1Market Research

Diesel in Europe

Peter Duncan

General Manager Market Research

Johnson Matthey PLC

2Market Research

Overview

• The emissions debate

• The facts

• Technology options for latest phases of emissions legislation

• Future power trains

• Implications for pgm demand

• Summary

3Market Research

Overview

• The emissions debate

• The facts

• Technology options for latest phases of emissions legislation

• Future power trains

• Implications for pgm demand

• Summary

4Market Research

The emissions debate: the bad press

“Diesel tests reveal toxic truth”The Sunday Times, May 2015

“Paris mayor announces plans to ban diesel cars from French capital by 2020”The Guardian, December 2014

“Junk all diesel cars: They're a health hazard, so scrap them and pay owners £2,000” Boris tells MPs.The Daily Mail, September 2014

“Freddie Starr ate my hamster” The Sun, March 1986

5Market Research

The emissions debate: the industry fights back

“The allegations against diesel cars made in recent months threaten to misguide policy making and undermine public confidence in diesel. It’s time to put the record straight.”

Mike Hawes, SMMT Chief Executive, March 2015

“So in a year of COP21 where we are going to discuss about how we fix the global warming, how can we pinpoint diesel as diesel is the number one tool we have to achieve the 95 grams of C02 emissions by 2020?” Carlos Tavares, Chairman Peugeot SA, February 2015

“Diesel engines have never been more important than they are today. This technology is key to achieving fleet CO2 emission targets – in Europe especially, it is indispensable to that goal,” Dr. Rolf Bulander, chairman of the Mobility Solutions business sector, Bosch

“If you look at gasoline cars, there are also a few myths that should be addressed and the first one is that the new fuel-efficient gasoline engines are not as clean as they are being presented”. Marc Grynberg, CEO Umicore, February 2015

6Market Research

Overview

• The emissions debate

• The facts

• Technology options for latest phases of emissions legislation

• Future power trains

• Implications for pgm demand

• Summary

7Market Research

The facts

• NOx emissions limit from diesel vehicles under Euro 6b slightly higher than gasoline vehicles (80mg/km vs 60mg/km).

• Particulate number (PN) emissions limit from diesel vehicles under Euro 6b an order of magnitude lower than gasoline vehicles (6.0 x 1011 vs 6.0 x 1012).

• Real world emissions from diesel vehicles at Euro6b probably are worse than the test, but that’s what Euro 6c is all about…

• Diesel vehicles are an essential tool to meet European CO2 emissions legislation.

8Market Research

Euro 6b to Euro 6c: “real world testing”

• Euro 6b 2014/15

• Euro 6c 2017/18

• Move to new test cycle (WLTC)

• Inclusion of RDE test (PEMs)

9Market Research

Greenhouse gas legislation

EC Regulation No. 443/2009

EU: 130g CO2/km by 2012; 95g CO2/km by 2020

• Huge fines on car manufacturers for failure to meet targets:

from 2019, an excess emissions premium of €95 will be applied for every gram over the specified emissions target. This is multiplied by the number of vehicles produced in that year by the relevant OEM.

10Market Research

Overview

• The emissions debate

• The facts

• Technology options for latest phases of emissions legislation

• Future power trains

• Implications for pgm demand

• Summary

11Market Research

Overview of catalyst components

TWC = Three Way Catalyst

Largely PdRh

DOC = Diesel Oxidation Catalyst

Largely PtPd, alloy varies by region

CSF = Catalytic Soot Filter

Largely PtPd

LNT = Lean NOx Trap

PtPdRh content , high volume

SCR = Selective Catalytic Reduction

No pgm content (V, Cu, or Fe-based), but needs high pgm-loaded DOC upstream

GPF – Gasoline Particulate Filter

Largely PdRh SCRF = Selective Catalytic Reduction Filter

No pgm content

ASC = Ammonia Slip Catalyst

Very low pgm loading, low volume

12Market Research

Euro 6b and 6c technologyGasoline vehicles

Euro 5 TWC Euro 6c TWC + GPF

13Market Research

CSF

SCRCSF

Euro 5 basis

Euro 6b series

SCR

CSFLNT

SCRF®

LNT-

CSFLNT

At Euro 6c the complexity of systems will increase substantiallySCRF®CSFLNT

Euro 2, 3, 4 basis

Euro 6b and 6c technologyDiesel vehicles

14Market Research

SCRCSF

CSFLNT

SCRF®LNT-

CSFLNT

SCRF®CSFLNT

Euro 6c technology optionsDiesel vehicles

CSF For vehicles with very low engine out NOx

Some smaller vehicles with low/med engine out NOx

For some light commercial vehicles as prefer underfloor SCR

No urea tank required – Ammonia generated over the LNT

Some extra LNT functionality on the filter

15Market Research

SCRF®

SCRF

SCR/

ASC

Euro 6c technology options (cont.)Diesel vehicles

For vehicles with high engine out NOx

SCRF

ASCMore compact close coupled system (space/cost saving)

