legal statement - copper alliance · 2019-03-04 · 6 the martec group confidential future co 2...

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THE MARTEC GROUP CONFIDENTIAL

Legal Statement

The purpose of the information in this presentation is to guide ICA programsand provide members information to make independent business decisions.

Based on a combination of primary interviews and industry information TheMartec Group is the source of forecast data in this presentation.

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Antitrust Guidelines

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The Reality of Copper Substitution in Automotive Wire Harnesses

1. Survey Base

2. Study Global Indicators

3. Summary of Findings

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Automotive Wire Harness - Summary of Interviews

Martec has completed 79 interviews with various key industry respondents:• Leading global OEMs

GM, Toyota, Ford, Mercedes, BMW, VW/Audi, Honda, Nissan,etc.

• All leading global wire harness suppliers Sumitomo, Yazaki, Delphi, Leoni, Furukawa, etc.

EuropeNorth

AmericaAsia ROW

OEM 10 7 11 2

Supplier 8 13 15 -

Other 5 4 4 -

Total 23 24 30 79

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Small Vehicles Will Grow At the Fastest Rate Over the Next 10Years

0

20

40

60

80

100

120

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Small Medium Large

Millions of Vehicles

Global Light Vehicle Production by Segment

115% Growth

130% Growth

140% Growth

2015-2025 Growth

Note: Small vehicles include A and B segment, Medium vehicles include C and compact truck segments, Large vehicles include D, E and full size truck segments

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Future CO2 Legislation Will Continue to Require Greater Advancesin Technology

US 2025:107

EU 2020: 95

Japan 2020: 105

China 2020: 117

90

110

130

150

170

190

210

230

250

270

2000 2005 2010 2015 2020 2025

Gra

ms

CO

2 p

er

kilo

met

er,

no

rmal

ize

d t

o N

EDC

GHG regulations are globally driving new technologies for compliance:• Downsizing• Downweighting

Global Light Duty CO2 Standards

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0

2

4

6

8

10

12

14

16

18

NorthAmerica

Japan/Korea Europe GreaterChina

South Asia ME/Africa SouthAmerica

GlobalAverage

Average Copper Content in Wire Harnesses and Cables Rangesfrom 8.1 to 16.4 Kilos in Different Regions Globally

Average kg Cu per Vehicle by Region

Recent Trends:

• North American decrease primarily due to vehicle downsizing

• Japan increase due to lower than expected gauge downsizing

• Global average decrease due to global vehicle downsizing trend, material substitution and gauge downsizing

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Average Copper Content Range from 5.5 Kilos in Small (Basic)Vehicles to 23.2 Kilos in SUVs

0

5

10

15

20

25

A - Basic B -Subcompact

C - Compact D - Midsize E - Large F - Large Plus G - Sports MPV SUV Pickup truck Van Unclassified/other

Average kg Cu per Vehicle by Vehicle TypeRecent Trends:

• Increased use of wires to support feature content in large and large plus segments

• Decrease in SUVs, compact, midsize due to material substitution and downsizing

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Significant Downsizing Is Evident from 2008 to 2016 … 0.13mm²Introduction Is the Primary Driver

0%

5%

10%

15%

20%

25%

No Substitution Lower Risk of Substitution Higher Risk Group

0.13 0.35 0.50 0.75 1.00 1.50 2.00 2.50 4 6 10 16 25 35

2008 vs. 2016 Average Midsize Sedan

Larger Gauge / Battery Cable is Most at Risk

Wire Area (mm²)

2008

2016

Share of Total Harness Mass

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Global Substitution of Copper in Automotive Harnesses (Battery Cableand Other) Will Likely Displace 6% of Total Copper Mass by 2020

91%

92%

93%

94%

95%

96%

97%

98%

99%

100%

2015 2016 2017 2018 2019 2020

Global Material Share in Electrical Distribution System

6%

Copper

Al Battery

Other Al

2%

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0

1

2

3

4

5

6

7

8

Weight Cost Customer Influence Space Cost Volatility

Wire Harness Battery Cable

Weight, More Than Cost, Is Agreed Upon as the StrongestDriver to Change

Drivers for Copper Substitution

Respondents placed a greater emphasis on weight and cost for battery cables vs. other wire harnesses.

1=Least Important, 7=Most Important

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80,000,000

85,000,000

90,000,000

95,000,000

100,000,000

105,000,000

10.4

10.6

10.8

11

11.2

11.4

11.6

11.8

2015 2016 2017 2018 2019 2020

Best Base Worst Global Vehicle Production

Cu Demand Is Forecast to Continue to Increase Over the Next 5 Years,Mainly Driven by an Increase in Vehicle Production Globally

Cu Use vs. Vehicles Produced

Kg/Cu per VehicleVehicle Production

Recent Trends:

• Avg. Cu kg/vehicle is expected to decrease from 11.7 to 11.0 in 2020

• Vehicle demand shifts are the key driver

Best Case: Japanese OEMs pursue Al substitution less aggressively, US OEMs maintain Cu battery cables

Baseline Case: Aggregate of Martec interview feedback from global OEMs and suppliers

Worst Case: US downsizes faster, moves quickly on Al battery cables; Technology allows Al substitution to be more feasible for diameters down to 1mm by 2020

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960,000

980,000

1,000,000

1,020,000

1,040,000

1,060,000

1,080,000

1,100,000

1,120,000

1,140,000

1,160,000

2015 2016 2017 2018 2019 2020

Best Base Worst

The Market Indicates a Small Potential Downside for Cu EvenUnder Worst Case Scenario

Cu Tonnes

Best Case vs. Projected Base vs. Worst Case

• Takes into consideration both decline of Cu usage on average and growth of global vehicle production

• Cu demand growing due to courtesy of production

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Summary of Key Findings

1. Copper continues to be the predominant material of choice for wireharnesses in the Automotive industry.

• Currently: Copper ~98% and Aluminum ~2% share

• Weight and cost are the key reasons to material substitution

2. Substitution is slow due to risk averse organizations.

• Copper still holds major advantages over Aluminum, resulting in thingauge Copper wires being “protected”

Corrosion risk, connectivity issues, packaging and flexibility

• Automotive engineers are still more comfortable in using Copper(long standing history)

3. European and Japanese OEMs lead the charge on substitution.

• European OEMs leading the charge with battery cables

• Japanese OEMs focused on battery cables and body chassis harnesses

4. American OEMs are focusing more on downsizing of gauges.

5. Current market demand for Copper in Automotive wire harnesses is ~1Mtonnes globally and is expected to grow to ~1.15M tonnes by 2020.

• Increase due to growth of Automotive market and feature content

legal statement - copper alliance · 2019-03-04 · 6 the martec group confidential future co 2...

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