Welcome. It's our pleasure to welcome so many of you here with us today in Seoul. Also, welcome to those who are joining us via webcast. My name is Evelien Goovaerts. I am in charge of investor relations. Before handing over to the management for the presentations, I would like to go through a few practical things, as well as walk you through the agenda of today. As always, a cautionary statement. I am not going to read it for you. It is also on our website if you would like to consult it. Let's now move to the agenda. Powering ahead. You will have noted the theme already, and that is exactly what we want to showcase today. Umicore is powering ahead and is leading the way in clean mobility. Our CEO, Marc Grynberg, will kick off today's presentations. He will start with a strategic update on Horizon 2020.
He will reflect on the achievements made so far. He will also highlight the key mega trends that are strengthening and that are driving our key businesses, in particular, the accelerating move to clean mobility. We then move further to Pascal Reymondet, Executive Vice President, Catalysis. He will talk about the unprecedented growth opportunities in automotive catalysts. Strengthening emission norms for both passenger cars and heavy-duty diesel are driving growth in the market, and he will demonstrate that Umicore is set to outgrow the market. After a break, we continue with Kurt Vandeputte, Senior Vice President, Rechargeable Battery Materials. He will explain that Umicore is widening the gap in battery materials for xEV applications. He will explain that this is driving significant growth for Umicore in the years to come.
After a longer break for lunch. Also a cultural activity, we will continue with Denis Goffaux, our CTO and Executive Vice President, Energy and Surface Technologies. He will walk you through the innovation roadmap in clean mobility materials. Highlight the unique position of Umicore on every step along that innovation pipeline. We will then go back to Marc, who will wrap up today's presentations with some key messages. That is also when we will stop the live webcast. Those of you who are here with us today will then be invited for dinner. Will also have the opportunity to attend the keynote of Chancellor Professor of Materials Science and Engineering, Gerbrand Ceder, who will talk about the future of energy storage and electrified vehicles. We have a very busy agenda, so a busy schedule.
We are very anxious to get things started, but just a few practical things before we can start it. We have foreseen official Q&A sessions. In order to give everyone the possibility to raise their questions, may we ask you to limit your question to one question per person? All the presentations that we will be showing today will be posted as well on our corporate website every time at the end of each session. Please note that today's event is being recorded, and that the replay will remain available for five years on Umicore's website. Then last but not least, may we ask you to switch off your mobile phones? If you decide to tweet about the event, don't hesitate to mention our hashtag UmicoreCMD. With this, I would like to ask Marc to come on stage. I wish you a very enjoyable day. Thank you.
Okay, you can click already.
Thank you, Evelien, for this very thorough introduction. Good morning, everyone, and welcome to Umicore's Capital Markets Day in Korea. If you attended our Capital Markets Day three years ago in London, welcome back. If you attended our Capital Markets Day six years ago, I'm glad we gave you a good reason to come back to Korea. Of course, I would like also to welcome our web audience today. We have prepared a very full program for you for today and for tomorrow, a program that is articulated around the theme of clean mobility materials. One of the key things that we want to bring across as part of the program is actually we want to highlight how technology and environmental regulations are driving the growth in our business.
What we would also like to highlight during the program is what has changed compared to the Capital Markets Day of three years ago when we launched our strategic plan, Horizon 2020. Before doing so, and before highlighting those changes, I would like to go a little bit back in history. Actually, I would like to bring you some 15 years back in history, and that in order to put the strategic journey of Umicore in somewhat of a good context and perspective. 15 years ago, we started to drastically transform the portfolio of Umicore, and that was done through intensive M&A activities. 15 years ago, we acquired the catalyst activities that are one of our flagship activities and one of our largest activities today. We also started the divestment process of the historical activities of Umicore in smelting and refining.
At the same time, we were rolling out the recycling business model, and we were also starting to plant the seeds for some organic developments. A very intensive phase of transformation for the group, and as I mentioned, driven or executed to the very large extent through M&A activities. After that, we decided to put much more focus on the organic growth potential of the company. As I mentioned, we had planted some seeds for organic growth and during the 2010, 2015 timeframe, we started to make choices. We actually started to make selections and invest in those activities, those seeds that had developed the best and were showing the best promise. At the same time, we also decided to put some more investment on the ground in those activities and prepare for the next phase.
M&A transformation in the first decade of this century, followed by a more significant focus on organic growth. Then when we met three years ago and we launched the Horizon 2020 strategic plan, I told you that we would seek a somewhat more balanced approach. Of course, the focus would still be on organic growth, but I told you that we would want to complement the organic growth with some selected M&A activities. Having now passed the halfway mark of Horizon 2020, I can actually comment a bit more as to how things have developed in reality. Over the past three years, we have really spent significant efforts to change the configuration of Umicore and to simplify the configuration of Umicore. First of all, we have streamlined our portfolio of activities.
You will recall that early 2015, we announced that we wanted to streamline the portfolio of activities in order to increase the focus on clean mobility materials and on recycling. That is by and large done by now. In 2016, we divested our zinc chemicals activities. In 2017, we divested building products and the large area coatings activities of Thin Film Products. Earlier this year, we sold the European operations of technical materials. All in all, over the past few years, we reduced the number of business units from 15 to nine, and we reduced the number of production sites from 64 to 51. Quite a significant simplification. During the same period of time, we completed some selected acquisitions in Energy and Surface Technologies and in Catalysis. These acquisitions were meant to strengthen our positions, our market positions, or strengthen our technology offering.
In Catalysis, we acquired the remaining shares in our Korean joint ventures that is producing automotive catalysts, Ordeg. We also acquired the HDD and the stationary emission control catalyst activities of Haldor Topsøe, and we acquired the metathesis catalyst activities of Materia. In Energy and Surface Technologies, we acquired a very critical IP portfolio a few years ago, and we also acquired French company, Eurotungstene. At the same time, during the past three years, we stepped up and accelerated our investments in Rechargeable Battery Materials in quite a considerable manner, and we'll have a chance to come back to that and elaborate on these investments and how we step them up.
As a result of that phase of the past three years, we have now a new Umicore, if I may put it this way, with a very clear and much sharper focus on clean mobility materials and on recycling. We have also used this period of time to build very strong foundations that we can use to accelerate the growth of our business going forward. That is what we will see next. More organic growth, actually as a result of the previous phase of preparation, and a very, very significant acceleration of that growth. Talking about foundations, there is one thing that has not changed at Umicore, and these are our foundations. Our foundations are exactly the same as three years ago when we talked about them. They are the same as six or 10 years ago.
This is the common denominator across our businesses. It is also the basis on which we make key strategic decisions. Our business model consists of transforming metals into functional materials. We do that using a blend of competencies in chemistry, in material science, and in metallurgy. Actually, we are strongest in those areas where a combination or all three types of competencies are required simultaneously. We differentiate ourselves through a very deep application know-how. We differentiate ourselves by closing the materials loop. A very significant part of our foundations is our approach to sustainability. We are and we act as a leader in sustainability. At Umicore, I would like to emphasize that this means more than trying to minimize the potential negative impact that industrial operations could have.
At Umicore, as part of our sustainability leadership, we are striving to have a positive impact around us by using our technologies, using our competencies, to address a certain number of societal challenges. This is reflected in the way we select our businesses, the businesses that we want to pursue and in which we invest. It is also reflected in our mission statement of making materials for a better life. I would like now to elaborate on the mega trends that are actually the underlying factor behind our strategy, show you why the mega trends that were selected a number of years ago to support the strategy are still very relevant, even have strengthened over the years. Let me start with what I believe is the most obvious case, that's resource scarcity. Why obvious? Well, because mineral resources are available on the Earth in finite quantities.
