GLOBAL AUTOMOTIVE SEMINAR 16 NOVEMBER 27 SHANGHAI AUTOMOBILE EXHIBITION CENTRE ANTING Is Mobility As We Know It Sustainable? Philip Gott Director, Automotive Consulting Copyright @ 27, Global Insight, Inc.
The Top-down View from 235 Introduction Motorization Phenomena Economic and Demographic Outlook Transport Linked strongly to economic growth Greenhouse gas emissions are critical (?) By How Much Can We Improve? Evolution of conventional technology Revolution of new technology Conclusions Developing markets are in the best position to implement innovative solutions Opportunities abound! Copyright 27 Global Insight, Inc. 1
Fuel Consumption or CO 2 Standards Are Being Implemented in Many Countries and Regions Objectives Reduce geopolitical impacts of energy dependency on a limited number of countries Conserve energy for the future Minimize balance of trade issues Minimize man s impact on climate change Reductions of 4% or more are being discussed Biofuels are being offered as a benign alternative to the most drastic reductions Are these efforts enough? Just how far do we need to go to make mobility as we know it sustainable? Copyright 27 Global Insight, Inc. 2
Sustainability Is.. Sustainable mobility provides for the safe freedom of movement for people and goods in a way that uses renewable sources of energy while creating no adverse impacts on the earth and its environment Copyright @ 27, Global Insight, Inc. Inc. 3
Is Mobility As We Know It Sustainable? Economic growth depends on transport Mobility of goods and people is a function of wealth and its distribution as well as the total number of people Motorization begins in earnest at about $5 per capita GDP Some regions are above the curve due to space availability and the natural evolution of the infrastructure with the motor vehicle Other countries or city-states are limited by congestion, taxation and/or infrastructure Vehicles Per 1 People 9 8 7 6 5 4 3 2 1 Vehicle Density vs. Income (for 22 and 27) W. Europe & Japan United States Singapore Hong Kong 1 2 3 4 5 Per Capita GDP @ PPP Vehicles/1 People = -.5413(PC GDP) 2 + 37.375(PC GDP) 131.53 Copyright 27 Global Insight, Inc. 4
Can We Forecast the Global In-Use Fleet? The In-use Fleet (cars and trucks) Is a Function of: Wealth (per capita GDP) Population Copyright 27 Global Insight, Inc. 5
More Countries and Regions Gain Wealth % Global GDP by Region Change in Real GDP - 35 1% 8% 6% 4% 2% % 2 25 21 215 22 225 23 235 USA & Canada Western Europe Africa Latin America & Caribbean Rest of Asia-Pacific India China Japan Emerging Europe Emerging Europe China Rest of Asia-Pacific Africa Japan India L America & Caribbean (Real 2 US$) Western Europe USA & Canada $ $4 $8 $12 $16 Trillions of US$ Copyright 27 Global Insight, Inc. 6
As Well As Population Millions of People Population By Region - 35 9, 8, 7, 6, 5, 4, 3, 2, 1, 2 25 21 215 22 225 23 235 USA & Canada W. Europe Emerging Europe Japan Overall growth of some 2 billion people in 3 years Population distribution shifts somewhat towards Asia as their economies grow Which suggests that as wealth is generated in developing regions... China Rest of Asia Pacific India L. America & Caribbean Africa & M. East Copyright 27 Global Insight, Inc. 7
More People At Work Make Nations Wealthier 6, GDP by Country or Region at PPP Billions of US Dollars 5, 4, 3, 2, 1, 2 25 21 215 22 225 23 235 USA & Canada W. Europe Emerging Europe Japan China India Rest of Asia Pacific L. America & Caribbean Africa & M. East (Real Year 2 US$) Copyright 27 Global Insight, Inc. 8
and Individuals Gain Wealth, Exceeding the Motorization Take-off Point Virtually Everywhere! Per Capita GDP by Country or Region at PPP Thousands of Dollars 8 7 6 5 4 3 2 1 2 25 21 215 22 225 23 235 USA & Canada W. Europe Emerging Europe Japan China India Rest of Asia Pacific L. America & Caribbean Africa & M. East (Real Year 2 US$) Copyright 27 Global Insight, Inc. 9
