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David Geanacopoulos Executive Vice President and General Counsel Volkswagen Group of America 2008 Tennessee Valley Corr

Volkswagen Group of America: Short Introduction. Volkswagen Group of America (VWGoA) consists of five brands in the US.Earlier this year, VW became the world's third largest automaker.VW is the market leader in Europe, China, and South America.In the US, VWGoA's sales represent about 2 percent

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David Geanacopoulos Executive Vice President and General Counsel Volkswagen Group of America 2008 Tennessee Valley Corr

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    1. David Geanacopoulos Executive Vice President and General Counsel Volkswagen Group of America 2008 Tennessee Valley Corridor November 24, 2008

    2. Volkswagen Group of America: Short Introduction Volkswagen Group of America (VWGoA) consists of five brands in the US. Earlier this year, VW became the world’s third largest automaker. VW is the market leader in Europe, China, and South America. In the US, VWGoA’s sales represent about 2 percent of the market. This may not be necessary Very briefly world’s largest company by market capitalization Each brand has its own brand character and operates as an independent entity. This may not be necessary Very briefly world’s largest company by market capitalization Each brand has its own brand character and operates as an independent entity.

    3. The Volkswagen Group: Today

    4. 2018 Strategy: The Five Pillars

    5. Volkswagen Product Offering

    6. Domestic Production: Chattanooga

    7. Why the Tennessee Valley: Site Selection Process Very competitive selection process Tennessee Valley’s rich manufacturing heritage Region’s commitment to environmentally sustainable values Well trained labor and excellent engineering and manufacturing programs Enterprise South site worked well with our aggressive timetable Tennessee Valley is a leading center for technology and the environment Transformative government leadership, public-private partnerships, and individual know-how No individual factor that made the difference all on its own Tennessee’s reputation for drama-free legislative sessions Tiered tax credit program tied to high-quality jobs. Tax credit program that rewarded VWGoA’s capital intensive investment. Confidentiality during the entire site selection process. No individual factor that made the difference all on its own Tennessee’s reputation for drama-free legislative sessions Tiered tax credit program tied to high-quality jobs. Tax credit program that rewarded VWGoA’s capital intensive investment. Confidentiality during the entire site selection process.

    8. Economic Impact Study conducted by University of Tennessee’s Center for Business and Economic Reseach These number were estimated using a very conservative approach. Good possiblity that the region could see even more pronounced benefits. Report was calculated on a 30 year life of project. VWGoA has agreed to pay 100% of local property taxes funding public education. Study conducted by University of Tennessee’s Center for Business and Economic Reseach These number were estimated using a very conservative approach. Good possiblity that the region could see even more pronounced benefits. Report was calculated on a 30 year life of project. VWGoA has agreed to pay 100% of local property taxes funding public education.

    9. Economic Impact: Construction of Facility

    10. Chattanooga Production Facility

    11. Chattanooga Production Facility: Timeline

    14. Sustainable Mobility: Fuel and Powertrain Strategy An Evolutionary Path to a Revolutionary Objective Before fossil fuels can be completely replaced, VW’s aim is to use fossil fuels as efficiently as possible The first step in achieving this goal is to make further improvements to the efficient powertrain technologies we are currently offering In parallel, VW is developing new power plants capable of running on second-generation biofuels, natural gas, hydrogen, and electricity In the meantime, synthetic fuels must optimize and complement fossil fuels Ultimate goal is manufacturing individual transportation independent of fossil fuels and largely CO2-neutral Technological improvement on current offerings = TDI, FSI, advanced cruise controlTechnological improvement on current offerings = TDI, FSI, advanced cruise control

    15. Sustainable Mobility: Fuel and Powertrain Strategy Matrix Short term = dependence on fossile fuel Blend them with as much biofuels as possible On the diesel side, diversify with synthetic fuels like gas to liquid and from biomass Gasoline= blend with 2 generation ethanol Before hydrogen will be on the market there are several problems to be overcome: storage and leakage; durability and costs; production of renewable H2. Ultimate destination=electricificationShort term = dependence on fossile fuel Blend them with as much biofuels as possible On the diesel side, diversify with synthetic fuels like gas to liquid and from biomass Gasoline= blend with 2 generation ethanol Before hydrogen will be on the market there are several problems to be overcome: storage and leakage; durability and costs; production of renewable H2. Ultimate destination=electricification

    16. Clean Diesel The diesel industry is on a path to produce virtually emissions-free vehicles while still retaining the efficiency, reliability and power long associated with diesel 10%-20% reduction in carbon dioxide emissions over gasoline counterpart Sulfur content reduced by 97 percent 20%-40% greater fuel economy J.D. Power & Associates predict that diesel sales will triple in the next 10 years

    17. Sustainable Mobility: Recent News

    18. SunFuel CHOREN is one of the world’s leading gasification technology companies for solid biomass and oil based residue feedstock CHOREN stakeholders = VW, Daimler, Shell CHOREN owns the world’s only facility that can produce a biomass-to-liquid fuel SunDiesel only releases as much CO2 as was previously absorbed by the biomass that was used to produce the fuel SunDiesel is the first fuel with true zero emission potential Reduce emissions and pollutants by 30-40%

    19. BlueMotion BlueMotion is VW’s new sustainability initiative BlueMotion vehicles combine consumption reducing technology with an equally efficient and dynamic powertrain Launched in 2006, the Polo BlueMotion is a three-cylinder turbo diesel direct injection car has a 59 hp engine with a standard consumption of 89 mpg over 61 miles (100 km). BlueMotion is a response to rising fuel prices and increasing demands of the environmental properties and consumption of vehicles. Our new high-fuel-efficiency BlueMotion models provide the best of both worlds – they are not only very economical, they are also fun to drive. BlueMotion is a response to rising fuel prices and increasing demands of the environmental properties and consumption of vehicles. Our new high-fuel-efficiency BlueMotion models provide the best of both worlds – they are not only very economical, they are also fun to drive.

    20. Hybrid and Battery Electric Technology Volkswagen Group is developing proprietary Hybrid and Plug-in Hybrid technology Cooperation on Battery Research (Sanyo) Development is driven by future market demands as well as regulations Implementation is dependent on advances in battery technology Investment in technology varies with energy prices

    21. Fuel Cell Volkswagen’s powertrain and fuels strategy culminates in electric-drive mobility Volkswagen began carrying out research into fuel cells in 1997 California Fuel Cell Partnership Development of a high-temperature fuel cell enables a smaller, more efficient, and lower-priced overall system Possibility = electricity generation in the stationary and mobile sphere Until the fuel cell technology is ready for production, Volkswagen is also turning to the synthetic bio fuel SunFuel as part of its fuel strategy. We are convinced that in the decades ahead there will be a coexistence of the internal combustion engine and fuel cells Therefore we are encouraging both fuel cell technology as well as activities into new usage concepts for biomass. Until the fuel cell technology is ready for production, Volkswagen is also turning to the synthetic bio fuel SunFuel as part of its fuel strategy. We are convinced that in the decades ahead there will be a coexistence of the internal combustion engine and fuel cells Therefore we are encouraging both fuel cell technology as well as activities into new usage concepts for biomass.

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