L E A D I N G I N E N T E R P R I S E P R O D U C T C O S T I N G | W W W . F A C T O N . C O M

Disruptive Technologies Impacting Profitability in the Auto IndustryAlexander M. Swoboda | CEO | FACTON

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Disruptive technologies impacting profitability in the auto industry

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KEY MESSAGES

▪ The factory/production of the future will be digital, connected and generic to meet tomorrow’s requirements.

▪ Trends and technologies change manufacturing processes and the profitability of the industry.

▪ A thorough understanding of profitability will be key to keep an edge in this fast-changing world.

Photo credits: see page 14

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The factory and production of the future will be digital, connected and generic to meet tomorrow’s requirements

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GENERIC

DIGITAL

CONNECTED

Photo credits: see page 14

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Hand in hand with changes in manufacturing, the profitability of the industry will change

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QUANTUM COMPUTINGThe total quantum computer market will grow to $ 283 million by 2024.

NEW AND LIGHTWEIGHT MATERIALCarbon fiber has average annual growth of 11.1% since 2013.

ACES90% of car innovations and new features are driven by electronics. ELECTRIC

By 2035, 30% of new cars sold globally will be BEVs.

IoT | SMART PRODUCTSIn 2022, more than 50 billion sensors and devices will be connected.

BLOCKCHAINIn the next three years, 54%

of the car pioneers plan to implement a blockchain.

ARTIFICIAL INTELLIGENCEThe AI in manufacturing market is expected to reach $ 17.2 billion by 2025.

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SHARED

Autonomous, Connected and Shared will drive adoption of Electric with huge impact on revenues and costs

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Reduces components

Increases utilization and coordination

Accelerates adaption

Facilitates rapid adoption

Enables fleets of smaller cars

Lower costs to serve

Lower costs to build and operate

ELECTRIC

CONNECTED

Sources: Forbes

AUTONOMOUS

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Electric vehicles seem more expensive, but are more effective through the interaction of ACES

8/15/2019 | FACTON Trade Secret & Copyright, for authorized use only6 | Source: McKinsey Company; AAA (the American Automobile Association, Inc.); own estimate

Cost step from ICE to ACESEstimated per vehicle; end-user perspective. Mileage 100,000 miles; cost in thousand $.

22.5

32

30

ICE - Internal combustionengine

34.5

16

3

ACES

Time

Operation

Production

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Lightweight construction: materials like carbon fiber make it harder to understand long term costs and profitability

8/15/2019 | FACTON Trade Secret & Copyright, for authorized use only7 | Source: AVK Composites Market Report 2018; *estimation; Photo credits: see page 14

0

20

40

60

80

100

120

140

2010 2011 2012 2013 2014 2015 2016 2017 2018* 2020* 2022*

DEM

AN

D IN

TH

SD. T

ON

S

THE GLOBAL CARBON FIBER MARKET WEIGHT OF A CAR BODY

889 lbs. with sheet metal parts.

vs.222 lbs. with carbon

fiber reinforced plastics

75%

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In a smart production world, products capture real-time cost information during manufacturing

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Warehouse

Products will "know" what they cost.

Machine I

Machine II

"

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The blockchain allows new ways to collaborate by sharing costing information across the supply chain

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3PL

3PL

Car ManufacturerCustoms & Port Authorities II

Dealer

Authorized Service Center

Customer

Tier 2

Tier 1

Customs & Port Authorities I

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AI revolutionizes our understanding by automating simple tasks and generating completely new insights

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Automatic inputdata collection

Outlier analysis

Early cost estimator

Automation Insight generation

Linking of costs towarranty / recalls

Automatic optimization

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Roof linings: 90.000

Car doors: 3.000

Rear axles: 324

Quantum Computing is ideal for working with large amounts of product cost data across product and production variants

Source: University Paderborn (Germany); Business Magazine Brand Eins (2006)

Audi 1020

BMW 1032

Ways to combine the components

= in total more than 1020

theoretical combinations

Variant possibilities

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Standardization and digitization are the prerequisites for the step into the future. We call it: Enterprise Product Costing

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Enterprise Product Costing (EPC)

Standardization Digitization

ACES

Electric

New and Lightweight Material

IoT | Smart Products

Blockchain

Quantum Computing

Artificial Intelligence

Photo credits: see page 14

L E A D I N G I N E N T E R P R I S E P R O D U C T C O S T I N G | W W W . F A C T O N . C O M

Alexander M. SwobodaAlexander.Swoboda (at) facton.com

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THANK YOU!

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Photo creditsPages 2-4, 8, 12: Background photo by Unknown Author is licensed according to CC BY-SA, URL:https://de.wikipedia.org/wiki/Datei:Blauer_hintergrund.png

Pages 3 / 12: Photo by Unknown Author is licensed according to CC BY-SAFactory: https://en.wikipedia.org/wiki/Tesla_Factory

Page 7 Photo by Unknown Author is licensed according to CC BY-NDCarbon fibre: https://theconversation.com/black-to-the-future-carbon-fibre-research-seeds-new-innovation-27148

Page 8: All photos by Unknown Author are licensed according to CC BY-SA or CC BY-NC-ND▪ Shock absorber: http://www.contramanillar.com/amortiguadores-bitubo-especificos-para-harley-davidson/ (CC BY-SA)▪ Warehouse: https://commons.wikimedia.org/wiki/File:Warehouse_of_Grupo_Martins_in_Camaçari_(Brazil).jpg▪ Production: https://www.flickr.com/photos/daimlerag/6759498869 (CC BY-NC-ND)▪ Stamping: https://commons.wikimedia.org/wiki/File:Stanzen_TruPunch_5000.jpg (CC BY-SA)

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