Ron Minsk's presentation at the April 24th, 2012 Boston Security Analysts Society session on the electrification of transportation

1. The Electrification Coalition
Revolutionizing Transportation and Achieving Energy Security

2. EIA Slide From December 1998
Department of Energy was concerned that oil prices, which had fallen
.
sharply from historic levels, would not recover for years
1

3. Economist Cover, March 1999
Conventional wisdom was that oil was plentiful and likely to remain cheap
.
for the foreseeable future
“ . . . a normal market
price might now be in
the $5-10 range.”
“$10 might actually be
too optimistic. We may
be heading for $5.”
2

4. Global Oil Market Dynamics—Demand
The United States is the world’s largest oil consumer, accounting for one-
fifth of global oil demand. The majority—70 percent—is used in transport.
TOP WORLD OIL CONSUMERS, 2010
› At 19.1 million barrels
per day, the U.S. was
U.S. Transport U.S.
the world’s largest
China
consumer of petroleum
Japan in 2010, with oil
India
accounting for 37
Russia percent of primary
Saudi Arabia energy demand.
Brazil
› The U.S. transport
Germany
sector alone consumes
South Korea
more oil than any
Canada national economy in
Mexico the world—13.0 mbd.
Iran
0 5 10 15 20
Million Barrels per Day
Source: BP, plc., Statistical Review of World Energy 2011
3

5. Global Oil Market Dynamics—Demand
Rising demand for mobility in emerging markets has placed substantial
strain on oil suppliers in recent years. This trend is expected to accelerate.
› Chinese oil demand increased by 90 percent › Passenger vehicle sales and vehicle stock are
2000-2010. The increase was equivalent to soaring in emerging markets. Non-OECD stock
adding another Japan to the market. is on pace to surpass the OECD around 2030.
CHINESE LIQUID FUEL DEMAND (HISTORICAL) LIGHT-DUTY VEHICLE SALES AND STOCK
10 120 1200
Million barrels per Day
Others Fuel oil Sales (Lhs) Stock (Rhs)
100 1000
8 Middle distillates Light distillates
Million Vehicles
Million Vehicles
80 800
6
60 600
4 40 400
20 200
2
0 0
2010 2020 2030 2035 2010 2020 2030 2035
0
1990 1995 2000 2005 2010 OECD Non-OECD
4
Source: BP, plc. Source: IEA, World Energy Outlook 2011

6. Global Oil Market Dynamics—Demand
Oil consumption within the world’s most developed economies has peaked.
Emerging markets account for 100 percent of demand growth going forward.
WORLD OIL CONSUMPTION (HISTORICAL AND FORECAST) › World oil demand is
set to grow by about 22
100
percent over the next
20 years.
80
› One hundred percent
Million Barrels per Day
of that growth is in
60 China, India, and other
emerging economies.
40 And 97 percent of it is
in transportation.
20
0
1980 2010 2015 2020 2025 2030 2035
OECD China and India Other Non-OECD Other
Source: International Energy Agency, World Energy Outlook 2011
5

7. Global Oil Market Dynamics—Supply
Conventional oil production outside of OPEC is reaching a plateau.
Increases in regions like North America are being offset elsewhere.
› Going forward, most
WORLD LIQUID FUEL PRODUCTION (HISTORICAL AND FORECAST)
mainstream scenarios
120 60%
rely on increases in
OPEC supplies to meet
100 50%
rising demand.
› Two key questions
Million Barrels per Day
80 40%
illustrate the downside
risk to growth in future
60 30%
liquid supplies:
40 20%
1. Who will have access
to low-cost
conventional reserves?
20 10%
2. What will reserves
0 0% replacement cost for
1980 2010 2015 2020 2025 2030 2035 IOCs?
Source: IEA OPEC Non-OPEC OPEC Share
6

