www.ricardo.com © Ricardo plc 2012

Global Powertrain Development at Ricardo Powertrain Strategies for the 21st Century: Designing Global Powertrains

July 2012

2 © Ricardo plc 2012

Agenda

Introduction to Ricardo

Advanced Technology Development and Market Entry

Engine Development Examples

Competitive Cost Management

Driveline and Hybridization

3 © Ricardo plc 2012

China Japan

Ricardo is one of the world's leading management & engineering consulting firms

Focused on value-adding services Solving key industry issues Programme delivery as a core competence Investment in people and technology Critical mass with revenues exceeding £190m

and over 1800 people Independent and long established (1915)

Product Engineering

Products/ Production

Strategy Consulting

UK Germany

USA

India

Strategy development

Engines

Vehicles

Software

High performance exhaust systems

Technical support service

Product development Procurement strategy

Product Strategy

Manufacturing & supply chain

Motor sport Transmissions & drivelines

Control & Electronics

R&D, Industry and Technology

Know-How

M&A support Efficiency Improvement

Cost Optimization

Established Success Factors

Value-Adding Capabilities

International Presence

Global Client Base (selection)

Introduction to Ricardo

4 © Ricardo plc 2012

1966 Jensen FF The 4WD system of the Jensen FF, the world’s first 4WD passenger car, was developed by Ferguson Research Ltd (which later became part of Ricardo) launched at British Motor Show

2005 Bugatti Veyron Development and manufacturing of the DCT (dual clutch transmission) for the fastest road going car in the world , the Bugatti Veyron

Ricardo’s contribution to some key developments in the history of transportation

1915 Engine Patents Ltd. Harry Ricardo formed Engine Patents Ltd, the precursor of today’s Ricardo Plc becoming famous for the design of a revolutionary engine which was utilised in tanks, trains and generators

1930 Fundamental Fuel Research Development of a variable compression engine which was used to quantify the performance of different fuels. This was the forerunner of today’s Octane rating scale (RON)

1935 Citroën Rosalie The world’s first diesel production passenger car, the Citroën Rosalie, was introduced featuring a Comet Mk III combustion chamber. Derivatives of this design are still used

1986 Voyager Voyager was the first aircraft to fly around the world non-stop without refuelling. Ricardo redesigned the Teledyne Continental engine, improving fuel economy and reducing drag

1999 Le Mans Successes Advanced technology helped Audi to secure its special place in motorsport history with a novel transmission to win 5 races out of 6 entries at the 24-hour race of Le Mans

2006 Record Breaking Year Development of the world's fastest diesel engine for JCB. The DieselMax set the diesel land speed record at Bonneville with a speed of 350 mph (563 kph)

1951 Fell Locomotive The 2,000bhp Fell Locomotive was the world’s first diesel mechanical locomotive, with a novel transmission invented by Lt. Col Fell. It was powered by four Paxman-Ricardo engines.

2011 NHTSA/CAFÉ Fuel Economy Ricardo helped shape future North American CAFE Fuel Economy Ruling

Introduction to Ricardo

5 © Ricardo plc 2012

Ricardo’s world wide footprint allows us to support clients in their local markets

Ricardo Strategic Consulting Offices Main Engineering Facilities Ricardo Corporate Offices

1800+ people based in main automotive centres around the world

Ricardo Representative Offices

Ricardo UK Ltd

Shoreham

Cambridge

Leamington

Ricardo Sweden Ricardo Prague

Prague

Ricardo Japan

Tokyo

Ricardo Korea

Seoul

Ricardo China

Shanghai

Ricardo India

Ricardo Italia Ricardo France

Ricardo Inc.

