1. REACH and others... Timo Unger Latest Developments

2. Hyundai Motor Europe Tech. Center Content Interesting facts to know from ACEA / TF REACH –Structure of ACEA WG on Materials & Substances (WG M/S) –Status of the „Substance Pilot“ discussion Status of the most critical REACH Challenges –Update on „Lead Time Shortage“ The PACT List The SVHC survey and how suppliers can support –Update on Legacy Spare Parts under Authorisation –Update on the O5A Discussion Status of key SVHCs under REACH 2

3. Hyundai Motor Europe Tech. Center ACEA WG M&S Unger/Hyundai Bahr/ACEA TF REACH (Unger/Hyundai Bahr/ACEA) TF Biocides (Swindell/JLR Bahr/ACEA) Informal TF Process Ch emicals (Stein-Schaller/BMW) TF Nanos (Bahr/ ACEA Meeuws/Toyota) TF VIAQ (Nesa/Renault) Bahr/ACEA) Structure of the ACEA WG M&S 3

4. Hyundai Motor Europe Tech. Center 4 The Challenge Suppliers OEM

5. Hyundai Motor Europe Tech. Center Some of our current discussions... The WG M&S is approving the recommendations from the different Taskforces All global M&S related issues are in scope (China, Turkey, Korea, Australia,...) In addition, there are discussed other (strategic, visionary) subjects, such as –Development of GLAPS (Global List of Automotive Process Substances) –Implementation of a Global Substance Monitoring System –Common Alternative Assessments for critical substances 5

6. Hyundai Motor Europe Tech. Center Update on Substance Pilots Task Description: –Be main point of contact for the substance / group of substances –Establish a network with the relevant manufacturers, associations, industry consortia –Collect and consolidate latest information on the substance/(alternatives) for every relevant automotive application –Report back at the TF REACH meetings, if necessary Where mandated by the relevant associations: –Coordinate Automotive Industry activities, if needed –Organize ad-hoc teleconferences and/or email exchange of the sub-group, if necessary –Prepare proposals for decisions to be taken by the relevant associations Schlüter (Scania)/ Funcken (Nissan) Glabbeek (Mitsubishi) Griffin (JLR) Hillmann (Daimler) Drozd (Kia) Meeuvs (Toyota) Kobayashi (Denso)/ Buczilowski (Faurecia) Swindell (JLR) Duarri (Mazda) Genero (Fiat) Henault (Renault) Sarabando (PSA) List of current Pilots 6

7. Hyundai Motor Europe Tech. Center 7 Lead time shortage

8. Hyundai Motor Europe Tech. Center Lead time shortage But only if the substance is identified already ONE year before* 360 days + 180 days = 540 days (worste case) => Time needed for newly identified substances!  Experience out of 13 years of data collection throughout complex supply chains: –Under normal conditions a reliable investigation via IMDS can be performed within 2-6 month= up to 180 days! * Time needed - to adjust existing tools and processes (GADSL is updated max 2/year!) - for suppliers to check and update their material reportings 8

9. Hyundai Motor Europe Tech. Center Public Activity Coordination Tool (PACT) As requested by Industry since a long time (also included in the ACEA presentations), and as one major outcome of the SVHC Roadmap projects, many EU member states have now agreed to announce much earlier than it is today (currently earliest announcement to regulate a substance is in the ROI) their intention to conduct a RMOA (Risk Management Option Analysis) on a potential SVHC. This announcement is done on the ECHA webpage (see: http://echa.europa.eu/addressing-chemicals-of-concern/substances-of-potential- concern/svhc-roadmap-implementation-plan/pact) and shall serve as a first indication into future legislative measures.http://echa.europa.eu/addressing-chemicals-of-concern/substances-of-potential- concern/svhc-roadmap-implementation-plan/pact 9

10. Hyundai Motor Europe Tech. Center Public Activity Coordination Tool (PACT) Current status (8.4.2015) : 254 Substances !!! 10

11. Hyundai Motor Europe Tech. Center Public Activity Coordination Tool (PACT) This publication so far is not mentioned in the legal text and thus not mandatory to be done by each Member State. However some of the most active ones (e.g. Germany, France, Sweden, Denmark and Holland) have already announced to publish each substances they are intending to regulated in the future under REACH. As a consequence this means that they also commit to always perform an RMOA! Conclusion for REACH TF: The impact of these substance on our business needs to be evaluated in order to provide valuable input into the RMOA discussions (-> SVHC survey). In order to guarantee that this new legislative process also is accurately reflected in our commonly agreed processes, the IMDS-GADSL-REACH Process charts has been updated and released in the last Global GADSL Meeting. 11

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13. Hyundai Motor Europe Tech. Center *Update of MDS is necessary if substances newly added to GADSL are covered by an IMDS joker / wildcard 13

14. Hyundai Motor Europe Tech. Center Purpose and Challenge of the SVHC survey This survey serves as basis for many of our future decisions: GENERAL QUESTION: Are we impacted by that substance? Is there a need for Notification acc. to REACH Art 7.2? o Basis for the evaluation of the notification factsheets Is there a need for further actions concerning Authorisation or Restriction, e.g. o Do we have to give input into the stakeholder consultation? o Do we have to start communication with the responsible associations? o Do we need a Substance Pilot? Which legacy parts have to be communicated acc. to Art. 33? Is there an impact foreseen for the production sites of OEMs or suppliers? Does the substance potentially have to be added to GADSL? What are the challenges? Sometimes we compare with We are not having data on the impact of substances into the production sites of our suppliers 14

15. Hyundai Motor Europe Tech. Center Request to suppliers Please help us to protect (y)our business 15 Provide input into the SVHC survey for process chemicals (not for parts!)