8. Global Oil Market Dynamics—Supply
Oil prices are set in an open market, but that does not mean there is a free
market for oil supply.
TOP OIL AND GAS FIRMS BY PROVED RESERVES (2007)
› More than 90 percent of
global proved oil reserves
NIOC are held by national oil
Saudi Aramco companies (NOCs) that
Gazprom are either partially or fully
INOC controlled by
QP governments.
Adnoc
PDVSA
› While a handful of NOCs
KPC
operate like private firms,
NNPC
many function essentially
as a branch of the central
Sonatrach
government, depositing
LNOC
CNPC
oil revenues in the
treasury from which they
Petronas
are diverted to social
ExxonMobil
programs instead of being
0 50 100 150 200 250 300
reinvested in new projects.
Billion barrels oil equivalent 7
Source: International Energy Agency, World Energy Outlook 2008

9. Oil Supply Cost Curve
Resources in the Middle East and North Africa will be the least expensive to
produce. However, they may also be the least accessible to IOCs.
LONG TERM OIL SUPPLY COST CURVE
Production Costs (Real $2008 per Barrel)
COAL TO LIQUID
ARCTIC OIL SHALES
CO2 - EOR
GAS TO LIQUID
DEEPWATER
HEAVY OIL &
EOR
BITUMEN
OTHER CONV.
MIDDLE EAST OIL
PRODUCED NORTH
AFRICA
Resources (billions of barrels) 8
Source: International Energy Agency, World Energy Outlook 2008

10. Oil Supply Cost Curve
Budget requirements have ballooned in recent years in OPEC nations and
Russia, essentially incentivizing higher oil prices for much of global supply.
BREAKEVEN COSTS FOR SELECTED PRODUCERS (MID-2011)
120
VENEZUELA
Production Costs (Dollars per Barrel)
Budget
100 Breakeven
ECUADOR
NIGERIA
RUSSIA
ANGOLA
IRAN
ALGERIA
IRAQ
SAUDI ARABIA
LIBYA
80
UAE
60
KUWAIT
QUATAR
40
Production
20 Breakeven
0
0 5 10 15 20 25 30 35 40 45 50
Oil Production (million barrels per day)
9
Source: International Energy Agency, World Energy Outlook 2011

11. U.S. Oil Dependence
Petroleum fuels account for approximately 40 percent of U.S. primary
energy demand, more than any other fuel.
› Approximately 70 percent of U.S. oil consumption occurs in the transportation sector, with
40 percent in light-duty vehicles.
› Transportation is 94 percent reliant on oil-based fuel for energy, with no scaled substitutes.
U.S. PRIMARY ENERGY DEMAND, 2009 PETROLEUM FUEL DEMAND BY SECTOR, 2009
20% Autos
39% Oil
24% Light-trucks
27% Natural Gas
28% Other Transport
23% Coal
22% Industrial
9% Nuclear Energy
2% Commercial
3% Hydro electric
4% Residential
1% Electric Power
10
Source: BP, plc., Statistical Review of World Energy 2010

12. U.S. Oil Dependence: Imports
U.S. oil supplies are acquired from a variety of sources, including domestic
crude oil and natural gas liquids, biofuels, refinery gains, and imports.
U.S. OIL CONSUMPTION (HISTORICAL AND FORECAST)
› Net imports, once a
small fraction of
25 U.S. supplies, still
meet half of total
20 U.S. liquid fuel
demand.
Million Barrels per Day
15 › Amid rising
domestic liquids
10 production and flat
demand, net import
volumes have
5
declined
substantially since
-
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
their peak in 2005.
Net Imports Adjustments and Domestic Biofuels
Processing Gain and Stock Changes Domestic NGLs
Domestic Crude
Source: DOE, EIA, AER 2010
11

