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© 2016 Daramic, LLC. ALL RIGHTS RESERVED Global Lead-Acid Battery Trends And Component Advances - Through The Lens Of A Component Supplier Dr. Pete Smith May 3 rd , 2016

Global Lead-Acid Battery Trends And Component …...Lead-acid battery VRLA lead-acid battery NiMH battery Lithium-Ion battery Invented in 1970s/ Performance ComparisonGlobal Battery

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  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED

    Global Lead-Acid Battery Trends And Component Advances

    - Through The Lens Of A Component Supplier

    Dr. Pete Smith

    May 3rd, 2016

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 2

    Energy Storage History

    Li-ion has Performance Advantages but Lead-acid Retains Significant Share Why the Consternation about the Lead-acid Battery Industry?

    Developed in

    1970s

    Invented in 1967/

    commercialized in

    1990s

    NiMH: Nickel–metal Hydride; Li-ion: Lithium-ion

    Lead-acid battery VRLA lead-acid battery NiMH battery Lithium-Ion battery

    Invented in 1970s/

    commercialized in

    1990s

    Performance Comparison

    Lead Acid NiMH/Li-ion

    Wh/kg 35-40 140-150

    Wh/liter 70 400

    Charge Efficiency 75% 97%

    Deeper Discharge

    Tolerance up to 80% up to 100%

    Discharge Cycle X 2X

    Cost X 3X

    Li-ion/NiMH has significant advantages over lead-acid

    battery on energy density, charge efficiency, deep cycling

    and discharge cycles

    MWh

    Highest growth in

    Li-ion in last decade

    Global Battery Market Growth

    Source: Avicenne Energy and UltraLife

    Invented in 1859

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 3

    Lead-acid Attractiveness

    Lower Energy Density

    Limited Charge Efficiency

    Not Very Deep Cycling

    Production Environment

    Lead-acid Battery

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 4

    Capital Investment Examples

    – Enterprise Value/EBITDA:

    JCI (~10X)

    Enersys (~8.3X)

    – Private equity sponsor investment

    Trojan, Exide Technology, C&D

    Capacity expansion

    Lead-acid Industry Attractiveness

    Continuing Capital Investments and Expanding Capacity in the Lead-acid Industry

    Source: Johnson Controls and Enersys 10K, Company official website, Daily Register, BEST magazine, Yahoo Finance

    0

    2,000

    4,000

    6,000

    8,000

    2011 2014 2013 2012

    Johnson Controls Enersys

    Industry Property, Plant and

    Equipment Investment

    JCI: announced the investments of $555 million

    between 2011 and 2020 to expand capacity –

    Johnson Controls Official Website (2015)

    $, million

    Enersys: announced acquisitions in Australia,

    South East Asia, South America and built

    plant China in last 5 years (2010-2015))

    East Penn looking at $66.8 million dollar

    expansion in Oelwein

    – Daily Register News (2015)

    Significant investment and valuations Significant and sustained investment

    Daramic: new capacity expansion in

    China and India

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 5

    Lead-acid Industry Innovation

    Significant Innovation Increases in the Last 10 Years across All Regions

    World Wide Patent Filings Related to

    Lead-acid Batteries Overview

    5,278

    1,785

    1995-2005

    196%

    2006-2015

    World Wide Patent Filings Related to

    Lead-acid Batteries by Region

    294

    114

    276

    603

    498

    592

    424

    802

    Europe

    Korea

    1,082

    2,378

    US

    China

    International

    Patent Filling (2006-2015)

    Patent Filling (1995-2005)

    21

    7% 217%

    133%

    154%

    519%

    809%

    Source: Keyword patent search

    Step change increase Global innovation

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 6

    Lead-acid Battery Patents

    Mix of Conglomerates, Lead-acid manufacturers, Suppliers and Application Owners Invested in Patents

    0

    5

    10

    15

    20

    25

    30

    35

    JOHNSON

    CONTROLS

    TOSHIBA GS

    YUASA

    PANASONIC DARAMIC ASAHI KASEI SANYO

    ELECTRIC.