The 235 Economically Potential Vehicle Parc Is More Than 3.5 Times That of the Current In-Use Fleet If Transportation Is to Do Its Part in Mitigating Humanity s Impact on Climate Change by 235, We Must Reduce Total Transport CO 2 by a Factor of More than 3.5 Just to Break Even! Millions of Vehicles 35 3 25 2 15 1 5 Actual and Economically Potential Vehicle Parc Vehicles= Population x -.5413(PC GDP) 2 + 37.375(PC GDP) 131.53 2 25 26 27 21 235 USA & Canada W. Europe Emerging Europe Japan China India Rest of Asia Pacific L. America & Caribbean Africa & M. East Copyright 27 Global Insight, Inc. 1
Conventional Powertrain Technology Options Can Cut Fuel Use Almost 5%, CO 2 Emissions by ~4% Gasoline and Diesel hybrids have an important but insufficient role to play Higher carbon content of Diesel fuel makes it a less powerful CO 2 saving option Performance Index 1.9.8.7.6.5.4.3.2.1 Comparison of Powertrain Options (European Drive Cycle) Gasoline Adv. Gasoline Diesel Diesel Fuel & CO 2 Fuel & CO 2 Fuel Consumption CO 2 Level of Hybridization: None Stop Start Mild Full Source: Future Powertrain Technologies; Global Insight Inc. & TIAX LLC Copyright 27 Global Insight, Inc. 11
Movements to Smaller Vehicles Yield Surprisingly Small Benefits NAFTA W. Europe Japan 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % As-Expected NA Scenario: As Scenario Expected WE Scenario: As Expected 2 25 21 215 22 225 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % JPN Scenario: As Expected 2 1% 25 21 215 22 225 9% 8% 7% 6% 5% 4% 3% 2% 1% % 2 25 21 215 22 225 1% PUP 9% SUV 8% CUV 7% MPV 6% E5% D 4% 3% C 2% B 1% A % 2 25 21 215 22 225 1% PUP 9% 8% SUV 7% CUV 6% MPV 5% E 4% D 3% C 2% B 1% A % Accelerated NA Scenario: Constrained Change WE Scenario: Constrained JPN Scenario: Constrained 2 25 21 215 22 225 1% PUP 9% SUV 8% CUV 7% MPV 6% E 4% D C 2% B 1% A% 2 25 21 215 22 225 Copyright 27 Global Insight, Inc. 12 PUP SUV CUV MPV E D C B A PUP SUV CUV MPV E D C B A PUP SUV CUV MPV E D C B A PUP SUV CUV MPV E D C B A Fuel Benefit 26-225 - 12% -4% -5% Source: Future Powertrain Technologies; Global Insight Inc. & TIAX LLC
Increased Use of Appropriate Biofuels Yields at Least a Net 1 for 1 Reduction in Harmful CO 2, Field to Wheel, for Every Litre of Petroleum-Derived Fuel Replaced on an Energy Equivalent Basis A recent multiclient study on biofuels concludes that we can supply 15 to 3% of our 23 global transportation energy needs from biofuels before running into a food-fuel conflict Ultimately, non-food crops will be used for fuel Yields per unit of land area and the use of land not suitable for food crops will mitigate competition between these two types of crops for the same resources This 15 to 3% is directly additive to the gains made by vehicle fuel efficiency improvements Copyright @ 27, Global Insight, Inc. Inc. 13
Toxic Tailpipe Emissions Are Also Coming Down. Toxic Emissions Generation 4 3 35 Megatonnes / Yr 2.5 3 25 2 2 1.5 15 1 1 5.5 2 21 22 23 24 25 NOx Dev NOx Emr CO Dev CO Emr VOC Dev VOC EMR PM Dev (RHS) PM EMR (RHS) Decline based on: Implementation of advanced emission standards with little lag between first introduction date and global adoption Proper maintenance of inuse fleet Life-of-vehicle solutions Source: WBCSD Sustainable Mobility Project Copyright 27 Global Insight, Inc. 14
but Technical Solutions Can Be Overwhelmed by Sheer Volumes of Vehicles Shanghai, 26 Los Angeles, ca 2 Source:www.nd.edu Copyright 27 Global Insight, Inc. 15
What, Then, Is the Solution? Ever-smaller vehicles are not a likely option due to safety and payload characteristics, while the benefits are limited to ~1-15% Consumers demand larger, safer, more versatile vehicle solutions A new approach to mobility is needed Source: www.arrivealive.co.za Copyright 27 Global Insight, Inc. 16