16. Hyundai Motor Europe Tech. Center Spare parts under REACH Authorisation 16

17. Hyundai Motor Europe Tech. Center Substance Substitution vs. Spare Parts Production Spare parts (still produced in very low volumes & often by SMEs) have to be re-developed & re-validated (several times?) –Not possible Experience from ELV: Will have negative consequences on service parts strategy –Results in: Increasing costs for customers or Decrease of the vehicle lifetime Consequences: Spare parts are produced outside of Europe OR Quality of service parts may decrease Lifecycle of a car – From the cradle to the grave Sunset Date = Substance Substitution Publication Annex XIV Material Development Component Production Material Production Vehicle Production Vehicle Production Component Development Vehicle Development Vehicle Lifetime Vehicle Recycling OEM or SME Spare Parts Production 8 - 20 years (after EOP) Spare Parts avail ability 0 - X years (after EOSP) SME Spare Parts Production 3 - 7 years OEM EOP: End of Production EOSP: End of Spareparts Production 17

18. Hyundai Motor Europe Tech. Center Reason for the quality decrease: Substitution...! 18

19. Hyundai Motor Europe Tech. Center Examples of insufficient testing  2005 Indianapolis Formula 1 Fiasco – Only 6 cars started the race – 14 of the 20 cars withdrew from the race due to tire problems – A major F1 tire supplier concluded that its tires would not survive turn 13. – The turn had been reshaped  Challenger Explosion 19

20. Hyundai Motor Europe Tech. Center Conclusion Type approval legal requirements and minimum 10 year warranty obligation must be fulfilled. It is normal for OEMs to offer spare parts for 15 years or longer after End of Production. Stockpiling not (always) possible: Storage capacity, material degradation e.g. of rubber parts, resource efficiency Substitutions of substances can cause changes in function, geometry, thermal durability, …. Disproportionate efforts to substitute due to low demands for spare parts. Repair of durable goods is beneficial for EU society Automotive Industry proposal for spare parts:  Agreement to the EC proposal to extend the LAD / Sunset date for 15 years???  Alternatively a combination of the extended transitional periods with a simplified authorisation CAN work if: It is easily affordable and achievable 20

21. Hyundai Motor Europe Tech. Center Possible Solutions 1.OEMs or large suppliers make sure that relevant uses for spare parts production are included in the AfA of the chemical industry (e.g. DEHP in rubber) 2.M/I can benefit from a simplified authorisation 3.M/I can benefit from longer sunset dates for the low volume production of spare parts Preferred solution from Automotive Industry 21

22. Hyundai Motor Europe Tech. Center Latest Status of Discussions: Public Consultation started (5 March, 2015) –One Intention: Collect more information on what substances are used in spare parts and, when possible, the volumes used. Comments can be sent until April 30, 2015 A working group of TF Reach has finalized the input from the automotive industry into the public consultation. –CLEPA (and others) already asked to support! Decision expected for second half of 2015 Current tendency from EC and MS: –“the solution that seems to have the broadest acceptance among all stakeholders is a simplification of the assessment of alternatives (AoA) and of the socio-economic analysis (SEA) in the application for authorisation.” –The sunset date of some substance uses will pass before the planned implementing act has been adopted. For these cases, the Commission intends to extend the sunset dates specifically for legacy spare part uses of the Annex XIV substances concerned, until the implementing act is applied. –Simplified AoA and SEA templates will also be developed for substances used in legacy spare parts. 22

23. Hyundai Motor Europe Tech. Center Simplified Authorisation for Spare Parts Pre-Requisites: 1.Should be more like Notification 2.1 st level material / part producer (person who uses substances to manufacture materials / parts) may apply 3.Free of charge 4.Duration – set time frame (e.g. 15 years), can re-apply if still required 5.Automatically accepted by RAC / SEAC 6.No need for a Chemical Safety Report (CSR) 7.No need for Exposure Scenarios (replace with RMM in place) 8.Analysis of alternatives / Substitution plan obsolete – not required because spare parts are automatically phasing out Information to be provided: Template provided by association (e.g. ACEA-webpage) with socio-economic justification for spare parts in automotive To be completed by individual applicant only with: 1. Substance name 2. CAS # / EINECS # 3. Authorisation number 4. Use(s) Applied for 5. Usage / Volume information (e.g. 1 – 10 kg/pa;10-100 kg/pa) 6. Risk Management Measures in place 23