    IQ POWER LG

    CHEM

    SHIN KOBE ITM

    SEMICONDUC

    Top filers in International lead-acid battery category

    2005-Present

    Li-ion battery makers Separator maker

    Separator

    maker

    (cross IP)

    # of independent

    patent

    Source: Keyword patent search

    Lead-acid

    battery makers

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 7

    Why Does Innovation Happen Now?

    Lead-acid Battery

    Large investments in

    the industry and highest

    patent filing in history

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 8

    Start-Stop in Automotive requests

    battery always in PSOC

    Battery Working Pattern Changes

    Both Automotive and Industrial Batteries Evolved with Higher Usage Frequency and Higher Power Output under PSoC*

    Automotive

    Industrial

    Battery working pattern (1995-2005) Battery working pattern (2005-2015)

    Battery mainly for starting vehicle

    low discharge percentage and

    always fully charged

    Battery (forklift) operates in an

    organized way, enough time in

    charging and cooling down

    • Forklift battery needs to work more

    efficiently with faster charging

    • Renewable energy also has limited

    time to charge battery

    *PSoC: Partial State of Charge

    Depth

    of

    disch

    arg

    e

    Depth

    of

    disch

    arg

    e

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 9

    Battery Discharge Depth Changes

    Wider range of partial state of charge and higher energy output and discharge deeper across automotive and

    industrial applications

    Battery Working Pattern Changes in All Key Lead-acid Applications

    Depth

    of

    Dis

    charg

    e %

    80%

    10%

    50%

    Fully

    charged

    Fully

    discharged

    Auto

    Industrial

    Motive

    Power Stationary

    Auto

    Industrial

    Motive

    Power Stationary

    Battery working pattern (1995-2005) Battery working pattern (2005-2015)

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 10

    What Is The Future And Implication?

    Lead-acid Battery

    Working pattern changes

    will drive battery

    performance changes

    across applications in

    future

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 11

    New Insights/Changes in Automotive

    Increasing Auto Electrification Requires Lead-acid Improvements of Charge Acceptance, Durability and Power Output

    Vehicle Electrification Requirement

    Lead-Acid Battery

    Li-on / Ni-MH / etc.

    Heat

    Resistance

    Cost

    Reduction

    Charge

    Acceptance

    Power

    Output Cycling in

    PSOC*

    *Partial State of Charge

    Improvement

    Improvement Other Key Component

    Battery management system became

    critical to impact battery performance/life

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 12

    New Insights/Changes in Motive Power

    Better Utilization Requires the Improvement of Rechargability and Higher Output while Maintaining Long Life

    %

    Working hour Working hour

    Forklift Traditional Working Pattern

    Depth

    of

    disch

    arg

    e

    %

    Forklift New Working Pattern*(Trend)

    Lead-Acid Battery

    Historical Battery Utilization Requirement

    In work

    (discharge) Off work

    (charge)

    In work

    (discharge) Off work

    (charge)

    In work

    (discharge) Off work

    (charge)

    Depth

    of

    disch

    arg

    e

    Improvement

    Longer Life in

    faster charge Longer Life with

    higher capacity

    Other Key Component

    Charger needs to deliver more

    and impact on battery life

    0

    50

    100

    0 5 10 15 20 25

    0

    50

    100

    0 5 10 15 20 25

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 13

    New Insights/Changes in Stationary

    Battery Needs Better Cycling and Lower Maintenance

    Telecom Renewable Energy

    Telecom and renewable energy – mainly work in remote and hot area - requires no/low maintenance

    Renewable energy

    – Unstable charge/discharge which leads to PSOC operation

    – Deep cycling

    Lead-Acid Battery

    Improvement

    No/Low

    maintenance Rechargeability

    & deep cycling

    0

    50

    100

    150

    +10.1%

    2018F 2014

    Stationary+

    Renewable Energy

    M, cell

    Source: Transparency Market Research & Daramic Internal Analysis

    Battery diagnostic system needs

    remote tracking on performance

    Other Key Component

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 14

    Through The Lens Of A Supplier

    Lead-acid Battery

    Component

    Innovation is occurring

    in battery operating

    cycle, battery design

    and battery application.