As we dig them from the ground, by definition, their scarcity can only increase. In a way, will the need for recycling. What we observe, though, is that over time, the perception of what is scarce may change, may move from one element to the other. I recall that when we spoke about that some six years ago during our Capital Markets Day here in Korea, what was hot on the agenda was the availability of rare earth, that was following the introduction of export quotas by China. Three years ago, the question mark was about the availability of lithium, as we saw the first sign of emerging demand for battery materials for electrified vehicles. Now, the spotlight has clearly moved to cobalt.
The scarcity increases, the need for recycling follows, the elements which are perceived or which are actually scarce can change over time in function of market, regulatory, or technology developments. There is another mega trend that has also strengthened in recent years, that's the need for cleaner air. One of the catalyst factors in the recent past that has changed the perception about the need and the urgency to make the air cleaner is no doubt the diesel scandal. As a matter of coincidence, you may recall or you may have noticed that the diesel scandal broke out in September 2015, just a matter of days after our Capital Markets Day back in London. The diesel scandal has done a few things.
It has changed the perception in the public opinion, and it has also reduced, quite dramatically, the tolerance for pollution, not only in the public opinion, but also in the regulators' eyes. As a result of that, you have seen an accelerated introduction of tighter emission norms. For the first time, some of these norms will be applicable in real driving conditions, which, and we will explain that later, actually Pascal will explain that later, which will boost, actually, the value of the catalysts that are required per vehicle. The other thing that has changed following the diesel scandal is that the regulators have decided to raise taxes on diesel fuel.
If you take the combined effect of tighter emission norms and more catalysts or more sophisticated catalysts being required for cars because of that, and the increase of the fuel cost because of higher taxes, and I'm talking about Europe, the effect is that diesel engines have become less competitive and less affordable, in particular for compact cars. I've already mentioned what is on the slide now. The fact that for the first time, the new emission norms will be applicable in real driving conditions, and that will have an effect on the catalyst value. Another thing that has changed, and that's a recent trend or recent strengthening of the trend for cleaner air, is that you have seen a certain number of municipalities considering or announcing bans on diesel. A certain number of municipalities no longer want to have diesel cars in city traffic conditions.
If you consider that diesel will become more expensive, diesel configurations will become more expensive in Europe, and that there is an uncertainty now as to whether you will have the authorization to drive your diesel car in city centers, you can infer from that these factors are keeping quite a number of consumers away from diesel today, and that explains the declining sales of diesel cars in Europe. As a result of that, we have recently seen a series of announcements from leading global car OEMs, such as Nissan, Toyota, and Volvo, that they would stop developing diesel platforms and that they would seek to accelerate their exit from diesel sales. If you take another leading car manufacturer, Volkswagen, while they decided not to abandon diesel, at the same time, they clearly decided to step up and accelerate significantly their electrification strategy.
The other key development that actually took place shortly after our Capital Markets Day of three years ago, was China's decision to introduce China 6 emission standards, much tighter emission standards, both for passenger cars and for heavy-duty diesel applications, and that implementation will start in 2020. Later today, we will show you how this is going to impact the value of catalyst per car and how this is going to impact the value or going to boost the value of the catalyst market. It's also worth noting that the emission norms that China is going to introduce shortly are going to be tighter than those that we know in Europe. China has been a follower in terms of emission norms for quite a number of years and have decided to now leapfrog what others are doing and to lead with the tightest emission norms.
You can also say that this is normal because the air quality problem is much more acute in China than in any other region. Also worth noting is that India decided to follow suit, and while the Indian market is somewhat smaller than China, this is also a significant development. If you consider that China and India together account for some 35% of global car production and about half of the heavy-duty engine production, you can imagine what effect this will have on the global market. All in all, this is leading us to believe that the growth in the catalyst market is going to be much more pronounced than what we felt three years ago, when we started, when we launched the Horizon 2020 strategy. Historically, we have told you that the catalyst market was growing at about 1.5 times the rate of car production growth.
It was not a linear growth, of course, because it was depending on a few steps achieved at the time of the introduction of new norms, but that's been the historical average. With what is happening in Europe, what is happening in China and in India on the passenger car side and for heavy duty, you will see now a much more pronounced growth going forward and actually in the not so distant future. At the same time, we also see a very significant acceleration of the electrification of car production. This is actually not so new compared to what we discussed three years ago at the time of the Capital Markets Day in London, because actually the main regulations that are driving the introduction of electrified vehicles, that is the CO2 regulation in Europe and the CO2 regulations in China.
Those regulations were in place in 2014 already, before we launched Horizon 2020. However, what has happened in the recent couple of years is that there has been an acceleration of the electrification and a step-up of the electrification efforts of the car OEMs. In China, which is the leading market in terms of electrification and which probably account for more than 40% of global EV demand going forward. In China, the acceleration is pushed by the government that has recently introduced EV or new energy vehicle production quotas over and above the subsidy mechanism that was encouraging already the adoption of electrified vehicles. You have now a much stronger regulatory push and a much stronger government mandate to introduce electrified vehicles in the marketplace.
In Europe, the push is coming from the fallout of the diesel decline, which will make it even more challenging for car makers to achieve the 2021 CO2 regulations and new limits in Europe and will force them to increase the proportion of electrified vehicles in their model lineup. When we met six years ago for the Capital Markets Day in Korea, clearly, there were more skeptics at the time than believers in electrification. The question at the time really was, will electrification ever happen? The question was sometimes expressed in another manner. The question was sometimes expressed by the skeptics mostly, in the following way: where does the oil price need to go in order for electrification to make sense? Some people, some observers, were saying below $200 per barrel, electrification will not make sense and therefore will not happen. That was six years ago.
If you were an early adopter, it is also true to say that you had a limited choice of EV models on offer at that time, which was not really creating the best conditions for EV models to penetrate the market and to convince the skeptics. When we met 3 years ago in London, when we were launching the Horizon 2020 strategy, the question no longer was, will electrification ever happen? The question at the time was, how fast will it go? Regulations had been adopted, there was a clear indication, or more than indication, there was a confirmation that electrified models would be required in a certain proportion in order for car OEMs to be able to meet the new and more stringent CO2 limits.
At the time, some models were developed to try and simulate what was the required reduction in battery costs to make battery electric vehicles or plug-in hybrid vehicles competitive with combustion engines. I think that has occupied many of you for quite a while. At the same time, I have to say that, and you will see that also from the images that we're projecting now, the number of models on offer had been multiplied quite substantially. Still for the early adopters, clearly, you had back then, 3 years ago, quite a number of models to choose from if you wanted to make the effort, the financial effort, to acquire an electrified vehicle. Today, I would say that the question no longer is how fast will electrification happen? The question really has become, how much faster can it go?
You see a proliferation of models that are being offered, actually this will even be more visible next year in Europe. Why next year? Next year the credits that the European Union is giving to car producers for electrified vehicles are starting to accrue, while the potential penalties, if you don't meet CO2 regulations, will only start to kick in in 2021. That's one factor. The other thing is that clearly the perception of the urgency of improving air quality has really changed in recent times. The question today, as I mentioned, is how much faster can it go? Having explained why the mega trends that are supporting our growth and supporting our strategy Horizon 2020 are still relevant and have even strengthened, let me now go back to the objectives that we had set ourselves as part of Horizon 2020.