Detroit

Chicago

Ricardo GmbH

Schwäbisch Gmünd

+ Aachen + Wolfsburg

Munich

Delhi

Introduction to Ricardo

6 © Ricardo plc 2012

Ricardo’s advanced propulsion technology market strategy development process

Define Opportunity Growth Option 1: Bus market Entry

2015

2020

2015

2020

1,9589%

Target two market entry points:– Bus Integrators; no BMS required

as integrators have development capability

–Bus VMs; likely to require BMS and integrated battery pack

Commence market activity with prototype pack by end 2010 and target market entry by 2012/13

–Relatively short programme lead times due to integrator role in development of drive systems

Develop battery suitable for mild and full bus applications

– Mild Hybrid: ~1kWh energy; 7 kW power

–Full Hybrid: ~37 kWh energy; 170 kW power

Primary targets: Yuchai, Weichai as integrators; Xiamen Jinlong, Yutong and Suzhou Jinlong as bus VMs

2,93613%

4775%

Baseline

87410%

Optimistic

High Level StrategySales

Volume

Share of Total

SegmentScenarios

2015

2020

2015

2020

1,9589%

Target two market entry points:– Bus Integrators; no BMS required

as integrators have development capability

–Bus VMs; likely to require BMS and integrated battery pack

Commence market activity with prototype pack by end 2010 and target market entry by 2012/13

–Relatively short programme lead times due to integrator role in development of drive systems

Develop battery suitable for mild and full bus applications

– Mild Hybrid: ~1kWh energy; 7 kW power

–Full Hybrid: ~37 kWh energy; 170 kW power

Primary targets: Yuchai, Weichai as integrators; Xiamen Jinlong, Yutong and Suzhou Jinlong as bus VMs

2,93613%

4775%

Baseline

87410%

Optimistic

High Level StrategySales

Volume

Share of Total

SegmentScenarios

2015 2020

US

D (M

) Pow

erG

enix

Opp

ortu

nity

Define Strategy Growth Option Overview

Market Definition

Sales Channel

Dual approach:– Drive-train integrators, who integrate and sell solutions to bus VMs; sell

the same drive-train to multiple bus VMs– Bus VMs, who integrate the drive-train into a chassis and may also

build the bus body Bus drive-train are used across multiple bus chassis, creating a strong

market entry opportunity for PowerGenix with a single product

Product Definition

Bus power-train integrators not likely to require BMS capability; giving PowerGenix the opportunity to target the segment while developing internal competence

Bus VMs are likely to require a fully integrated pack– Likely secondary target, to enable PowerGenix time to develop suitable

BMS

Value Proposition Lower cost alternative to Li-Ion Higher specific power than NiMH should reduce pack weight, creating

more opportunity for passenger pay-load, critical for operator TCO

Target Chinese Domestic Bus VMs and drive-train integrators (eg: Yuchai, Weichai)

Key battery competitors include Chunlan, Forever, Shenzhou (NiMH); ANX, ATL, Lishen (LiFePo4) MGL (LiMN04)

Filter Target Customer

21 VMs and integrators

Long List of Potential Bus VM & Integrator Customers

Selection Criterion

Product Fit Non-captive battery supply Vehicle/ HEV volume Openness to Ni-Zn Etc

Target Customers

5 Target VMs and integrators

Bus Powertrain Yuchai DFM Cummins Cummins FAW Weichai

BAIC Zhongtong Ankai FAW Bus GAIG Bus CSR Times Shenzhen

Wuzhoulong

Bus VM Xiamen Jinlong Yutong Chongqing Hengtong Dandong Huanghai Suzhou Jinlong Jiangsu Youyi Shanghai Sunwin DFM Bus Yangzhou Yaxing

Bus Powertrain Yuchai DFM Cummins Cummins FAW Weichai

BAIC Zhongtong Ankai FAW Bus GAIG Bus CSR Times Shenzhen

Wuzhoulong

Bus VM Xiamen Jinlong Yutong Chongqing Hengtong Dandong Huanghai Suzhou Jinlong Jiangsu Youyi Shanghai Sunwin DFM Bus Yangzhou Yaxing