    - What does this imply

    for the supply base?

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 15

    Evolution Of Lead Usage

    Cost efficiency is a major target in Automotive SLI,

    especially better utilization of the main

    component, lead, which price increased 300% in

    last 10 years

    Simultaneously, battery life/performance must be

    retained while reducing lead quantity

    – Especially in the heavy duty applications

    Major Cost Component, Lead, Used More Efficiently

    Punched

    300%+

    Lead Price Evolution

    Lead p

    rice

    ($)

    Better utilization of lead (Cost Efficiency) _

    +

    Cast Expanded Metal Punch

    Source: LEM Lead Price

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 16

    Innovation Drivers From BOM

    Most of the Bill Of Materials (BOM) are commodities

    The Industry has focused on lead

    What does drive the future?

    – Innovation drivers: separator, battery management system, additives

    Categorization of BOM Shows Innovation Opportunities

    Battery Bill of Materials/Performance Related Materials

    Innovation Drivers

    Commodity Materials

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    90%

    100%

    Battery Raw Materials Breakdown

    Others

    Acid

    Separators

    Bushings

    Hot-melt

    PP case/lid

    Lead

    BOM Categorization

    Acid Lead

    PP case …

    Separator BMS

    Additives

    (Carbon)

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 17

    BOM Innovation vs. Industry Needs

    Innovation Drivers can Impact the Requirement Demanded by Emerging Lead-acid Battery Applications

    Separator

    Additives

    (Carbon)

    Battery Management

    System

    Lamination

    Poly case

    Hot-melt

    Acid

    Other chemical additives

    Plate equipment

    Pasting paper Partial State Of

    Charge X X

    High Power

    Output X X

    Longer Lifecycle X X

    Dynamic Charge

    Acceptance X X

    No/low

    maintenance X

    Industry Needs Automotive Industrial

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 18

    Length scale

    Time scale

    10-9 10-6 10-3 100

    (nm) (um) (mm) (m)

    100 (sec)

    10-3 (msec)

    10-6 (msec)

    10-9 (nsec)

    10-12 (psec)

    10-15 (fsec)

    Fluid dynamics,

    Finite element analysis

    Charge transfer

    Stress Strain

    Behavior of Materials

    Plate design and

    arrangement

    Mechanical properties of battery

    components

    Electrochemistry on battery surfaces

    Redox reactions

    Separator Phase Engineering

    Acid stratification

    How Does A BOM Innovation Approach Industry Needs?

    Physical/Chemical Phenomena over Wide Length/Time Scale Potential Improvements Represent Industry Opportunities

    From atomic scale(nm/fsec) to real life scale (m/sec)

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 19

    Molecular Dynamics Simulation

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 20

    Summary

    After 100+ years as an energy storage technology, lead-acid is still attracting investment, adding

    capacity and focusing on innovation.

    – Continuous investments and capacity expansion

    – Significant innovation (patent) increases in last 10 years

    Some of the innovation is a response from the threat from other technologies (e.g. Li-ion)

    Some of the innovation comes from use models for lead-acid batteries

    Regardless of the history or the technological threats, lead acid industry is attractive and innovative

    In the past 10 years, the lead-acid industry has become pioneering with respect to innovation

    – With new applications emerging and battery working pattern changes, batteries in both Automotive and Industrial evolved to

    higher usage frequencies and to supplying more power output under partial state of charge

    – Lead-acid batteries are also required to discharge deeply

  • © 2016 Daramic, LLC. ALL RIGHTS RESERVED 21

    Summary (Cont’d)

    Technical changes drive the battery performance improvement across applications moving forward

    – Better dynamic charge acceptance

    – Good capability in partial state of charge

    – Longer lifecycle

    – High power output

    From the supplier/BOM viewpoint

    – Lead utilization has been optimized

    – Opportunities to meet emerging industry needs reside in the separator, battery management system and additives

    To guide supplier development, we think a fundamental approach focused on length scales and time

    scales in the battery will yield the most innovative component technology and a more robust and

    competitive lead-acid battery and lead-acid battery industry