Judith Eadie Account Director Automotive Leasing - a LeasePlan brand 1

The evolution of alternative fuels and the fleet market.

Where are we now? Adoption of electric vehicles continues to increase 3 Vehicle CategoryMar-15Mar-14% ChangeYTD 2015YTD 2014% Change Plug-inPure electric1, ,6331, Plug-inOther electric4, , ,007.3 HybridPetrol/electric7,5376, ,17710, HybridDiesel/electric , Cars eligible for the Plug-in Car Grant6,1041, ,5411, Total new cars registered492,774464, ,588688,1226.8

4 RANKMAKE & MODELQ2 2015Q1 2015Q Mitsubishi Outlander PHEV (all variants) Nissan Leaf BMW i Renault Zoe Toyota Prius Plug in Hybrid Vauxhall Ampera Tesla Model S BMW i Renauly Kangoo ZE Nissan e-NV200 (all variants)

Increased user adoption drives... An expansion of the charging infrastructure Greater driver acceptance as both perceived and actual fears/risks are overcome Increased remarketing data helps leasing companies firm up residual value calculations (a key driver of leasing cost) 5

Targets to be hit EU legislation has set a target of 95g/km for ‘average’ new cars by 2020 With no immediate mass market alternative, take up of full or hybrid EVs must continue to increase rapidly 6

Barriers – real or unfounded? Range Charging infrastructure Residual values Better alternatives (FCVs) 7

Vehicle Range A perceived barrier that doesn’t really exist

Range Even if we take the impressive, but pricey, Tesla out of the equation we have: Nissan Leaf (2016):155 miles Nissan Leaf (2017):250 miles (expected) Renault Zoe:149 miles (to be released) Kia Soul:132 miles 9

Range 67% of trips are less than 5 miles Average trip length 6.4 miles Average commute to work length 15 miles Have you ever actually seen an electric vehicle stranded at the side of the road? 10 Statistical Release - National Travel Survey Gov.uk

Charging infrastructure A perceived barrier that doesn’t really exist

Charging infrastructure 12

Residual values Perception, reality and the leasing company viewpoint

Residual values Residual values are the biggest driver of monthly rental costs Current market pricing for the same (or equivalent) vehicle, is the primary basis for predicting future values Additional influencers are: – New model releases – Supply outstripping demand (fluctuates over time) – Economic growth / decline 14

Residual values LeasePlan remarkets 28,000 cars a year but has only remarketed 10 electric vehicles over the past 12 months. The lack of data is not the only challenge, we also need to consider: – Battery efficiency/life as total mileage increases – Any step-changes in technology – Rate of infrastructure growth – Increased familiarity and adoption driving further demand 15

Residual values As the leasing company the risk is our responsibility (that’s why you should lease and not buy) Most leasing companies err on the side of caution when setting residual values for EVs LeasePlan has a more positive view and is setting optimistic residual values, which in turn drives down the monthly rental cost 16

Residual values Tesla Model S, with a 220 mile range, ensures its 3 year / 60,000 mile value is c. 43% This is almost exactly the same as a BMW M535D Sport 17

Residual values Vauxhall Ampera Electron has a residual value of around 28% (3 years, 60,000 miles) This is getting pretty close to the Vauxhall Insignia SRI CDTI’s 35% 18

The gap is closing... The gap between diesel and electric residual values is closing fast As an owner, if fuel is taken into consideration, the electric vehicle will often beat the diesel 19

Are EVs the long term answer? Shouldn’t we wait for FCVs?

Batteries vs Fuel Cells Elon Musk says “fuel cells are a really dumb idea” – Hydrogen is an energy storage mechanism, it is not an energy source – Electrolysis (to extract hydrogen from water) is extremely inefficient – The best case hydrogen fuel cell doesn't win against the current case batteries 21

Batteries vs Fuel Cells Toyota would disagree, they would says hydrogen is the future because it is: – Highly abundant – Can be made from almost any energy source – Easier to store in large quantities – Longer range (312 miles) 22

Batteries vs Fuel Cells There’s just one tiny problem – EV’s are here, with mass production models (34 EVs as opposed to 2 FCVs as of July 2015) and a rapidly growing charging infrastructure – In the UK, there are just 29 hydrogen refuelling stations (most of which are closed to the public). 23

Batteries vs Fuel Cells Why is the government backing fuel cells if they are not the answer? The UK is being positioned as a global leader in renewable energy and needs to demonstrate diversity in approach The government must be seen to support the development of a technology that may have a long term role to play in the wider ‘renewables’ market 24

The verdict In theory, fuel cells address the perceived current range limitations of mass market EVs But…fuel cells will not be a viable mass market alternative within the next 5 years Even allowing for the government’s £6.6M hydrogen infrastructure investment, by the time FCVs are a viable alternative, the perceived advantages over EVs will have disappeared 25

The next steps… Familiarity breeds acceptance

The next steps People accept what they are familiar with, and are familiar with what they accept. EVs are generally unfamiliar to most people, so they can’t reasonably compare them based on their effectiveness. To become familiar means talking, testing and then making a conscious decision.

Who can you talk to? 28 Talk to the experts: – Work with 98 clients to deliver ULEV solutions – Green Fleet Award Winners 2011,2012,2014 – EST partnership driving training programme – Member of Scottish Government’s E-Cosse panel – Transportation Spending Advisory Panel member – Tesla / LeasePlan Go leasing partnership

Who can you talk to? Talk to the adopters:

Testing 30 Our Take a Leaf out of our book scheme has given customers the opportunity to use a Nissan Leaf for up to 3 months The gives enough time to see how it performs in a real-world situation When customers liked the results, we help introduce them to the fleet When customers don’t like the results.. actually we’re not sure because it hasn’t happened yet

Are EVs are the only answer? It can’t be right for everyone

Are EVs the only answer? LeasePlan is committed to driving down emissions because it contributes to a healthier society and environment for future generations We have no vested interest in EVs, and work with companies to help them lower their carbon footprint in a way that works for them We will continue to encourage UK Government to commit to investment in the infrastructure to support ULEVs on our road network, regardless of fuel source. 32

Here’s the but… Over the next 5 years there will not be another viable mass market solution EVs can, and should, be a part of every fleet As pioneers in the adoption of EVs and ULEVs we will help you adopt EVs only where it is economically and operationally viable If EVs won’t work for your organisation right now, we’ll help you lower emissions through more informed vehicle and fuel selection 33

It’s easier to leaseplan

SLIDE IN DEVELOPMENT Roles & Responsibilities 35 Manufacturer – All new models must be 150 miles + per charging cycle Leasing company Customer Driver