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