More compact close coupled system (space/cost saving) but with increased NOx functionalitySCRF

ASCLNT

16Market Research

Overview

• The emissions debate

• The facts

• Technology options for latest phases of emissions legislation

• Future power trains

• Implications for pgm demand

• Summary

17Market Research

Future powertrains

diesel

turbocharged gasoline engine

lean burn gasoline engine

LPG

fuel cell

CNG

battery electrichybrid

EREV, MHEV, FHEV,PHEV

diesel and gasoline options

18Market Research

Forecast diesel share of light duty vehicle markets

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Europe China N.America India Japan Global

Source:

LMC Automotive

Q1 2015

18.6%20.0%

19Market Research

Hybrid Vehicle Definitions

Mild Hybrid Electric Vehicle IC and electric motor(s) working in parallel. Not able to drive under electric power alone. Electric assistance greater than 5kW, but less than 30kW. Typical figure is 10kW to 15kW.

Full Hybrid Electric VehicleIC and electric motor(s) working in parallel. Can be driven for short distances under electric power alone. Electric assistance greater than 30kW. Typical electric assistance ranges from 60kW to 165kW.

Plug-in Hybrid Electric VehicleFull hybrid electric vehicle with larger battery pack which can be recharged from the electricity grid thereby enabling a longer electric-only driving range.

Extended Range Electric VehicleIC and electric motor(s) working in series. A battery electric vehicle with an on-board charger (usually IC engine+generator) for the battery pack to enable longer range than BEV.

Global Hybrid and EV Forecast

***

Second Half, 2014

20Market Research

Forecast production of hybrid vehicle by category

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

un

its

FHEV PHEV MHEV EREV TOTAL

Source:

LMC Automotive

Global hybrid and electric vehicle forecast

2nd half 2014

5.04 million units in 2021

= 4.8% of total LDV units

eg BMW i3

eg Toyota Prius

eg Chevrolet Volt

eg Honda Accord

(Stop/starts not included)

21Market Research

0

5,000

10,000

15,000

20,000

25,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

FCEV

un

its

BEV

un

its

BEV (lh axis) FCEV (rh axis)

Forecast production of BEV and FCEV

Source:

LMC Automotive

Global hybrid and electric vehicle forecast

2nd half 2014

21k fuel cell vehicles in 2021, and 0.99 million BEV

eg Tesla

eg Toyota Mirai

22Market Research

Overview

• The emissions debate

• The facts

• Technology options for latest phases of emissions legislation

• Future power trains

• Implications for pgm demand

• Summary

23Market Research

Implications for pgm demand

BEV (battery electric) 2014 units = 150k; 2024 forecast units = 1.8m

• No pgm (source = LMC Automotive)

FCEV (Fuel Cell) 2014 units = 340; 2024 forecast units = 96k• Current ~30 to 80 grams Pt (source = LMC Automotive)• DOE target loading of 12.5 grams by 2020

Hybrid EV 2014 units = 2.3m; 2024 forecast units = 7.1m• Frequent “cold” start (source = LMC Automotive)• Efficiency or performance ?• Up to 15% higher pgm loading in catalyst

Lean burn gasoline engines 2014 units = 280k • Better fuel efficiency, but higher NOx emissions• Requires a lean NOx trap = more pgm

Direct injection turbocharged gasoline engines• Better fuel efficiency, but higher HC and particulate emissions• Catalyst is further from engine, so exhaust gas is cooler• Overall result is more pgm in catalyst and possible need for particulate filter

24Market Research

Overview

• The emissions debate

• The facts

• Technology options for latest phases of emissions legislation

• Future power trains

• Implications for pgm demand

• Summary

25Market Research

Summary

• Emissions from all vehicles need to be controlled by appropriate legislation, and at Euro 6c the real world emissions from diesel cars will be similar to those from gasoline vehicles.

• Diesel vehicles are an essential tool to meet tightening greenhouse gas targets.

• New catalyst system designs will be increasingly complex, resulting in less certainty of future pgm loadings.

• New powertrains are unlikely to replace a substantial share of the existing ICE-based market in the near term, but in most cases would require similar or higher pgm loadings.