Advanced Battery Technology June 10, 2010

Craig Rigby, VP, Global Product Engineering

Kim Metcalf-Kupres, VP Global Sales and Marketing

There has been radical change in automotive battery

applications in the past decade

2

2nd Generation Toyota

Prius launched

2003

BMW 1 Series with

Start-Stop launched

2007

Electric

Vehicles

(EV)

SLI Applications

Start-Stop

Vehicles

Hybrid Electric

Vehicles

(HEV)

2010

Plug-In Hybrid

Electric Vehicles

(PHEV)

Start-Stop technology

May be inhibited due to climate control demand or battery condition

Opportunity to capture braking energy through

“regeneration” of electricity

Opportunity for “Passive Boost” through alternator controlEngine Cranking Current

Support Engine-OffElectrical Loads- Lights- Infotainment- Fan / Blower- Electronics

Start-Stop technology enables the engine to shut-off when it

does not need to run (i.e. at idle when stopped)

4

Cruising

Start

Engine

Restart

Engine

Engine

Off

Potential fuel economy

improvement is 5 – 12%

There are several energy storage strategies for Start-Stop but

the current solutions are based on lead-acid technology

5

AGMAbsorbent Glass Mat

EFBEnhanced Flooded

Battery

Battery /

Ultracapacitor

Lithium-Ion

Sealed, valve-regulated

lead-acid battery

Plates under

compression results in

improved cycle life

High temperature

performance challenges

Based on standard

flooded lead-acid

battery

Changes to negative

plate and separator to

improve cycling and

charge acceptance

performance

Limited in its

applications & capability

Combining lead-acid

battery with ultra-

capacitor through a

DC/DC converter

Improves charge power

and extends battery life

High system complexity

Superior recharge

power and cycling

Cycle life capability will

reduce or eliminate

battery replacement

over vehicle life

Significantly lighter

solution

Low temperature

performance challenges

Extremely high cost

Present market solutions Long-term potential

Start-Stop Penetration

6

Total 16M market

by FY2015

OEMs focusing

launches in Europe

Expansion into North

America and Asia

Global Start-Stop Production Estimates

Source: CSM Forecasts, April 2010

0

2

4

6

8

10

12

14

16

18

20

CY 2010 CY 2011 CY 2012 CY 2013 CY 2014 CY 2015 CY 2016

Mill

ion

s

Europe ROW

Start-Stop applications: Regional differences

7

North America

Limited adoption

through 2015

Market resistance to

diesel technology

used in Europe

Key barriers include

automatic

transmission and air

conditioning

performance

Emphasis on HEV

approaches

Europe

Dominant market for Start-Stop

65% share of regional build by 2015

Asia

OEs experimenting

with fast-follower

approaches

Emphasis on full

hybrid and EV

approaches

Hot climates may

impact acceptance

Global opportunity of over 16 million units by 2015

Implementation is legislation dependent

Highly dynamic OE strategies tailored by region

xEV

•Hybrid

•Plug-in hybrid

•Electric

xEV Applications

9

Hybrid and Electric Vehicle applications require a system to

monitor and control the energy storage

System

Cells – store energy and provide power

Thermal System – retains and cools cells

Electronics – monitor cells, control pack

and interface with the vehicle

Module – Group of cells with thermal and

electronic subsystems

Electric System – delivers power to

vehicle

Battery Housing – structural interface to

vehicle

10

Lithium-ion hybrid batteries

The value chain structure for cells and systems is in flux

Automakers: No make/buy consensus

OEM Priorities

– Understand impact of battery on vehicle

dynamics

– Controls and system integration to deliver

reliability

Battery Supplier Priorities

– Thermal and electrical control strategies to

manage life

– Avoid commoditization

– Maximize added value in system

Cell Specialist Priorities

– Maximize reuse of cell

– Manage warranty

11

Batt

ery

Ho

usin

g

Thermal System

Cell

Cell Monitoring

Electronics

Battery Management

Electronics

Electrical System

Vehicle

Controller

Cell

Expertise

OEM

Expertise

Battery

System

Expertise

Johnson Controls advanced battery highlights

12

Awarded $299 million through ARRA grant

Production launch on track in Holland

– Pack assembly 2010, cell manufacturing 2011

Securing new contracts through

Johnson Controls-Saft

– Ford and Azure Dynamics

– Volkswagen EV fleet program

– Jaguar Land Rover

Cars on the road