1

Bus Powertrain Yuchai Weichai

Bus VM Xiamen Jinlong Yutong DFM Bus

Bus Powertrain Yuchai Weichai

Bus VM Xiamen Jinlong Yutong DFM Bus

Identify Target Program

Vehicle Volume

11.43.8TOTAL

0.50.20.05XHEV PowertrainWeichaiIntegrator*

51.50.1XHEV PowertrainYuchaiIntegrator*

0.70.30.1XHEV BusDFMBus

1.50.50.2XHEV BusDFMBus

0.70.30.1XHEV BusYutongBus

1.50.50.1X11m BusYutongBus

Bus

Vehicle Type

2011

Micro

Mild

Full

HEV Bus

Program

1.50.50.2XXiamen Jinlong

Planned Vehicle Program SOP Time

2020

HEV Segment

2015201420132012Target VM

Vehicle Volume

11.43.8TOTAL

0.50.20.05XHEV PowertrainWeichaiIntegrator*

51.50.1XHEV PowertrainYuchaiIntegrator*

0.70.30.1XHEV BusDFMBus

1.50.50.2XHEV BusDFMBus

0.70.30.1XHEV BusYutongBus

1.50.50.1X11m BusYutongBus

Bus

Vehicle Type

2011

Micro

Mild

Full

HEV Bus

Program

1.50.50.2XXiamen Jinlong

Planned Vehicle Program SOP Time

2020

HEV Segment

2015201420132012Target VM

Target Bus VM and Integrator Customer Programs1

INDICATIVEINDICATIVE

Technology Requirements

Typical Vehicle Typical Battery Requirement

Full Hybrid Bus Vehicle Battery Requirements

S

800LTarget battery size:

475-500kgTarget Battery Weight:

1.4 m OhmsCell Internal Resistance:

105AContinuous Charge Current:

210AInstantaneous Charge Current:

40-60%SOC Range:

210APeak Charge Current:

430APeak Discharge Current:

170-200kWPeak Charge Power:

170-200kWPeak Discharge Power:

800VCharge Voltage:

576VSystem Voltage:

400VDischarge Voltage:

6 yearsLife-cycle:

2015: 118,400RMB / $17,000Battery Cell Cost (NiZn, China)

-20 to +55 CelsiusOperating Temperature:

64AhBattery Capacity:

37kWhBattery Energy:

Huanghai, DD6129HES11

11.9 Metres Long Kerb weight 13.2 Tonnes 132kW DFM Cummins Diesel 24-50 Seats, 73 passengers

Growth Options

Source: Ricardo Analysis

Advanced Technology Development and Market Entry

7 © Ricardo plc 2012

Ricardo scientists and engineers continue to develop and improve combustion engine technology

Advanced Combustion Technology for Improved engine-Out NOx

System Optimisation

Code System

Modelling Vehicle

Simulation

Analysis Thermal / FE

Test Data

Advanced Technology Development and Market Entry

8 © Ricardo plc 2012

One of our latest accomplishments is the design and manufacture of the McLaren supercar engine

3.8L Twin Turbo V8 592 Horsepower 443 ft-lbs peak torque 0-60 in 3.1 seconds Redline 7000 RPM 22 MPG EPA Highway

McLaren MP4-12C Avoids Gas Guzzler Tax

Engine Development Examples

9 © Ricardo plc 2011 RD.11/399001.01 Confidential

Our work for a regional OEM is a prime example of Ricardo’s capabilities to support development from beginning to end

Projects Overview

Long-term Power-train Strategy ( 5 months)

Powertrain Seminar

(3 days)

Engine Feasibility Study (6 months)

Product Group conducted a three day seminar at OEM covering future engine and transmission technologies

This triggered a discussion at OEM about their future engine strategy

OEM subsequently asked Ricardo to assist with development of its future long term powertrain strategy

R-UK handed over lead for proposal development to RSC Asia

Ricardo Strategic Consulting developed the long term engine and transmission strategy over five months

Close collaboration between RSC, R-Malaysia and R-UK

Two phased approach with RSC leading Phase 1 but much stronger R-UK participation in Phase 2 (Phase 2)

Key recommendation was to develop own engine programme

Six months concept feasibility study 3 years prior to SOP

Engine concept proven and demonstrated

Source: Ricardo Strategic Consulting

R-UK Procurement and Quality

Support (6 months)

Procurement of first wave of components for new engine

Very operational approach with emphasis on learning to doing

RSC R-UK RSC

Engine Development Examples

10 © Ricardo plc 2012

After the architecture is defined, design begins with emissions and fuel economy targets

CAFE (NHTSA)

Tier I Tier II

LEV2

USA

California

Speculative ("real-world" effects)

HVAC effects

PM size spectrum

Off-cycle Emissions?