13. U.S. Oil Dependence: Macroeconomic Costs
Since January 2007, the United States has run an aggregate $1.4 trillion
deficit in crude and petroleum product trade, exporting vast capital abroad.
› The portion of the
U.S. TRADE DEFICIT IN PETROLEUM AND OTHER GOODS AND SERVICES
trade deficit driven by
80 100%
petroleum imports
Petroleum Share of Total Trade Deficit
70
90%
generally exceeds the
Monthly Trade Deficit ($billions)
80% imbalance we run in
60
70% other goods and
50
60% services with trade
partners like China,
40 50%
NAFTA, and the EU.
40%
30
30%
› A high trade deficit
20 exerts downward
20%
pressure on the dollar,
10
10% which in turn may be
0 0% helping to prop up oil
2000 2002 2004 2006 2008 2010
Deficit in Petroleum Deficit in Goods and Services
prices, resulting in a
Petroleum Share of Total Trade Deficit vicious circle.
Source: U.S. Census Bureau, Office of Foreign Trade Statistics
12

14. U.S. Oil Dependence: Price Volatility
The volatility of liquid fuels is the key threat from an economic security
perspective. This volatility is driven by events beyond our control.
› Oil price volatility is
FUEL VOLATILITY INDEX (HISTORICAL)
driven by events in the
5.0
global oil market, and oil
Crude Oil - WTI
is priced at the margin—
Diesel
4.0
meaning that even if the
Gasoline U.S. produces more
Ethanol (Nebraska Rack) domestically, it cannot
3.0 Electricity avoid volatility.
Index: Jan 2000 = 1 › All liquid fuels are
affected, including
2.0
biofuels.
› The solution has to be to
1.0 transition toward non-
liquid fuels where
economically rational.
-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
13
Source: DOE, EIA

15. U.S. Oil Dependence: Household Impact
The average U.S. household spent a record $4,000 on gasoline in 2011.
Since 2000, the increase in spending has offset numerous stimulus efforts.
AVG. HOUSEHOLD SPENDING ON GASOLINE (2000-2011)
› Household spending on
gasoline increased by
3.75 5,000
$2,008 dollars between
Gas Spending/Household 2001 and 2008.
3.00 Gasoline Price (Lhs) 4,000 › Income tax cuts over the
same period increased
Dollars (Nominal)
household income by
2.25 3,000
$1,900. Thus, rising fuel
$/gal
prices fully offset the benefit
1.50 Increased gas
2,000 of tax cuts.
› We saw the same effect in
spending
0.75 1,000 2011 with the payroll tax cut,
which increased Americans
income by $110 billion while
0.00 - spending on gasoline
2000 01 02 03 04 05 06 07 08 09 10 2011
increased by $104 billion.
14
Source: DOE, EIA, Annual Energy Review 2010; ORNL, Transportation Energy Data Book; SAFE Analysis

16. U.S. Macroeconomic Costs: U.S. Oil Intensity
and Spending on Oil
High oil prices experienced throughout 2011 contributed to weak consumer
spending and slow economic growth in the United States and elsewhere.
Oil Spending, Share › At more than 6 percent of
1.5 of GDP 10% GDP, consumer spending
Barrels of Oil per on petroleum fuels
Consumer Expenditures on Pet. Fuels, Share of
$1,000 GDP reached levels typically
1.2 8%
Recessionary Period associated with recession
in 2011.
Barrels of Oil per $1,000 GDP
0.9 6% › Increased spending on
gasoline by consumers—
particularly in Q1 and
GDP
0.6 4%
Q2—crowded out other
spending.
0.3 2%
› Price volatility
2011 Estimate contributes to an
0.0 0% uncertain investment
1970 1975 1980 1985 1990 1995 2000 2005 2010
climate for businesses.
Source: EIA, AER 2010; Department of Commerce, Bureau of Economic Analysis; SAFE Calculations
15

17. U.S. Oil Dependence: Total Economic Costs
The economic costs of U.S. oil dependence reached nearly $500 billion in
2008. Since 1970, total economic damage exceeds $5 trillion (real dollars).
› In addition to staggering wealth transfers, high and volatile oil prices generate significant
uncertainty for households and businesses. The result is lost economic opportunity.
ECONOMIC COSTS OF U.S. OIL DEPENDENCE
600
Wealth Transfer Transfer Dislocation Losses Losses Loss of Potential GDP
500
Billions ($2008)
400
300
200
100
0
1970 1975 1980 1985 1990 1995 2000 2005 2010
16
Source: DOE, EERE; ORNL