Let me start with the financial part of these objectives. You will recall that 3 years ago, we told you that as a result of the growth and the organic growth that we had in mind, that we would double the recurring EBIT by 2020, starting from the 2014 base, excluding discontinued operations. At the time, the REBIT in 2014, excluding discontinued, was slightly over EUR 240 million, which meant that we were expecting to reach half a billion euro in recurring EBIT by 2020. I'm pretty sure that you will recall what we communicated in February at the time of the full year earnings release, at the time we launched our capital increase.
You will also recall the guidance that was provided at the end of April, which basically means that we now expect to reach the Horizon 2020 target or to even exceed it as early as this year, so two years ahead of schedule. The faster growth that we see in energy and surface technologies, and the fact that we've been able to accommodate the faster growth of demand and to accelerate our investment, now means that we see a potential to exceed the original Horizon 2020 target by some 35%-45%. I also told you three years ago that as a result of the faster growth in energy and surface technologies compared to the catalysis and recycling segments, that by 2020 we would have rebalanced the contribution to earnings from the three segments.
As a matter of fact, this rebalancing was achieved in 2017 already as a result, again, of the faster than anticipated growth in battery materials. With the investment program that is in place and where we see now demand heading, it is fair to expect that by 2020, the energy and surface technology segment will have become the largest contributor to earnings. Let me now address our sustainability objectives as we set them out back in 2015. There again, I have to say that we have achieved very, very significant progress. In terms of eco-efficiency in the first instance, despite the significant growth in production and in our business configuration, we have achieved significant improvements. For instance, we have reduced our energy consumption by 20%, more than 20% compared to the baseline of 2015.
We have also reduced our metal emissions to air and water by respectively 41% and 69%. This is the result of significant investments that were made in our largest facilities and significant projects that were successfully achieved in order to make our facilities way more eco-efficient than was the case. Again, still with the idea in the back of our minds that we want our operations to be the benchmark in the industry. Another area where Umicore is creating competitive distinction is in the area of ethical and sustainable sourcing. Actually, more than 10 years ago, back in 2005, we decided to introduce an ethical and sustainable sourcing charter and to impose it to all of our raw materials suppliers. I have to admit that we have hardly been rewarded for that so far, things are changing.
Things are changing because there is an increased level of scrutiny by the public opinion, by the NGOs, and by leading customers in the automotive and the electronics segments about the origin of the raw materials going into their products. This is a trend that we're building on to play out our competitive advantage and our early positioning in that respect. Early positioning, for instance, I have to say that Umicore was the first company, last year, to obtain third-party certification that our cobalt supplies are 100% of ethical and clean origin, which in today's high scrutiny environment, clearly positions Umicore quite apart from the rest of the industry. Next to that, of course, we have our closed loop or recycling capabilities, which offer our customers full traceability. This is one of the key distinctive factors in our business model.
When we talk about making or turning our leadership in sustainability into a greater competitive advantage, this is, I think, one of the best way to illustrate what we mean with that. Now let me briefly show a few selected examples of how we are establishing or strengthening our leadership in clean mobility materials and recycling. Short examples and selected examples, because actually this will be developed in way more detail and depth by my colleagues during the rest of the program today. Let me start with recycling. Actually, I have to clarify in the first instance that you will not have, and you may have noticed that from the agenda that Evelien presented, you will not have a fully fledged presentation on recycling today. It doesn't mean that we have a lesser interest in recycling from a strategic point of view.
It's just that we wanted to focus today and tomorrow on what has changed the most since we spoke last in September 2015, and that is in the area of clean mobility materials, in catalysis, and in battery materials. The interest and the willingness to develop our activities in recycling are totally unchanged compared to three years ago. Our leadership in recycling hinges, I would say, in the short to medium term, mostly on the capacity expansion of our flagship operation in Hoboken. The ramp-up of the new capacity is proceeding well, and as I mentioned to you on a few occasions in recent communications, the results of this ramp-up should become more visible starting this year. More visible in terms of financial impact.
While we will not focus on recycling today, and while the growth profile may not be as sharp as it is in catalysis or in battery materials, I would like to repeat, and I would like you to continue to bear in mind that our recycling activities generate outstanding returns and has an extremely attractive cash flow profile. Nothing to be read between the lines. We'll not talk a lot about recycling today. Doesn't mean that we have less interest from a strategic point of view, and of course, I'll be happy to take your questions on recycling during one of the Q&A sessions. I've talked about the leadership in recycling in the short to medium term. In the longer term, what we see as the next big thing is, of course, the recycling of spent lithium-ion batteries.
It will take a bit of time to materialize as a new business. I still expect that this business will take off in the mid-2020s, and that it will have a growth curve that is likely to mimic the growth curve in battery demand that we see today, with a time lag of about 10 to 12 years. Which means or implies that we are likely to make investment decisions to scale up our recycling capacities and capabilities sometime in the first part of the next decade, in the first part of the 2020s. In catalysis, we're also strengthening our leadership position, and Pascal will elaborate on that. I'd just like to highlight a few things, and I've selected as a picture, as an image, the tech center of Ordeg, the research and tech center that you will visit tomorrow as part of the visit program.
That's an acquisition that was completed in the first part of last year. We had a 50% stake in that catalyst joint venture, and we moved to 100%, with a full integration being done in the meantime. We also acquired the HDD and the stationary business of Haldor Topsoe in the course of last year. This will strengthen our technology offering in HDD, and in particular in China, which is set to become the largest HDD market in the world. It's also given us an entry into a new segment for us. That's the DeNOx segment for some stationary applications such as power stations. Pascal will also show you later today how we are strengthening our market position in the passenger car segment with very significant technology leadership in gasoline applications.
I will say even less about battery materials, because this will be highlighted today during the presentation and tomorrow during the visit in Cheonan. What I told you three years ago, when we presented Horizon 2020, is that we would make use of the time window of Horizon 2020 to increase the gap in battery materials. Today, what I can say with a lot of confidence, and what I think you will see today and tomorrow, is that we have done so. That's what is really happening these days. We are increasing the gap, we continue to qualify for large platforms in the automotive segment, we continue to add capacity much faster than anyone else in the industry.
As I would like to remind you with some of the press releases that were issued recently, that outline the pace at which we're adding capacity and which imply that we are actually outpacing the market growth in battery materials. Clearly with the visit tomorrow in Cheonan, you will get a visual impression of what we mean when we talk about building scale in this battery materials activity for electrified vehicles. As I get near to the end of my introduction, I would like to reuse a slide that I showed you three years ago at the Capital Markets Day in London. Why do I want to reuse it? Because it is still very much relevant. What I told you three years ago is that Umicore was uniquely positioned to serve the move to cleaner mobility in the automotive industry.
Today, this is as true as it was three years ago. It is even more visible, I believe, that Umicore is in that unique position. We're the only company that is actually offering the entire spectrum of materials technologies to support the cleaner mobility transition, be it through catalysts for combustion engines with gasoline particulate filters, for instance, now becoming necessary in certain engine configurations. Be it through our materials for plug-in hybrid or battery electric vehicles, through the catalysts for fuel cells applications. Please bear in mind that we're also the only company that is closing the materials loop and offers the customers in the automotive segment that want to have a true clean solution, the ability to recycle these materials that are used in drivetrains when they reach end of life.
The other reason that I wanted to show you again this image is to outline once again that at Umicore, this is not an aspiration. This is who we are today. We are indeed already offering the full spectrum. Given the changes that we constantly see in engine mix, in drivetrain mix, for a number of reasons, I'm convinced more than ever that our versatility and our ability to cover the entire spectrum is going to play out in our favor. How is it playing out? Well, as I mentioned, there are a lot of changes in the engine mix. If you remember the discussions that we had three years ago at the capital markets day or even a longer time ago, quite a number of assumptions in terms of engine mix trends have had to be revisited since then.