2000 2005 2010

Euro 5 (2010)

140 g/km CO2

Euro 4 (2005) Europe

2015

0

0.02

0.04

0.06

0.08

0.1

0.12

0 0.2 0.4 0.6 0.8 1 1.2 1.4

NOx (g/mile)

PM

(g/m

ile)

Approximate Comparison of EU and US Legislation

T1 - LDV

T2 Bin 10 (Max for HLDT)

T2 Bin 9 (Max for LDV/

LLDT) Euro IV (2005)

Euro V (2010)

(Proposed)

Euro III

~3L Small SUV

~4.5L Mid SUV

~6L Large SUV

Euro legislation represents Diesel passenger car

Predicted NOx vs PM over FTP-75 cycle for various applications with Euro 4 PC technology

T2 Bin 8

T2 Bin 5

Temperature /(K)

Loca

l Equ

ival

ence

Rat

io

1000 1400 1800 2200 2600 3000

1

4

3

2

5

6

7

8

9

10

Soot formation area

NOx formation area

Engine Development Examples

11 © Ricardo plc 2012

Concurrent with design, supplier qualification, sourcing, and component costs are established

3

5

5

4

6 2

3

8

2

5

2

27

6

15

6

3 16

32

4

2

7

1

61 18

Competitive Cost Management

12 © Ricardo plc 2011 RD.11/399001.01 Confidential

Powertrain components are sourced in successive waves based on their cost and development lead time

Source: Ricardo Strategic Consulting

Dev

elop

men

t Lea

d Ti

me

Req

uire

men

ts

High

Low

High Low Cost Contribution

Medium

Catalyst

Fuel System

Sensors

Turbo

Throttle Body

ECU

Cyl. Block

Cam Conrod

VVT

Pumps Piston

Pri Drive

Engine Covers

Composites

Turbo

Crankshaft (if outsourced)

Starter A/C Compressor

Alternator

HPAS

Flywheel Flexplate

Sealing excl. Head

Gskt

Valves

Wave 1

Wave 2

Wave 3

Head Gskt

Crit Fasteners

Other

Vac. Pump

Commodity Segmentation

Competitive Cost Management

13 © Ricardo plc 2012

Additional final drive ratios enable downsizing allowing engine to operate in narrower peak power and efficiency bands

Technology Development Market

Automatic

Benefits to Boosted Vehicles

+ Diesel engines with high torque at low engine speeds can capitalize on overdriven gears to reduce engine speed during cruising conditions and benefit from low gearing to improve launch feel

• Increase in the number of speeds offered by conventional planetary-torque converter automatics from the US standard 4 speeds to 6/7 combined with adaptive control strategies

CVT / IVT + Continuously variable ratios can be used to ensure the driveability of downsized / boosted engines by keeping the engine within its optimum operating window

• Automatic transmissions using a variator to offer step-less ratio selection

DCT + Increased ratio spread and control capabilities improve the driveability of downsized / boosted engines with mechanical efficiency approaching that of conventional manual transmissions

• Hydraulically actuated, twin input shaft automated manual transmissions offering gear pre-selection and shifting without torque interrupt to optimize shift speed and quality

78%

7%

5%

MT CVT

DCT

AT

MT CVT

DCT

AT

MT CVT

DCT

AT

Driveline and Hybridization

14 © Ricardo plc 2012

Hybridization of heavy vehicles shows substantial opportunities to reduce fuel consumption

Driveline and Hybridization