– Launching BMW-7 Series

– Launched Mercedes Benz S-Class hybrid

– Battery Electric Commercial Van

Holland, Michigan

Johnson Controls first U.S. Li-ion site: Meadowbrook

13

Our commitment: Standing up a domestic Li-ion industry

14

Partnerships with the federal laboratory network to advance

technology and reduce costs…

15

- Suppliers- Suppliers

Basic

research

Applied

researchDevelopment Production

DOE Basic

Science

DOE ARPA-E

DOE EERE

USABC

Increasing Focus on Commercialization

Mass commercialization

Increased energy storage

capacity

Cost reduction

Oak Ridge National

Laboratory

Johnson Controls-Saft

Federal Laboratory PartnershipsPartnership Goals

16

The future of the industry

Mature

Transitional

New

Our view of the Li-ion battery landscape

Competitive

advantage

from market

shaping

(Through

technology,

speed-to-market,

standards-setting,

brand value and

business model

innovation)

Competitive advantage from product

cost, quality, and performance management

Lower

criticality

Higher

criticality

Lower

criticality

Higher

criticality

e-bikes,

forklifts

& other lead

acid based

motive

Transportation

Stationary storage

Consumer

electronics

17

Demand-side potential: Three observations

24%

34%

32%

10%would buy at

higher price

would buy at

same price would buy at

lower price

would not buy

Most

Important

factors in

buying a

hybrid car

Hybrid

Car

Purchase

61

64

70

83

87Purchase price

Save money on gas

Decreasing US reliance on foreign fuel

Environmental impact

Driving experience

13.6M

Commercial Vehicle

Fleet Sales1.1M

300K HEV Sales, 2008

Passenger Vehicle

Unit Sales, 2008

Segment Sizes

…but the economics need to work

Retail consumers are key…

…and there is mass adoption potential

1

2

3

18

Getting to mass adoption: Making the economics work

How much does this cost

compared to a “normal” car?

Any incentives or other

adders?

How much gas will it save me?

How much is that worth?

Does it change my

maintenance cost?

Anything else I need to think –

or worry – about?

“So…all in all…is this a good deal for me?”

19

The (typical) economics answer: “It depends”

Lots of

driving,

in all

kinds of

trips

Daily Miles

Not much

driving,

in mostly

small

trips

Annual Miles

Moderate driving, in all

kinds of trips

20

Supply-side potential: What does that mean?

HEVs are the immediate solution:

No new infrastructure

Less exotic and more accessible

to more people

Better economics sooner

A shorter, easier and faster path to mass adoption of xEVs

Supply HEVs

Focus on high

mileage drivers

Leverage existing

gasoline infrastructure

Develop policies

and programs to

incentivize the shift

Educate consumers

Build from the Right

21

2015 demand: 2 million vehicles

22

Source:Booz & Company analysis; JD Power

7%

% of 2015

Production

90%

80%

70%

60%

50%

40%

30%

20%

10%

100%

0%

NA

Europe

China

Japan

ROW

By Region

2.0M

39%

27%

17%

10%

EV

PHEV

HEV

By xEV

2.0M

4%

9%

88%

Supply is the core competitive challenge for HEVs

23

Developing a significant advanced battery market for vehicles

requires driving down the cost curve

Cell

Cost

Component

System

Cost

Component

Today’s Li-ion Cost Structure2025 Li-ion Cost Structure

Threshold for High Penetration

$2

$3

$4

$5

$6

$7

$8

$9

$10

$0 $7,000

Pri

ce o

f G

aso

lin

e (

$/g

al)

Battery System Price

Scenarios

24

Assumptions: 20,000 miles driven per year 30 mpg baseline ICE vehicle

5 year pay back Incremental benefit is 5% S-S, 30% HEV, 60% PHEV

6.5% discount rate

offers cost

savings

offers cost

savings

HEV

PHEV

Start Stopoffers cost

savings

Today’s

gasoline and

battery

system price

Share of powertrain should shift from internal combustion engine to new technologies

as a function of miles driven, gas prices, and battery system prices to OEMs

Making the business case work

Final thoughts

Collaborate with customers on vehicle development to satisfy

requirements

Support policies that encourage wide-scale adoption of the highest-

benefit technology

Educate consumers around the economic and performance

standards

25

Demand

Target a break-even (or better) cost for Li-ion HEV system

compared to ICE

Drive scale economies and process maturity

Supply

Technology

Continue R&D around EVs and PHEVs

Leverage development of the full spectrum of technology to prepare

for fuel price volatility