The first change that we've seen, and that's a recent change, is that there is a reduction in the engine mix, and that's a clear trend. There is a reduction in the proportion of diesel sales in the engine mix. A second change compared to the assumptions that were made three years ago is that there is more electrified drivetrains in the engine mix now, and the trend is going to be even more pronounced going forward. Another change in terms of assumptions is that a number of car OEMs have started to narrow down the number of development avenues. While until recently, they were keeping all options open. All kinds of combustion engines, fuel cells, electrified drivetrains, and you name it.
Today, they are starting to narrow down their options to a more limited number of choices for cost and efficiency reasons, but also because the urgency to meet the new CO2 regulations is actually pushing them in that direction. As a result, we see car OEMs streamlining their development programs and coming up with a reduced number of platforms that are open for bidding. These platforms are each much larger and covering a larger number of models and a larger number of cars. Every time we bid for a platform, there is a lot at stake in terms of business development. The good news about that as well is that this is giving us quite a lot of visibility in the medium to long term so that we can easily adjust our capacity planning.
The last change, I would say in the engine mix is that fuel cells are clearly part of the mix. The timing is still quite a bit uncertain as to when this will reach mass production. What is getting increasingly certain is that fuel cell vehicles will be on the road at a certain point in time. The mix is changing, continues to change. You have different forces, regulatory forces, consumer choices, et cetera, that have an influence on the mix. We don't have a crystal ball, so we don't know exactly which drivetrain is going to come in which proportion at every point in time. There is one certainty that we have, is that there will be a diversity of drivetrains on the road.
We don't see today, we don't see in the foreseeable future, any single drivetrain technology taking a dominant position and winning the entire, or close to the entire, market potential. This will not happen because, first of all, there isn't a single technology that covers the entire spectrum of application requirements. They can be very different in terms of the consumer's choices and the functional requirements of each mobility solution. Also because most technologies, when you talk about drivetrains, most technologies for clean mobility require raw materials that may have some scarcity attached to them. Some of these technologies may hit supply chain bottlenecks at certain point in time. We're absolutely convinced that there will be a coexistence of drivetrain technologies in the foreseeable future.
Again, this is why I believe that our versatile position is unique and is going to continue to play out in our favor. With that, I would like now to hand over to Pascal, who will elaborate on the developments in catalysis.
Morning. Can you hear me? Switch is on. Thank you, Marc, for the introduction. After this presentation, actually, I have a question: is automotive catalyst a business still worth investing in? I get that question once in a while from friends and from other people. If you look back, I've been in business for about 30 years. In the last 30 years, that question could have seemed a bit awkward, because automotive catalyst has been growing steadily for the last 30 years. With electrification coming in, and Marc has explained it's happening, and it's good for society, it's very good for Umicore. With electrification coming in, the question of whether automotive catalyst is a business worth investing in is a valid question. Legitimate question.
My goal today is to show you that automotive catalyst still has growth potential, and we even call it unprecedented growth potential. You warned me. Pushed the wrong button. Agenda will present again automotive catalyst shortly and then go through the different markets so we can show you how much growth potential there is in these different markets. Our business model of automotive catalyst. We develop catalyst to help our customers to meet emission legislation at the lowest total cost of ownership. For those of you who were here or with us in London 3 years ago, you will notice that that slide hasn't changed. Our business model is still the same. It's good. Means it's efficient, it's successful. We haven't changed our business model. The business is still technology and innovation driven. Will be in the foreseeable future. Why? Because emission legislation is getting more stringent.
Emission legislation getting more stringent is supporting and actually requiring that we develop ever better catalysts. Our business for the foreseeable future will be technology and innovation driven. For that purpose, we develop catalysts with our customers in cooperation with our suppliers. We have very strong relationship with universities to develop basic science to come up with the best catalyst technologies. With technology-driven and customer focus, it is not sufficient to develop a catalyst technology in the lab. You have to adjust that technology to the customer requirements. We do that in our technical centers. You will visit our newest technical center tomorrow, you will get a sense of what we mean by technical center. We strongly worked on operational excellence because we have to make science affordable for our customers. Technology-driven business model has not changed and will not change for the foreseeable future.
Let's go through the different markets. Light-duty vehicles, passenger cars. We have been in that business for more than 30 years. We have a very strong track record. We work with all OEMs worldwide. When we started more than 30 years ago, we only had one plant in Rheinfelden in Germany. Over the years, we have developed our footprint worldwide with manufacturing plants covering all regions for all customers worldwide. Interesting is what happened since we last met in London in 2015. When we met in London, we had just opened up our plant in Poland. Now, we have ramped up this plant. We had in Europe, basically two plants in Germany, one plant in Sweden. In 2015, we opened up our plant in Poland. By the end of next year, we will have closed our historical plant in Rheinfelden.
At the end of this process, instead of two plants in Germany, we will have one plant in Germany, and we will have increased the capacity of our plant in Poland, resulting after this restructuring process into more capacity in Europe than we had before this restructuring plan. That is the first major step we took in Europe. More capacity with expansion in Poland. What happened as well in Suzhou, in our plant in China, is I know we are not supposed to give capacity, I will only say that we very much increased capacity, strongly increased capacity in China to support our market share gains and to support the growth in China. What has also happened is we have opened a plant in Thailand that was necessary to support our Japanese OEMs.
Our plant in Pune in 2015 in India had just been opened, in the meantime is ramping up, is going very well, and we have approved an expansion of this plant in India. Manufacturing footprint covering all customers worldwide, restructuring in Germany, in Europe resulting in more capacity and strong expansion in Asia. In America, the market is not growing as fast as in other regions, you do not see much happening. In these plants, we are also very strongly working on operational excellence to make capacity available for future growth. Heavy-duty. Contrary to light-duty vehicle, we are more of a newcomer in this business. Umicore decided in 2007? 2006? Thank you, Marc. In 2006, Umicore decided to enter this market. 2006, only 12 years ago. In London, in 2015, at that time, we had just opened up our plant in Florange.
We were ramping it up, we had just opened up our plant in Suzhou. That was the picture. Today, our plant in Florange is running full. Our plant in China, I said the light-duty vehicle plant capacity had been strongly expanded. The heavy-duty plant in China over the next three years, we'll be very much expanded. We expect a very strong capacity expansion in China. What happened as well is we will open up a heavy-duty line, in Pune. SOP is scheduled for next year. We have a plant in Korea to service our customers in Korea. As Marc mentioned, we've added three plants in heavy-duty through the acquisition of the heavy-duty business of Haldor Topsoe. We added a plant in Denmark for Europe, a plant in China, and a plant in Brazil. We were a newcomer.
10 years ago, we decided to enter this market. Five years ago, we were a newcomer. Now we have development programs with most OEMs, which will lead to a major growth, and I will discuss that a bit later. North America, we don't show any manufacturing plants there. It's no secret that our market share in heavy-duty diesel in North America is small, and we service that actually from our plant in Burlington, because when quantities are too high, we can make heavy-duty parts on our passenger car production lines. Whenever we have a commercial success in North America, we will expand in North America. I said our business is technically driven. A short update on our technical centers. We have technical centers across the globe, to adapt our technologies to the customer needs across the globe. Sorry, I come back.