24. Hyundai Motor Europe Tech. Center 24 Once an article, always an article (O5A)

25. Hyundai Motor Europe Tech. Center 25 Calculation of communication duty (Art 33 & 7.2) 0,1% All CL-Substance (CLS) with a weight of 0,1% w/w of the vehicle / spare parts have to be communicated (Art 33) and sometimes notified (Art 7.2) Calculation method: Check where CLS are contained and their weights Sum up the total weight of the CLS in the article Difficult but possible Check whether the sum exceeds 0,1% of the article weight TODAY: 0,1%

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27. Hyundai Motor Europe Tech. Center 27 Article weight vs. sub-article vs. homogenous material Article WeightSub-article weight down to spare part / tear down level Below this level: like Homogenous material Homogenous material (also sub-article below spare part level) Check where CSL are contained – which weight Define sub-articleDefine smallest sub-component (e.g. Resistor on PCB) Sum up total weight each CL-SubstanceCheck wether CL-Substances are included Check wether CL-Substance are included Check wether sum each CL-Substance exceeds 0,1% article weigth Find out sub-article weightDetermine the weight per material per sub component Check wether CL-Substances exceeds 0,1% of Sub article weight Check wether CL-Substances exceeds 0,1% of material weight Issue Communication to private / professional customer Managable Very high effort Almost impossible Tasks

28. Hyundai Motor Europe Tech. Center Latest developments Member state interpretations of the term “article,” diverge, in particular on how the threshold should be applied to complex articles, such as cars or spare parts. –The European Commission and most Member State authorities concluded that the threshold applies at the level of the whole article (e.g. car), but seven countries, including France and Germany, decided to apply the threshold at the level of each individual component, in the case of a car, the screen, plastic covers, capacitor, wires, etc. In April 2014, the Court of Justice of the European Union was asked to rule on whether the 0.1 percent limit applies to the article as a whole or to each component separately. On February 12, 2015, the Advocate-General, an advisor to the court, issued an opinion on this issue. This opinion is important, since the Court, more often than not, follows the substance of such opinions. The Court of Justice of the European Union is expected to release its judgment in the next several months. 28

29. Hyundai Motor Europe Tech. Center Impact on Art 7.2 Notification According to the Advocate-General, a component is an “article” if, once integrated, it retains a shape, surface or design of its own. The Advocate-General opined on Art 7.2 Notification that the 0.1 % limit applies at the level of the article as a whole for EU producers and at the level of each component for importers. –A EU located producer must notify ECHA if a substance on the Candidate List is present in concentration higher than 0.1 percent by weight of the whole article or of any sub-component that they produce and that retains a shape, surface or design of its own. –An importer, on the other hand, imports both the whole article and all its components. It therefore must notify ECHA if a substance on the Candidate List is present in concentration higher than 0.1 percent by weight of any “article” that it imports, including any component that retains a shape, surface or design of its own. REACH TF Advise: Check the Notification fact Sheets under http://www.acea.be/publications/article/reach- automotive-industry-factsheets to evaluate your substance specific duties http://www.acea.be/publications/article/reach- automotive-industry-factsheets 29

30. Hyundai Motor Europe Tech. Center Impact in Art 33 Communication The Advocate-General opined on the Art 33 Communication that the 0.1 percent threshold applies to each component for purposes of REACH’s “safe use” information requirement, provided that relevant information is available. –If the supplier is an importer, it is deemed to be the supplier of the whole article and all its components. The 0.1 percent threshold therefore must be applied at the level of each component separately. –Further, the Advocate-General reasons that EU producers of components must pass on SVHC-related information to their customers and this information thus is available in the EU, but it might not be the case for importers, in particular importers of small quantities of articles. To avoid an undue burden, it would thus be reasonable to limit this obligation to situations in which the information is available. REACH TF Advise: –Pray! 30

31. Hyundai Motor Europe Tech. Center 31 Article weight vs. sub-article vs. homogenous material EU ProducersEU Importers Notification (Art 7.2) If CLS > 0.1% weight by weight of the whole Article weight any (sub-) component that they produce (and that retains its shape, surface or design) If CLS > 0.1% weight by weight of any Article they import weight of each (sub-) component (that retain its shape, surface or design) Communication (Art 33) If CLS > 0.1% weight by weight of any Article weight of each (sub-) component (that retain its shape, surface or design) ONLY if information is available => Which is NOT doubted! If CLS > 0.1% weight by weight of any Article they import weight of each (sub-) component (that retain its shape, surface or design) ONLY if information is available => Which is doubted! CLS: Candidate List Substance Summary of the Advocate General Opinion: Question: Does the term „Only if information is available“ mean that Automotive Industry (compared to other Industries) has FULL obligations? Advise: Prepare & Pray

32. Hyundai Motor Europe Tech. Center Current substances with headache potential DecaBDE Restriction DEHP Authorisation DBTO Restriction Lead Authorisation Boric Acid Authorisation HBCD Authorisation Formaldehyde Class. ADCA Authorisation Nickel RMOA RCF Authorisation PFOA Restriction Chromium Trioxide … 32

33. Hyundai Motor Europe Tech. Center Conclusion There is a lot going on There is much impact also on your business There is much done to react and support There is still a lot to do So please, closely follow up, provide support and Don´t wait too long... 33