• Total 2006 market 384,000 units
• Toyota with 78% market share
• Toyota Prius alone at 45% market share
• The only other volume producers are Honda and Ford

World hybrid-vehicle market by automaker

• Strong Hybrids dominate the market
• Moderate hybrids are somewhat successful
• Mild hybrids have failed to gain market share
• Low cost micro hybrids are emerging in Europe

Hybrid-vehicle configurations

World hybrid-vehicle sales by hybrid category

• US market responsible for over 50% of total and is growing fast
• Japanese market is 2nd with moderate growth
• Selective markets in Europe including London and Belgium starting to grow
• New markets in Asia outside Japan starting to grow

Hybrid-vehicle sales by world region

• The NiMH HEV pack business at $600 million in 2006 accounts for nearly half of total NiMH battery business
• Panasonic EV Energy (PEVE), a joint venture between Toyota and Panasonic with over 75% market share
• Sanyo is the only other significant supplier
• Li Ion still in prototype limited production level through 2006

Hybrid-vehicle battery sales (pack level): 2000-2006

• Attractive configuration except for the battery
• Battery cost, volume life reliability and safety are all challenging
• Li Ion is preferred but safety and durability are big challenges
• Significant R&D and demonstration programs on the way
• Hard to envision volume production anytime soon

PHEV battery volume impact analysis (Toyota Camry)

• Growth drivers:
  • The cost of petroleum
  • Global warming, particularly as it translates into notable government involvement—via taxation incentives or regulations—to encourage the production of fuel-efficient cars
  • Customer interest in new and greener technologies
• Risks and growth-impeding factors:
  • If a steady reduction in oil prices to below $50 per barrel occurs
  • Significant adoption of diesel-powered cars in the U.S. market
  • Failure of HEV batteries to provide at least eight years of life in most applications
  • Inability of the HEV industry to reduce system costs (including, most prominently, battery costs) at the steady rate now projected

• The HEV battery market, estimated at $600 million in 2006
• HEV battery market is expected to grow to $2.3 billion by 2015
  • In comparison, the total current conventional SLI lead-acid OEM battery business is about $2 billion and is nearly flat
• NiMH batteries will continue to be the dominant battery technology for a few more years - the path and pace of Li ion penetration into the market is the pivotal question
• The current high cost of nickel is a significant drawback of NiMH batteries, but we expect the cost pressures to ease before the end of this decade as new nickel mines commence production
• Toyota’s moves over the next four years are likely to determine the pace of Li-Ion introduction into the HEV battery business

• The preferred technology at some point in the future
  • Still a risk for short-term implementation
• The main challenges facing Li Ion HEV batteries are manufacturing yields and reliability, including longevity and potential safety issues, which all pose a notable financial risk to both battery producers and automakers
• Multiple chemistries and cell configurations are being pursued