I thought it would be a different color. What has happened in technical centers, quite a bit has happened actually. In Auburn Hills, since London last year. In Auburn Hills, we've revamped our chassis dyno. In Korea, we built a new tech center in Songdo, and you will see that tomorrow. In China, we have expanded our test center capacity. Again, we not only spend money on production plant, we spend quite a bit of money on test center because it is the success factor of our business. Marc mentioned that we also went through a few acquisitions. We bought the 50% remaining share of Ordeg in Korea. Why did we do that? When we built the joint venture in 1985, at that time, Ordeg was supplying Hyundai Steel. The purpose was to supply the Korean customers.
In these days, talk back more than 35 years ago, the Korean customers were mostly making car in Korea. Ordeg supplying Korean customers in Korea. In the meantime, Korean customers produce more cars outside of Korea than in Korea. These cars produced by Korean customers outside of Korea are supplied by Umicore plants. To allow a better coordination between the supply in Korea by Ordeg and the supply by Umicore outside of Korea, we decided to buy the rest of the acquisition to allow a better service for our customers. Marc mentioned we also bought the heavy-duty catalyst activity of Haldor Topsoe with a plant in Brazil, Denmark, China, and a tech center in Denmark. That gives us an expanded product portfolio and a much stronger access to a few key customers. That's where we are.
The automotive catalyst needs two things to be successful. It needs combustion engines, because without combustion engines, I got a problem. It needs emission legislation. Marc mentioned that the public awareness towards emission legislation or towards emission has been increasing dramatically over the last three years. For good reasons, for bad reasons, fact is, awareness is much higher. The result of that is our customers, when they make an award decision for catalyst, they now go for the best technology. You can always make an engine work with a good technology, our customers between a good technology and a better technology go for the better technology. That's what's happened. Marc called it the diesel scandal. That's one of the impacts of the diesel scandal. Customers now go for the best technology. I said we need combustion engines, we also need legislation.
That picture is very busy, you should only focus on the visual. What is that picture saying? Each line represents a country or a region. On each line, every time there's a change of color, it means emission legislation is changed. You see all these colors? It means all the different countries have different legislations. If you look horizontally, colors keep changing, means legislation keeps changing. Legislation changes, we have to develop a new catalyst for our customers. That is a driver, the reason why we believe that innovation and technology is the success factor of this business. The other thing you see on this picture is that for 2025, discussions have started now to establish a new emission legislation. Today in Europe, I take Europe as an example, emission legislations are governed by Euro 6. Discussions are ongoing now to define Euro 7.
Euro 7 will be more stringent. How? We don't know yet, we know it will be more stringent. It will be applicable 2025, we have to work now in R&D to be prepared for Euro 7. Again, another reason for still developing and still investing in R&D in automotive catalyst. One example, if you look at USA, I said whenever colors change, it means a step in technology. If you look at this picture, first line, USA, apparently nothing is happening. Actually, things are happening, because within Tier 3, there's a regular upgrade of emission. Emissions are continuously going down. Now, I won't go through all these lines. We will focus on the three regions where most is happening in terms of legislation. That is Europe, China, and India. Let's go through China first. Marc mentioned that before.
China will become the pacesetter or has become the pacesetter in terms of emission legislation. They allow me, I will go into a bit more detail in through this slide so that you understand what it means for the business. First line, you see emission standards going from China 4, China 5, China 6A, China 6B. These different steps mean reduction of emission. Going from China 5 to China 6A, basically carbon monoxide emission limit is reduced and particulate number is being reduced. Going from China 6A to China 6B, it's reduced again. Actually, reduced by half. On the China 6B, the emission limits in China are half the emission limits in Europe. Half. Next line is about test cycle, because it's not only about emission, it's about how you measure emission.
Until China 5, which is till today, emissions are measured with a test cycle, which is called NEDC, and we will move to the WLTC, which is a World Harmonized Test Cycle. This test cycle is a lot more severe, a lot more dynamic and require a much better catalyst to meet the legislation. Limits are going down, the test cycle is getting more aggressive. Real driving. There will be what we call real driving. Emissions will have to be met not only in the lab, but they will have to be met on the street on the real drive conditions. That's another criteria to be met by customers. Durability is increasing and, in the last line, fuel efficiency. This fuel efficiency increase or fuel consumption reduction will drive a faster introduction of GDI, gasoline direct injection.
Gasoline direct injection also has an impact on the catalyst architecture. Legislation is actually interesting bedtime reading. It's complex, it's the basis of our business, drives our growth. Now that you've seen what's happening, let's see what it means in terms of catalyst value. That's the market in China for passenger car in 2025, 34 million cars. These are not our numbers. These are the numbers from IHS. We pay a lot of money for these numbers. We decided to believe these numbers. 34 million cars in China in 2025, about 6 million fully electric. That leaves still 29 million cars with combustion engine. What's happening with this combustion engine? China 5 current legislations. Basically all cars out there, they have either one TWC, three-way catalyst. The TWC is what takes care of NOx, CO, and hydrocarbon. Basically reduce the pollutants.
Cars today in China, under China 5, basically have one three-way catalyst or two three-way catalysts. China 6a is coming. China 6a reduces the emission limits for carbon monoxide, introduces particulate number. Some customers will use what we call GPF, gasoline particulate filter, that green part, on top of the three-way catalyst. Some won't use it as of 2020. Catalyst will get bigger because emissions limits go down. The result of all that's the beauty of Excel sheet, is we see an increase of value per car of 70%. In 2020, which is two years from now, the value of catalyst per car in China will be 70% higher than today. In 2023, that's when the legislations cut emission even more. At that time, emissions are 50% the level of Europe. That's when China introduced Real Drive Emission with a conformity factor of 2.1.
At that time, all gasoline engines will be equipped with a catalyzed gasoline particulate filter. That green part on this picture. Sorry, that picture represents an exhaust line. Okay. The green part is the filter. All cars will have one. Three-way cats will get bigger again, resulting in the value of catalyst per car being 2.4 higher than today. That's the result. Legislations gives work to our R&D people and gives food for the innovation. That's a result on business. In 2023, five years from now, the value per car will be 2.4 times what it is today. I said we go through three markets. I'll go a bit faster now, because you went through the logic. Europe. Europe, similar things are happening. The CO2 target is getting tighter. That has implication on introduction of gasoline direct injection engines.
Emissions of Euro 6b saw the introduction of particulate numbers. Euro 5 had less of that. You'll see a change of cycle, same as in China. Euro 6b today is being tested on the NEDC, will move to WLTC. Real Drive Emission will be implemented. Actually, similar trends. Let's not go through these details again. Similar to what's happening in China, a bit different, but similar things. Important is what is the impact of these legislations on the catalyst value per car. Again, IHS, 20 million in 2025. I'm talking Western Europe here. Including electrical cars. Today, what you see in Europe is exhaust lines with three-way catalyst, basically. Starting September 2018, which is three months from now, most cars will be equipped with a filter. Some with a pure filter, some with a catalyzed filter. Catalyst will get bigger.
At the end of the day, the value per car will be 80% higher. The value what we sell to the customers will be 1.8 what it is today. 2021, that's when Europe introduces Real Drive Emission. At that time, all gasoline cars or GDI cars will be equipped with, or most, 80% of the GDI cars, gasoline cars, will be equipped with a particulate filter. Three-way cats would have got a bit bigger again, meaning in 2021, which is three years from now, not three months, three years from now only, the value per car will be 2.2 what it is today. Factor two in three years. Same number of cars, just value is twice as high for us as it is today. Same thing is happening in diesel. 20 million, again, is total car population in Europe, gasoline, diesel, electrical, the whole thing.