Can Further Advances in Technology Help? Fuel cells promise up to 7% efficiency versus a maximum of ~4+ % for internal combustion engines But, are the well-to-wheels benefits advantageous, or do they just transform the challenge? Pure-electric vehicles, charged from highly efficient stationary sources, can be a game-changer CO2-Equi. GHG Emissions: g/mmbtu Fuels and Their Origins Can Make A Dramatic Impact on Greenhouse Gas, 4, 35, 3, 25, 2, 15, 1, 5, -5, -1, LS Gasoline Peptroleum Naphtha Fuel Conv. CO2 (from C in the fuel) WTT GHGs NG Naphtha Methanol Ethanol: corn Ethanol: Cellulose Central G.H2: NG Station G. H2: NG Central L.H2: NG Station L.H2: NG Elec. G.H2: U.S. mix Elec. G.H2: NG CC Elec. G.H2: Hydro Elec. L.H2: U.S. mix Elec. L.H2: NG CC Elec. L.H2: Hydro Source: Argonne National Labs Copyright 27 Global Insight, Inc. 17
Is Redefining Transport to Encompass e-mobility a Partial Solution? Internet Utilization takes off << $3 per capita GDP Utilization may peak at very close to 1 to 1, adjusted for age Could e-mobility be part of the transport solution for future generations? Internet usage, e-mobility is more accessible than on-road mobility Internet Users Per 1 People 9 8 7 6 5 4 3 2 1 Internet Density vs. Income e-mobility Motorization 1 2 3 4 5 Per Capita GDP @ PPP Internet/1 People = -.3926(PC GDP) 2 + 35.975(PC GDP) 94.844 Copyright 27 Global Insight, Inc. 18
Emerging Markets Have a Unique Opportunity to Be a World Leader in Sustainable Transportation Technologies Engine and Vehicle Assembly Plant Changes Through 211-12 7 13 4 2 Vehicles Engines 6 8 2 2 Vehicles Engines 6 4 Vehicles 7 2 15 China Vehicles Engines Vehicles Engines 1 1 5 Key Facility Openings Facility Closings 1 6 2 Vehicles Engines 2 Vehicles 8 1 1 Vehicles Engines Source: Global Insight Global Production Forecast Copyright 27 Global Insight, Inc. 19
Opportunities Abound! Develop Appropriate Infrastructure Dense metropolitan areas and city-states employ: High levels of vehicle taxation Ownership permits Robust public transportation infrastructure Paris Develop alternative solutions Robust mass transit infrastructure Favour bus and bicycle lanes Rail links TGV in Korea Source: web.pdx.edu Source: www.diplomatie.gouv.fr Copyright 27 Global Insight, Inc. 2
Opportunities Abound! Influence Public Behaviour Advertising in Britain is aimed at raising awareness Eco-driving practices New vehicle purchase Congestion Charging encourages Alternative technologies Use of low-impact or public modes of transport Revenue Neutral Taxation Funding alternative, sustainable mobility from carbon taxes Copyright 27 Global Insight, Inc. 21
Opportunities Abound! Government Funding of High-Risk or Advanced Technologies and Associated Infrastructure Source: virtualskies.arc.nasa.gov Source: www.toyota.co.jp Source: www.ministryoftech.com Source: www.energy.gov.on.ca Source: p2library.nfesc.navy.mil Source: www1.eere.energy.gov Copyright 27 Global Insight, Inc. 22
Opportunities Abound! Alternative Notions of Mobility e-mobility Expands personal horizons Shop-from-home Virtual travel Meet colleagues and friends A substitute for physical mobility or an enhancement to the car? Internet Users Per 1 People 9 8 7 6 5 4 3 2 1 Internet Density vs. Income 1 2 3 4 5 Per Capita GDP @ PPP Source: www.osha.gov Copyright 27 Global Insight, Inc. 23
To Be Sustainable, Mobility Must Evolve from What We Have Today. We Must Act Now with Appropriate Long Range Policy Rather Than Focus Only on Short Term Solutions! Statesman-like actions now on the part of policy makers can avoid future crises while placing forward-thinking markets in a favourable position to export advanced approaches to mobility Public education and awareness Appropriate infrastructure development Advanced technology development Redefining the current model of mobility is essential if we are to avoid facing a prolonged period of mobility-related adverse environmental and social challenges Copyright 27 Global Insight, Inc. 24
GLOBAL AUTOMOTIVE SEMINAR 16 NOVEMBER 27 SHANGHAI AUTOMOBILE EXHIBITION CENTRE ANTING Thank You Philip Gott Director, Automotive Consulting E-mail: philip.gott@globalinsight.com Copyright @ 27, Global Insight, Inc.