations

STATIONS REQUIRED

Fuel Type Vehicles/Station

Natural Gas (CNG) 940

Flex-Fuel (E85) 350

Plug-in Electric (BEV & PHEV) 1,950

Hydrogen (Fuel Cell) 520

Gasoline Projection 540

Actual (U.S.) 1,500

Number of Light-Duty Vehicles per Station by Fuel Type



Estimates from Research Are Similar to Other Estimates

INFRASTRUCTURE COST PER VEHICLE

Fuel Type Estimate ’

Natural Gas (CNG) $1,560

Flex-Fuel (E85) $240

Plug-in Electric (BEV & PHEV) $2,160

Hydrogen (Fuel Cell) $4,840

Fuel Type Low High

Natural Gas (CNG) $1,250 $2,500

Flex-Fuel (E85) $250 $500

Plug-in Electric (BEV & PHEV) $875 $1,625

Hydrogen (Fuel Cell) $3,438 $5,375

Fuel Type Estimate ‘

Natural Gas (CNG) $810

Flex-Fuel (E85) $2,760

Plug-in Electric (BEV & PHEV) $650-2,930

Hydrogen (Fuel Cell) $1,750

Estimate from

Research

Estimate from

National

Petroleum

Council

Estimate from

National

Academy of

Sciences

Infrastructure Cost per Vehicle by Fuel Type



Europe United States China

Natural Gas (CNG) Flex-Fuel (E85) Plug-in Electric (BEV & PHEV) Hydrogen (Fuel Cell)

AFV Sales in 2030 by Fuel Type by Country

2030 Scenario Suggests Strong Sales for PEVs in All Countries, CNG in

Europe and China, Flex-Fuel Vehicles in United States

SLIDE 7

AFV SALES, 2030

21,000

1,500,000

1,000,000

160,000

830

460,000

77,000

2,800,000

1,500,000

530,000

9.6% of

total sales

17.4% of

total sales

6.4% of

total sales



-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

2001 2006 2011 2016 2021 2026

Compressed Natural Gas Flex-Fuel (E85) Plug-in Electric Hydrogen Fuel Cell

SLIDE 8

Scenario Based on Trends and Forecasts

VEHICLE SALES BY COUNTRY, EUROPE

Annual Units Sold

Plug-in Electric

Flex-Fuel

CNG

Hydrogen

2005 2010 2015 2020 2025 2030



-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2001 2006 2011 2016 2021 2026

Compressed Natural Gas Flex-Fuel (E85) Plug-in Electric Hydrogen Fuel Cell

SLIDE 9


VEHICLE SALES BY COUNTRY, UNITED STATES

Annual Units Sold

Plug-in Electric

Flex-Fuel

CNG Hydrogen

2005 2010 2015 2020 2025 2030



-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2001 2006 2011 2016 2021 2026

Compressed Natural Gas Plug-in Electric

SLIDE 10


VEHICLE SALES BY COUNTRY, CHINA

Annual Units Sold

Plug-in Electric

CNG

2005 2010 2015 2020 2025 2030





Total AFVs in Operation in 2030 by Fuel Type and Market

2030 Scenario Suggests Substantial Fleets in All Countries

SLIDE 11

AFVS IN OPERATION, 2030

160,000

11,000,000

11,000,000

1,600,000

5,100

4,700,000

740,000

30,000,000 12,000,000

5,300,000

21 Million

AFVs

35 Million

AFVs

15 Million

AFVs





Infrastructure Cost by Country by Fuel Type in 2013 $U.S. Millions

Nearly $95 Billion Will Be Required to Build Refueling Infrastructure for AFVs

in Europe, the United States, and China

SLIDE 12

INFRASTRUCTURE COST

$774

$23,760

$17,160

$384 $25

$1,154

$7,200

$10,152

$25,920

$8,268

$42,078

Million

$18,531

Million

$34,188

Million

Nearly $95 Billion

Across all Three

Markets




Past Spending Future Spending

Infrastructure Cost by Country in 2013 $U.S. Billions

$8 Billion Spent So Far, $87 Billion to Go

SLIDE 13

FUNDING REQUIREMENT THROUGH 2030

$38.5 B

$3.6 B $2.0 B

$16.5 B

$31.6 B

$2.6 B

$42.1 Billion

$18.5 Billion

$34.2 Billion $87 Billion in Future Spending

Across all Three

Markets



SLIDE 14

FUNDING OPTIONS FOR INFRASTRUCTURE SPENDING

Many Publicly Supported Infrastructure Projects Have Provided Positive

External Impacts Through Employment Gains and Business Growth

Public Support

• Direct government expenditures

• Bond issuance

• Subsidies

• Infrastructure banks

Public-Private Partnership

• Government loans to private entities

• Collateralized support for private issuance

• “Green” bonds

Private

• Electric utilities’ funding of grid upgrades and charging stations through

privately issued bonds



SLIDE 15

SUMMARY

Using Public Investment or Public-Private Partnerships Could Advance Goals

of Energy Independence and Sustainability

• Through 2030, an estimated $90 billion would be needed to support AFV

volume projections in the U.S., Europe, and China

• China’s central government has committed to expanding “new energy

vehicles” in order to reduce pollution and its dependence on oil imports

• Historically, most major markets have relied on public funding to support

infrastructure investments

financing the infrastructure to support alternative fuel vehicles

Documents

infrastructure support

business planning purposes

infrastructure investment

plan slide

public investment

information containe

form of public support

new energy vehicles