Same thing is happening in diesel. I will go a bit faster here. Euro 6b, there are 2 different types of systems. Different types of catalysts, diesel oxidation catalyst, filters, NOx reduction catalyst. Important is, as of September 2019, all vehicles will be equipped with different system, the value per car will be 30% higher than it is today. I have to say here, the same thing applies to gasoline. The dates I'm giving you here is the date when all vehicles are equipped with these new systems. In Europe, new type approval gets equipped a year earlier. 2019 is when all diesel vehicles will be equipped with the systems. What I said for gasoline was 2018 and 2021. That's the date when all vehicles are equipped. New types are equipped before. In 2021, that's when a Real Drive Emission come in.
All diesel cars in Europe will be equipped with an even bigger system, resulting in catalyst value per car being 50% higher than today. I go fast India because same thing again, emissions getting tougher, test cycling getting tougher. At the end of the day, Indian market will be 8 million cars in 2025. Bharat Stage IV is the current legislations. Catalysts are small. Bharat Stage VI, catalysts are bigger, 50% more value. That's in 2020. That's in 2 years. In Bharat Stage VI, 2023, still to be defined in terms of Real Drive Emission. Introduction of catalyst filter. At that time, the catalyst value, what we sell to the customer, is three times higher than today. Same thing for diesel. Bharat Stage IV, a system simpler. Bharat Stage VI, much more extensive system, resulting in the catalyst sold to the customer value three times higher.
Thank you for your patience, but I think it was worth spending the time so you understand where all these legislations are coming from, what is happening, why it's happening, and the impact on what we do and what we sell. What we saw is the impact of legislations on the gasoline catalyst market will result in what we sell being between 70% to three times higher at constant engine quantities. You see the same factor for diesel, and I'm only using these three regions there. Basically allows us to say, because in some markets in America, a little bit less is happening. Basically, the conclusion is I'm not going through all countries. I went through the details of China, Europe, and India. You saw where it's coming from.
The conclusion is the gasoline catalyst market value will double, at least double, between now and 2025, driven by these legislations. I'm not talking car quantities increase. I'm talking the value we sell per car. That will double. In diesel, the value of what we sell to the industry, the value will increase by 50%. What comes on top of it is the impact of plug-in hybrid. Plug-in hybrid is supported by electrification. Plug-in hybrid, you know that, but I have to repeat it once in a while. A plug-in hybrid has a combustion engine. A plug-in hybrid is a customer for me. The plug-in hybrid today requires 20% more catalyst volume than a non-plug-in hybrid. Plug-in hybrid will increase the catalyst consumption. When you put all that together in an Excel sheet, that's what comes out.
The catalyst market for passenger car will double until 2025. That number in 2025 is around about EUR 9 billion. China is the biggest share of that growth. Doubling, China biggest growth. Assumptions behind that, we have taken some assumption in terms of internal combustion engine growth, but less than 1%. If you tell me, "I don't believe that combustion engine will grow by 1% per year," that's fine. It's not double. It's only 90%. Okay? Double because of value creation, because of legislation, not because of engine growth. In these assumptions, we've assumed that diesel share in Europe will be 30%. If it's only 10%, that number out there reduces by 5%. Basically, in any type of conditions you can think of, no engine growth, lower diesel, bear 1 number in your mind, the catalyst market for passenger car application will double until 2025.
That's good for the market. What's on for us, Umicore? Today at Umicore, we are increasing our market share in the gasoline segment. Specifically in China. This market share increase will become even more visible in 2020. We increase our market share in gasoline. This increase is supported by our very strong technology for GDI application. GDI, gasoline direct injection, is the gasoline engine of the future, and for this specific engine, Umicore has a very strong technology and is supporting our growth in market share. It's happening today, will become even more visible in 2020 and the years thereafter. In diesel, we're smaller, but in a few applications where we are supplying, we have strong technologies, otherwise, we won't be smaller, but we'll be nowhere. Again, customers only go for the best.
Wherever we have business, we have a very good technology, but we are smaller. If you look at our relative market share in gasoline and diesel, if diesel decreases faster, because we are so much stronger in gasoline, the impact on Umicore automotive catalyst is not there. Whatever we lose in diesel, we can compensate with our gasoline business. That's it. I am doing fine. Let's go into heavy duty. Heavy duty, same thing. Same picture. Let's not go through in details. Every region has a legislation. Change of color means different legislations, means growth potential for our business. I will focus on the two regions where things are happening the most and where legislations are changing the fastest is again India and China. China, there's a norm for on-road application and off-road application.
The total engine market in China in 2025 is predicted by another marketing company, KGP, to be 3.6 million engines. These engines are going partially for on-road application, partially for off-road application. I will look at the impact of legislations on the on-road applications. Give me 2 seconds. Sorry. It's too hot out there. You see it's hot out here. Hot spot. China, the 3.6 million engines in 2025, 40% off-road, 60% on-road. I will focus on the on-road applications. We are currently under China 5. China 5 on-road, basically, engines are equipped with an SCR, which is a NOx reduction catalyst. China 6 will come in 2021 nationwide. China 6 will start a bit sooner in some cities, some regions.
To make it simple, every time I present these figures, whether it's for passenger car or for heavy duty, I take the date when the whole region and all vehicles are affected by these new legislations. Okay? In 2021, all China 6 heavy duty engines will be equipped with a much more sophisticated exhaust system with a DOC filter and SCR, resulting in the value per truck almost tripling to 2.8. If you look at India, similar things are happening. In 2025, we see 1.1 million engines. About we see, KGP, and we believe that 1.1 million, at that time, about of this is about 60% off-road, 40% on-road. Again, I will only focus on the on-road legislation.
Today, on-road engines are governed by Bharat IV, with a NOx limit of 3,500 milligram per kilowatt hour, meaning the exhaust system either has a small DOC or a small SCR. DOC, diesel oxidation catalyst. SCR, NOx reduction. With Bharat VI coming in in 2020, legislation then is similar to what we have in Europe, Customers will move from this simple system, either DOC, either the SCR, to a much more complex systems. Value per truck will increase by four. Times four. What do we see in heavy duty? What do we see in heavy duty? We have seen that legislation is getting tighter in China and India for on-road application, resulting in value increase for catalysts per engines. What we also see in heavy duty, contrary to passenger car, is an increase of engine volumes. Between now and 2025 by 60%.
I am not talking about a 60% increase of engine production. I'm talking about almost 50% increase of engines being regulated. These off-road engines today are not regulated. In 2025, they will be regulated in China and in India. They exist today and they contribute to a big portion for this 60% volume increase. It's a volume increase for us as catalyst manufacturers. In 2025, this 60% volume increase, because these engines become regulated, will be regulated at a China IV type level. The catalyst value in these off-road engines will be still small, but will increase over the future and will give another step for business increase after 2025. What is the result of that? Strong value increase for on-road application in China and India. Some value increase in Europe, little in America.
Volume increase mainly because off-road engines not regulated today in India, China, being regulated in 2025. The result of that is the market, the catalyst market for heavy duty application will also actually more than double between now and 2025. China is by far becoming the biggest market. Because on-road trucks will be regulated just as strict or stricter than in Europe. Because off-road trucks or tractors, earth moving equipment, which today are not regulated, will become regulated in 2025. Not at China VI level, at China IV level, but still will require catalyst. In 2030, these off-road engines will become regulated at a stricter level and will provide the next growth opportunity. Again, good for the market, this doubling of catalyst for heavy duty application. What's on for us?
We started this business a bit later than our competitor, but today we have a very competitive technology portfolio. Our plants are running at a very high utilization rate. We have cooperation now, technical cooperation with most of the heavy duty customers, which give us high level confidence that we will benefit from this doubling of the market. If you put everything together, that's the addition of the catalyst market for passenger car and for heavy duty. They're both doubling, so the sum is also doubling. That's the message of today. The automotive catalyst market for emission control for cars and trucks will double between now and 2025. It is a technology play and innovation play because this doubling is not engine production driven. It's not car production driven.
