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 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
April 9, 2013
INFRASTRUCTURE INVESTMENT FOR ALTERNATIVE FUEL VEHICLES 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
Using Public Investment or Public-Private Partnerships Could Advance Goals of Energy Independence and Sustainability 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
SLIDE 1
FUTURE MOBILITY ATTRIBUTES AND WHY INFRASTRUCTURE SUPPORT IS CRITICAL 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
China Has Set a Goal of 5 Million NEVs by 2020 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
SLIDE 2
ALTERNATIVE FUELS OVERVIEW Compressed Natural Gas (CNG)
Ethanol (E85)
Electricity
Hydrogen
Variety of Alternative Fuels, this Analysis Will Focus on Four: CNG, E85, Electricity, and Hydrogen Images taken from: wheels.blogs.nytimes.com
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
SLIDE 3
STATIONS REQUIRED Simplified Clean Fuels Outlet Equation
đ??´đ?‘‰đ?‘€đ?‘‡ ∗ đ??żđ??ˇđ?‘‰ đ?‘€đ?‘ƒđ??ş/đ?‘’ Number of Stations Required = đ??´đ?‘Łđ?‘’đ?‘&#x;đ?‘Žđ?‘”đ?‘’ đ??šđ?‘˘đ?‘’đ?‘™ đ?‘‰đ?‘œđ?‘™đ?‘˘đ?‘šđ?‘’ đ?‘?đ?‘’đ?‘&#x; đ?‘†đ?‘Ąđ?‘Žđ?‘Ąđ?‘–đ?‘œđ?‘› Where: AVMT LDV MPG/e
= Average vehicle miles traveled = Number of light-duty vehicles = Miles per gallon equivalent
Rewritten in Terms of “Vehicles/Station�
đ??żđ??ˇđ?‘‰ đ?‘€đ?‘ƒđ??ş/đ?‘’ ∗ đ??´đ?‘Łđ?‘’đ?‘&#x;đ?‘Žđ?‘”đ?‘’ đ??šđ?‘˘đ?‘’đ?‘™ đ?‘‰đ?‘œđ?‘™đ?‘˘đ?‘šđ?‘’ đ?‘?đ?‘’đ?‘&#x; đ?‘†đ?‘Ąđ?‘Žđ?‘Ąđ?‘–đ?‘œđ?‘› = đ?‘…đ?‘’đ?‘žđ?‘˘đ?‘–đ?‘&#x;đ?‘’đ?‘‘ đ?‘†đ?‘Ąđ?‘Žđ?‘Ąđ?‘–đ?‘œđ?‘› đ??´đ?‘‰đ?‘€đ?‘‡
Based on the Equation Used in California Clean Fuels Outlet Regulation 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
SLIDE 4
STATIONS REQUIRED
Number of Light-Duty Vehicles per Station by Fuel Type
Fuel Type Natural Gas (CNG) Flex-Fuel (E85) Plug-in Electric (BEV & PHEV) Hydrogen (Fuel Cell) Projection Gasoline Actual (U.S.)
