Global Car, SUV, Light Truck and Heavy Truck Production Forecasts 1995-2005, 2006F

Ten year average annual growth rate for global sedan production averages about 1.7% per year. Thus, overall unit growth is limited. Global sedan production is estimated by Paumanok to be 47 million units in 2006, with an additional 10 million SUVs, and about 1 million class 7 and class 8 heavy-duty trucks, fire engines and busses. Thus, Paumanok forecasts 58.5 million vehicles will be built worldwide in 2006, of which only 0.0064% will be HEV products. And 100% of these vehicles will go to Toyota, Honda and Ford, with minor production from Hyundai/Kia. Thus, penetration rates are very small, especially in the car and light truck segment. There is also penetration into the heavy truck and bus business as well, which has been a viable market worldwide since 2002. This market experienced a rapid growth spurt in 2005 and 2006 due to impending 2007 Federal Highway Legislation in the United States. Forecasts for Class 7 and Class 8 truck production worldwide should increase by about 5% in 2006 to about 1.3 million vehicles. However, the real growth will be in sedan production. The following table shows how Toyota and Honda have made a huge impact on global car and light truck production since 1995.

The table below illustrates that penetration rates of hybrid electric vehicles are still less than 1% of global output, and the total available market is enormous. Even the most conservative estimates place HEV production at 6% of total car and truck sales in 2010 (about 3.0 million units).

The important message is that capacitor content in terms of dollar value in HEV products is more than 10 times that of a conventional car.

Global Car & Light Truck Production by Manufacturer: 1995-2005, 2006F (Ten Year Historical):
Source: Paumanok Publications, Compiled from Company Data.

Forecasts are based on Q1 2006 actual versus Q1 2005 actual.

Forecast Methodology:

Paumanok Publications, Inc. has noted that the sales history of hybrid electric vehicles at both Toyota and Honda is now being used by all car manufacturers to determine their own sales of HEV products over the next five to 10 years.
HEV Mathematical Equation for Development of HEV Forecasts: 2006-2015
As a result of Paumanok Publications’ research into passive component content in HEVs versus conventional automobiles, similarities of global production forecasts in how these manufacturers will produce electrified powertrains were noted.

The following mathematical formula is being used to determine HEV sales by platform, regardless of automobile manufacturer:

• Fuel Price (A) (100,000 units = $0.50 fuel increase per gallon)
• Availability (B) (5,000 units per new platform per calendar year)
• Tax Incentives (C) (7,500 units per $1,000 in tax incentives per platform per calendar year)
• Government Legislation Emissions (D) (5,000 units per platform per calendar year)
• Percentage of Global Production Platform - Prius® Growth Model (E) (Prius®= 220,000 units in 5 years or 6.4% of total vehicles produced- this is an important number for five year forecasts).

A+B+C+D=Total Number of Hybrids
E= Five Year Benchmark for Sales from Date Of Inception

The conclusion is that all major manufacturers should have 6% of their production in HEV by 2010, which is a statistic based upon production of the Toyota Prius® first and second-generation models. However, Toyota, as the benchmark, now suggests their production of HEV cars and trucks in 2011 will be 12% of production. There is no basis for such a forecast unless multiple variables such as the cost of fuel are considered. Obviously, a $0.50 increase in fuel prices in North America resulted in an additional 100,000 hybrid cars to be sold, so there is a variable based on fuel price. There is also the problem of availability and production delays on all hybrid platforms and this is because there is a strain on the supply chain for power electronics due to the rapid movement for all major manufacturers of automobiles to rush to the market with an HEV. There are also tax incentives, which have been improved in North America, and enormous government subsidies ($200 million) in Korea, which may boost sales by tens of thousands of units above the forecast. Emissions legislation will also impact sales, but not as much as one would think because of the availability of alternative vehicles that achieve emissions regulations (e.g., California) by using more efficient engines and very small cars (e.g., Mercedes SMART).

HEV Production & Forecasts: 2006-2015

Based upon the above-mentioned formula, Paumanok publications estimates 3.0 million HEV cars and light trucks produced in 2010. And 8 million HEV cars and light trucks will be produced by 2015. Also by 2015 most of the large trucks (class 7 and 8), busses, construction machinery, farming equipment and fire engines will employ either a series hybrid drive from gasoline or more preferably diesel. This will represent about 1 million additional vehicles per year.

Thus, if we use a $20,000 ASP retail price, the HEV sedan and light truck market should grow to $60 billion in value by 2010 and $160 billion in value by 2015. Capacitor requirements in 2010 would represent a $1.7 billion market, and in 2015 - $4.6 billion. Paumanok also notes additional large market opportunities for metal film resistors, large core inductors and block varistors based upon hybrid drive schematics of the power electronics (advanced DC motor technology, but bound by the laws of nature nothing has really changed in how diesel electric trains and hybrid cars operate. The concept is similar and so are the capacitance, resistance and inductance requirements.)

Global Production Forecasts for Hybrid Electric Vehicles By Manufacturer: 2006-2015

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Source: Paumanok Estimates

	Source: Paumanok Estimates

Capacitor Content: Gasoline Engine versus Hybrid Electric Vehicle:

As we noted, the potential capacitor market in hybrid electric vehicles by 2010 will be $1.7 billion. The following graph shows why. A traditional automobile, such as the Toyota Camry currently employs about 1,800 inexpensive capacitors (95% MLCC); however, a HEV uses the DC link capacitor in its power electronics, which causes capacitor value per vehicle to rise 10-fold. This is an amazing opportunity for the OPP film capacitor manufacturers worldwide. We also notice additional opportunities for activated carbon supercapacitors (EDLCs are slated for use only in the Nissan and BMW platforms thus far), and for ferrite core inductors and for large metal film resistors also used in the power electronics structure. In short, these are very interesting and exciting new markets for passive component manufacturers and the potential is truly great.

Source: Paumanok Publications, Inc.