It is solely driven through legislations and through innovations, through the better catalyst that we supply to our customers. I started this presentation with one question. Is automotive catalyst still a business worth investing in? I hope to have convinced you that the growth potential is there. It's even unprecedented. It's driven by tighter legislation. Again, the market will double until 2025. China is becoming a pacesetter. We believe, we don't believe, we are convinced that through our very strong technology in gasoline direct injection and through our competitive technology in heavy duty diesel, in our cooperation with our heavy duty diesel customers, that we're very well positioned to take an overproportional piece of that market and of the doubling of the market. Thank you very much. I guess we open the floor for questions now.
Thank you, Pascal. Marc, you are invited back on stage for the Q&A. May we ask you, when you have a question, can you raise your hand? We will bring the microphone to you. Can we also ask you to stand up while you ask the question? Please state your name and company before asking the questions. We have half an hour, we should have sufficient time. Can we also remind you kindly to limit first to one question per person so that we give the chance to everyone to raise their questions. Who's first?
Good morning, thank you for taking my question. Sebastian Bray at Berenberg Bank. Could I start, please, with one on the capital intensity or the capital demands of potentially outgrowing the business in the market growth in auto catalysts for the next, well, until 2025. How much growth CapEx are you going to have to allocate to this business? What is the rough maintenance figure that you would give? Sorry, I know you asked for just one question. This is just a point of clarification. When you mentioned that the market for light duty auto catalysts, I think it will be worth EUR 9 billion. Is that dollars or euros? Thank you.
Okay. One question on CapEx, because I'll let you give the numbers. The one key element of our business model is operational excellence. By operational excellence, we mean doing more with the same. The biggest portion of the capacity required for this doubling the market will be provided through operational excellence, doing more with the same. There will be CapEx, I'll leave it to Marc to give numbers. The business will remain very strong in terms of cash flow generation.
Before taking over Pascal, can you clarify the 9 billion, is that euros or dollars?
Euro.
Is that now or is that now or 2025?
Current Euro 2025. I don't know what the Euro will be in 2025, if you know.
Let me maybe add a little bit of color on the CapEx and remind you that we have invested a lot to modernize the catalyst production and research and testing configuration over the past several years. Today we enter this new growth phase with very modern facilities, state-of-the-art facilities, with state-of-the-art capabilities, and state-of-the-art research and testing facilities as well. There will be continued investments and not more than what we invest today. The cash flow generation in this very fast growth phase is going to increase in a way because CapEx is not going to follow the pace of the revenue growth. CapEx is going to stay more or less in the same region as it is today with significant revenue and profit growth, which means that indeed the cash flow profile of this growth business will stay quite unique.
Mutlu Gun again, ABN AMRO. A question on your margins. If I look at your R&D spend in a very long time period, it has actually gone up as a % of sales with the increase in value of markets and the potential increase in scale of your business. Do you expect that to come down and therefore your margins will go up?
Yes. R&D will increase because all these legislations cannot be met without work. As we showed, they are creating value. R&D will increase at a much slower rate than the revenue. The R&D quota will be much lower in 2025 than it is today.
Hi, it's Adam Collins from Liberum. I had a question on the commercial development on the HDD side. Your regulatory roadmap shows that in the U.S. we've only got GHG emissions through 2025. I wonder whether that would be a sufficient window in terms of regulatory change to enable you to enter the market in a bigger way. On a related note, you talked about Haldor Topsøe. It might be helpful just to have a better understanding of the profile of that business. How much of that business is off-road versus on-road, and what kind of scale-up in revenues for the HDD business did that provide? What is the size of that business relative to the existing base?
North America, the future of the legislation is a bit uncertain. Okay. There was a greenhouse gas stage 2. Whether that comes or not is not 100% clear. You're right, the tightening of legislation is not giving us an easy open door to this market. That's true. Customers have a system which works, but we are in cooperation in development programs with some big U.S. customers. There's a willingness in the market to see Umicore supply the American market.
Whether that will result in business remains to be seen. Today, and we have mentioned that a few times, as a late entrant in the segment. We were a too late entrant in the North American market because the main decisions had been made by 2007, 2010 timeframe, which meant that we were too late for that market and explains our very limited position today. Indeed, we're not trying to penetrate a given market at any price. That's obvious because we're not driven by market shares, we're driven by profitability. We need a window of opportunity to open up for us. There may be one, and we'll see how that plays out. That remains way more uncertain compared to the developments that Pascal has highlighted for the other regions when it comes to HDD.
What's important is we are truly recognized now by the American OEMs. We have technical programs with these customers. I don't expect sizable business before 2023.
Okay.
2025.
Will you also elaborate on what the-
Yes.
- Topsøe acquisition brings?
The Haldor Topsøe we bought two businesses. We bought catalysts for heavy-duty applications and catalysts for stationary applications. The heavy-duty part of the business is 90% for-
On road
for on-road application and increases our market share in this market by about 30%.
Hi, Chetan Udeshi, J.P. Morgan. You presented a very bullish case on growth in this market. EV is happening as well. How are your auto OEMs reacting to this? Because it seems like they have to spend on EVs, they have to spend on this side of the business as well. Clearly, their spending for them is going up significantly. Are they putting some of the pressure on suppliers like yourself?
Two things. You see the customers reorganizing. Marc mentioned that the platforms are getting bigger. In diesel, less development happening. There used to be many different diesel platforms, but customers are basically focusing on one platform for the purpose of exactly that, saving resources. Diesel development department in auto customers are getting smaller. You can see some of them even merging with gasoline, and all that for the purpose of allocating more resources for electrification.
Yeah.
Margin, because of this drive for new technology and these more stringent legislation, our expectation is margin will stay constant over the next foreseeable future.
There is pressure, of course, in every segment, there is pressure. There is customer pressure, there is competitive pressure. That is not really changing compared to what we've been used to for so many years operating in these industries. What really is changing is the fact that our customers, in order to save development costs, because as you rightly point out, these are huge. In order to save development costs, are streamlining significantly their development efforts. That's why I mentioned earlier the few examples of those customers that have done that in a drastic manner by abandoning a certain number of development avenues, like abandoning diesel altogether, so that they can indeed focus more resources, development resource, engineering resources, to electrified drivetrains and gasoline indeed.
The most significant way for the industry to address the move to clean mobility from a development cost point of view is by reducing the number of options nowadays, while until three, four years ago, all options were kept open.
I'm Celine Tan from GIC. Pascal, thank you very much for outlining that, say, for example, the addressable value for Umicore in a plug-in hybrid is 1.5 times the value in an ICE. I think that those are very interesting stats. This is perhaps a request may be addressed later on in the day. Could you address the addressable value for the entire Umicore for the different types of potential vehicles in the future, battery EVs, fuel cells? Other than just automotive catalyst, what is the addressable value for the entire Umicore? I think that could be very interesting.
Celine, I will ask you to bear with us, because I want first to go through the other presentations, regarding what we do in respect of electrified drivetrains. Then we can talk about that. This being said, I will not mention any figure about the addressable market in electrified drivetrains because there are too many, I would say, estimates or projections circulating today. There is still a pretty wild range of projections. I think I prefer to look at it the other way around and by looking at how Umicore is outpacing the market growth in that segment. While it is indeed still difficult to make out today how big exactly that segment will be. There are many factors that drive the value of that segment, and these factors will be outlined later today. Please bear with us.