Vehicles/Station 940 350 1,950 520 540 1,500
Number of Vehicles Supported by a Single Station Varies by Fuel Type, Difference Between Actual/Projected Vehicles Supported by Gasoline Stations 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
SLIDE 5
INFRASTRUCTURE COST PER VEHICLE Infrastructure Cost per Vehicle by Fuel Type Estimate from Research
Fuel Type Natural Gas (CNG) Flex-Fuel (E85) Plug-in Electric (BEV & PHEV) Hydrogen (Fuel Cell)
Estimate from National Petroleum Council
Fuel Type Natural Gas (CNG) Flex-Fuel (E85) Plug-in Electric (BEV & PHEV) Hydrogen (Fuel Cell)
Estimate from National Academy of Sciences
Fuel Type Natural Gas (CNG) Flex-Fuel (E85) Plug-in Electric (BEV & PHEV) Hydrogen (Fuel Cell)
Estimate $1,560 $240 $2,160 $4,840 Low $1,250 $250 $875 $3,438
’
High $2,500 $500 $1,625 $5,375 Estimate ‘ $810 $2,760 $650-2,930 $1,750
Estimates from Research Are Similar to Other Estimates 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
SLIDE 6
AFV SALES, 2030 AFV Sales in 2030 by Fuel Type by Country
17.4% of total sales 830 460,000
9.6% of total sales 21,000
6.4% of total sales
1,500,000 2,800,000 1,500,000
160,000 1,000,000
530,000
77,000 Europe Natural Gas (CNG)
United States Flex-Fuel (E85)
China
Plug-in Electric (BEV & PHEV)
Hydrogen (Fuel Cell)
2030 Scenario Suggests Strong Sales for PEVs in All Countries, CNG in Europe and China, Flex-Fuel Vehicles in United States 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
SLIDE 7
VEHICLE SALES BY COUNTRY, EUROPE Annual Units Sold 1,600,000 Plug-in Electric 1,400,000 1,200,000 CNG 1,000,000 800,000 600,000 400,000
Flex-Fuel
200,000
Hydrogen 2001
20052006 Compressed Natural Gas
20102011 Flex-Fuel (E85)
20152016
2021 2020
Plug-in Electric
2026 2025
2030
Hydrogen Fuel Cell
Scenario Based on Trends and Forecasts 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
SLIDE 8
VEHICLE SALES BY COUNTRY, UNITED STATES Annual Units Sold
3,000,000
Flex-Fuel
2,500,000 2,000,000 1,500,000 1,000,000 Plug-in Electric
500,000
Hydrogen
CNG
2001
2006 2005 Compressed Natural Gas
2011 2010 Flex-Fuel (E85)
2016 2015
2021 2020
Plug-in Electric
2026 2025
2030
Hydrogen Fuel Cell
Scenario Based on Trends and Forecasts 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
SLIDE 9
VEHICLE SALES BY COUNTRY, CHINA Annual Units Sold
1,800,000 Plug-in Electric
1,600,000 1,400,000 1,200,000 1,000,000 800,000
CNG
600,000 400,000 200,000 2001
2006
2005
2011
2010
2016
2015
Compressed Natural Gas
2021
2020
2026
2025
2030
Plug-in Electric
Scenario Based on Trends and Forecasts 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
SLIDE 10
AFVS IN OPERATION, 2030 Total AFVs in Operation in 2030 by Fuel Type and Market
35 Million AFVs 21 Million AFVs
5,100 4,700,000 15 Million AFVs
160,000 11,000,000
30,000,000
1,600,000
12,000,000
11,000,000 5,300,000
740,000 Europe
United States
Natural Gas (CNG)
Flex-Fuel (E85)
China
Plug-in Electric (BEV & PHEV)
Hydrogen (Fuel Cell)
2030 Scenario Suggests Substantial Fleets in All Countries 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
SLIDE 11
INFRASTRUCTURE COST Infrastructure Cost by Country by Fuel Type in 2013 $U.S. Millions
$42,078 Million
Nearly $95 Billion Across all Three Markets
$774
$34,188 Million
$23,760 $18,531 Million
$25,920 $25
$384
$10,152 $17,160
$7,200
$8,268
$1,154 Europe
United States
Natural Gas (CNG)
Flex-Fuel (E85)
China
Plug-in Electric (BEV & PHEV)
Hydrogen (Fuel Cell)
Nearly $95 Billion Will Be Required to Build Refueling Infrastructure for AFVs in Europe, the United States, and China 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
SLIDE 12
FUNDING REQUIREMENT THROUGH 2030 Infrastructure Cost by Country in 2013 $U.S. Billions
$42.1 Billion
$87 Billion
$34.2 Billion
in Future Spending Across all Three Markets $38.5 B
$18.5 Billion $31.6 B $16.5 B
$3.6 B
$2.0 B
$2.6 B
Europe
United States
China
Past Spending
Future Spending
$8 Billion Spent So Far, $87 Billion to Go 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
SLIDE 13
FUNDING OPTIONS FOR INFRASTRUCTURE SPENDING 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
Many Publicly Supported Infrastructure Projects Have Provided Positive External Impacts Through Employment Gains and Business Growth 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
SLIDE 14
SUMMARY • 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
Using Public Investment or Public-Private Partnerships Could Advance Goals of Energy Independence and Sustainability 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
SLIDE 15