18. Electrification Overview
Electrification of transportation is the best solution for reducing U.S. oil
dependence, insulating consumers and businesses from oil price volatility.
› Electricity is generated from a diverse portfolio of domestic fuels.
› The power sector has substantial spare capacity.
› Electricity prices are stable.
› The network of infrastructure already exists.
U.S. ELECTRICITY GENERATION BY FUEL, 2010 U.S. ELECTRICITY DEMAND BY SECTOR, 2010
49% COAL 38% RESIDENTIAL
22% NUCLEAR 37% COMMERCIAL/OTHER
17% NATURAL GAS 24% INDUSTRIAL
11% RENEWABLES 1% TRANSPORTATION
1% PETROLEUM
Source: EIA, AEO 2010 17

19. Electrification Overview: Challenges
While electrification has promise as an energy strategy, it can only succeed
if GEVs are attractive to the mass market and can integrate into the grid.
› Batteries and Vehicles
With the advent of lithium-ion battery technology, the largest obstacle to widespread
consumer adoption of these vehicles will be cost, though performance and raw material
supply chains are also important to consider. Need innovative business models,
manufacturing scale in gen-1/2, and R&D for Gen-3.
› Charging Infrastructure
A profitable business model for public charging points has not been reliably demonstrated,
and we do not yet know how much public charging will be needed.
› Electric Power Sector Interface
While “smart” charging will make electric vehicles an asset to the grid, “dumb” charging
will make them a liability.
› Consumer Acceptance
GEVs represent a significant shift in technology. In order to change mainstream consumer
attitudes, GEVs must offer a compelling alternative to conventional IC engines on either
cost or performance grounds.
18

20. Electrification Overview: Power Sector
A 2007 DOE study found that existing offpeak electrical generating capacity
could power 158 million vehicles for up to 33 miles of driving per day.
› PJM Interconnect: The 61 gWh of excess › Petroleum prices have exhibited significant
available capacity in a typical summer week volatility for the past several years. In contrast,
could charge 62 million Nissan Leafs each night. retail electricity prices have been stable.
PJM CAPACITY AND LOAD (7-1, 7-2, 2009) CHANGE IN RETAIL ENERGY PRICES (2000-PRESENT)
180 140 5.0
Crude Oil - WTI
160 Diesel
Wholesale Real Time Price 120
Installed Capacity Gasoline
140 4.0
Available Capacity
Load Ethanol (Nebraska Rack)
100
120 $ Per Megawatt Hour Electricity
80 3.0
100
Gigawatts
Index: Jan 2000 = 1
80 60
2.0
60
40
40
1.0
20
20
0 0 -
12:00 6:00 12:00 6:00 12:00 6:00 12:00 6:00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
AM AM PM PM AM AM PM PM
19
Source: PJM Source: DOE, EIA

21. Electrification Overview: Battery Costs
We are nearing the end of the first phase of battery cost reductions related
to today’s EVs and PHEVs. Scale and volume production are key today.
› The cost of the battery contributes as much as one-third of the cost of light-duty
electric vehicles. The share is higher in truck applications.
LARGE FORMAT LITHIUM ION BATTERY COST ($/KWH)
$1,200
$1,000
$/kWh
$800
$600
$400
$200
$0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Stage 1 Stage 2 Stage 3
- Limited Capacity - Over-capacity - Sustainable industrial volumes
- Limited Suppliers - Slow Volume Ramp-up - Consolidated Competitors
- Pilot Volumes - New Market Entrants - Operational Improvements
- Technical Advances - Continued Technical Advances
20
Source: EC Roadmap; PRTM Analysis

22. Charging Infrastructure: Getting Ready for
Plug-In Vehicles
Where vehicles spend their time
Source: SAE 21

23. Charging Infrastructure: Business Model
Investment in widespread public (shared) charging infrastructure is a risky
proposition. The appropriate strategy and business models are unknown.
PAYBACK PERIOD FOR A SINGLE PUBLIC CHARGER IN A ‘BUSINESS AS USUAL’ CASE
Source: EC Roadmap; PRTM Analysis 22

24. TEPCO Fast Charge Experiment
Infrastructure Is Critical for EV Adoption, Even if it is Not Used
Extensively
Source: TEPCO R&D Center Study 2008

25. Electrification Overview: Vehicle Supply
Automakers worldwide are developing plug-in hybrid and electric vehicles.
By 2013, more than 30 models could be available to consumers.
› Global automakers are rolling out a › Production volumes are expected to scale up
substantial number of PEV option in the as supply chains become mature and
coming years. consumer demand becomes predictable.
EXPECTED PEV LAUNCHES BY MAJOR GLOBAL OEMs ANNOUNCED PRODUCTION CAPACITY OF GLOBAL OEMs
900,000
800,000
PHEV
PHEV 700,000
6 EV
600,000
EV
500,000
400,000
1 300,000
8 2
200,000
5
1 3 100,000
1
0
2010 2011 2012 2013 2011 2012 2013
24
Source: Bloomberg New Energy Finance Source: Bloomberg New Energy Finance

26. Electrification Overview: Vehicle Demand
As the market for the current generation of PEVs enters its second full year
of sales, there have been some encouraging signs amid obvious challenges.
› There are currently 23,698 GM Volt › U.S. PEV sales were 17,813 in 2011. This total
customers on waitlists throughout the exceeded the number of traditional hybrids
United States. sold in 2000—HEVs first full sales year.
GM VOLT WAITLIST BY STATE—TOP 20 U.S. MARKETS U.S. SALES OF PEVs: 2011
4,500 12,000
4,000
10,000
3,500
3,000 8,000
2,500
6,000
2,000
1,500 4,000
1,000
2,000
500
0 0
PA
WA
VA
AZ
FL
OH
GA
TX
NJ
CO
CA
NY
MI
IL
NC
IN
MD
MA
MN
MO
Chevy Volt Nissan LEAF Smart ED Mitsubishi i
25

27. U.S. Hybrid and Plug-In Vehicle Sales
400 Mercedes S400
Mercedes ML450
Mazda Tribute
Honda CR-Z
350
Ford Lincoln MKZ
BMW X6
BMW ActiveHybrid 7
300 Sierra/Silverado
Lexus HS 250h
Mercury Milan
Ford Fusion
250
Dodge Durango
Thousand HEVs
Chrysler Aspen
Cadillac Escalade
200 Chevy Malibu
GMC Yukon
Chevy Tahoe
150 Saturn Aura
Lexus LS600hL
Saturn Vue
Nissan Altima
100 Toyota Camry
Lexus GS 450h
Mercury Mariner
50 Toyota Highlander
Lexus RX400h
Honda Accord
Ford Escape
-
Honda Civic
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Toyota Prius
(2010 for (2011 for Honda Insight 26
PEVs) PEVs) PEVs

28. The Electrification Coalition
Revolutionizing Transportation and Achieving Energy Security
› Online
www.electrificationcoalition.org
› Download Reports
www.electrificationcoalition.org/electrification-roadmap.php
› Office Contact
1111 19th Street, NW
Suite 406
Washington, DC 20036
202.461.2360

29. Global Oil Market Dynamics—Reserves
Proved conventional oil reserves have generally declined in most developed
economies over the past several decades. OPEC reserves have grown.
GLOBAL OIL RESERVES BY SOURCE
› OPEC’s share of global
1,600 100%
oil output (40 percent)
sharply lags its share of
1,400 reserves (80 percent).
80%
1,200
› This might make sense
if OPEC resources were
Billion Barrels
1,000 60%
highest cost, but in fact
800
the opposite is true.
600 40%
› Geopolitical issues,
400
20% cartel politics, and
200 weak investment
regimes are key
0 0%
1980 1984 1988 1992 1996 2000 2004 2008 challenges.
OPEC Other non-OPEC
OECD OPEC Share of Reserves
OPEC Share of Production
Source: BP, plc
28