Hi, thanks for my question. Charles Bentley, Bernstein. You talk about the importance of China. Looking at your customer mix, one thing that you noted at full year was kind of challenges with Korean manufacturers in China. I was wondering, could you explain a bit more about your positioning with both local and foreign customers there? Thanks.
Thank you for the question. That's also major change since 2015. It is true that in 2015, we were highly dependent on our Korean customers in China. We have strongly rebalanced this situation, which allows me today to say that we are growing market share in China because we have rebalanced. We have a much bigger share at European customers in China. We have a much bigger share at American customers in China. We're also growing with local Chinese customers. I feel a lot more comfortable now with Umicore customer portfolio in China than we had three years ago.
What we've seen also developing in China is that until a few years ago or until now, many domestic Chinese car producers were actually using domestic catalyst producers. With the move to China 5 and to a much larger extent with the move to China 6, these Chinese catalyst suppliers are being phased out because they don't have the technological capabilities to provide the systems that meet these very stringent regulations. Please bear in mind that the China 6 regulations are going to be tighter than Euro 6 regulations. There is a shift away for domestic car makers from Chinese suppliers to the global catalyst players. Given our very strong position in gasoline technologies, and in particular in GDI-related technologies, which are starting to dominate the Chinese passenger car market, we are indeed benefiting vastly from this development.
That's indeed we are starting to have a very well-balanced portfolio between the global brands and the local brands in that respect.
Sorry, if you mind me, I didn't mention, we're also growing with the Japanese OEMs.
Good morning, Wim Hoste, KBC Securities. I have a question on hybrid vehicles, which I think in terms of temperature management are quite a challenge for catalysts. Given the growth expected in the EV markets, can you maybe explain how your technology is specifically for hybrid vehicles and what kind of market share or prospects you see in that part of the market? Thank you.
I cannot give you any specific market share on plug-in hybrid. What you say is correct. The thermal management is a lot more complex. The cold start are adding stress on the catalyst system. The message I want to leave here, which I presented earlier today, is a plug-in hybrid vehicle will require about 25% more catalyst than the equivalent non-plug-in hybrid. We have very strong technology to address these cold start type of running conditions.
If I may add one point to that, please correct me if I'm misrepresenting technological developments, is that in the first instance, when car makers started to introduce plug-in hybrid vehicles in the market a number of years ago, they realized, of course, this issue around the cold start and repeating cold starts with plug-in hybrids. They address that typically by overloading the catalyst with PGMs, which by definition, from a cost point of view, cannot be a good solution. The technologies that we have developed are meant actually to reduce substantially this PGM loading and to address the cold start through sophisticated methods, not just by pouring more PGMs into the catalyst.
Thank you. Charlie Webb, Morgan Stanley. Marc, just a quick question for you, going back to your initial presentation around battery recycling. What type of scale of investment do you think is required there for that big growth opportunity, first off? Also, how competitive do you think that market is? Clearly, a large part of the supply chain is worried about cobalt as a scarce material. Do you see that market as being very competitive, or do you think you have technical expertise that will differentiate yourself there?
We're talking about large investments. A triple digit million investments required to build recycling facilities and to build industrial scale or larger industrial scale recycling facilities for lithium-ion batteries. It's going to be a very large market opportunity revenue-wise, we believe indeed that we have technology that can allow us to be competitive and profitable and justify large investments going forward. Our process is different than what we see from the competitive landscape today. We're one of the few players to use, or maybe probably even the only player to use high temperature processes for recycling, which drives the recovery yields. We are very efficient in terms of recoveries, not only in terms of yields, but also in terms of the scope of metals that we can recover from the recycling process.
Actually, our investments are probably or possibly going to be larger than those of competing technologies, they are going to be far more efficient in terms of recoveries and in terms of profitability. One of the other advantages that we have is that a growing number of customers are looking to have closed-loop solutions. We mentioned already a number of years back that this was going to be probably the ultimate model, now we see that shaping up in a more pronounced manner. Because of the growing scarcity of certain materials like cobalt, as you are pointing out, because of the need for more traceability, closed-loop is one of the favorite avenues for a number of leading OEMs.
The fact that we are present upstream of their requirements with the battery materials and downstream at the end of life with the recycling solutions will be or should be a competitive advantage in the long run.
Thank you. Dominic Fraundins from Aurora Capital. Marc, I had a question with regards to your 2020 guidance. In light of the comments that have been made so far, you talked about increasing contribution from the recycling capacity expansion. You talked about outpacing the EV market through your battery materials business. What Pascal has walked us through, more than doubling of the market value for catalysts, and you taking disproportionate shares or outgrowing that market as well. If we take what we know today, the guidance for this year, which suggests about 30% EBIT growth, then walk out to 2020, would suggest that that EBIT growth goes down to about 15% for each of the next two years. In light of those comments, however, I was wondering why we should see such a deceleration in EBIT growth. It's still very good EBIT growth
Yeah
I think a lot of companies in this sector would be very happy to have that EBIT growth. In light of the comments, I'd like to understand why we should see almost 50% drop in growth. Thank you.
Okay. First of all, thank you for pointing out that many companies would be happy with that. I share your view indeed, that this is a pretty enviable position to be in. First of all, let me clarify that what has not changed is our view about the contribution of recycling to the growth. This is fully in line with the assumptions that we made three years ago, when we set out the target for 2020. The comments that I made today about how the ramp-up is proceeding, et cetera, does not imply that we see things differently from a contribution point of view comes 2020.
The main change, compared to the 2015 assumptions for 2020, is definitely coming from battery materials and the vast acceleration in demand. Our ability actually to step up and accelerate our investment plans compared to the assumptions that were made three years ago. That is immediate contribution indeed, and that's explaining the most significant increases this year and for the next couple of years. What Pascal explained about catalysis is going to have some contribution to the revised expectation for 2020. This being said, please bear in mind that the doubling is horizon 2025. So if you remember the graph that were presented, most of the value increases is beyond 2020. There is already some value increase by 2020, most of it is coming after 2020, between 2020 and 2025.
Last comment is about the non-linearity, That's a theme that I have probably highlighted many times in the past. Growth in revenues, growth in profits is not linear, this time is no exception. It is not going to be linear, especially as we're putting a lot of investments in the ground. Which means that every time we start a green field, we have a front-loading of CapEx and a front-loading of fixed costs as well, which explains that the growth in earnings is not following a linear pace relative to the growth in revenues. Still pretty enviable growth in total, I bet.
Good morning, Geoffrey Haire from UBS. I just wonder, I could ask, given the changes you're seeing in the autocat market, given moving away from volume growth to more value content in the car, are you seeing changes in the competitive landscape in terms of what BASF and Johnson Matthey are doing in this market?
I didn't get that. Do I see changes or? I'm sorry, I didn't get the question.
Just how the competitive landscape is changing. Are you seeing much more competition and more aggression in terms of what your competitors are doing?
Again, the success factor in this business remains technology. We're very much focused on developing the right technology. If you have the right technology, yes, there's competition. At the end of the day, if you have the right technology, you can prevail, and margin, as I said, I expect it to stay the same.
Maybe if I can add a little bit of color to that. Overall, we don't see massive changes in market shares. They have been relatively stable over time and continue to be relatively stable. However, the mix is changing. Within the global market shares or the distribution of market shares among the global players, we see significant shifts with one player gaining significant share in light duty diesel applications and Umicore becoming a smaller player. Next to that, Umicore gaining significant ground in gasoline applications for passenger cars. The mix change is more evident than a change in market shares globally. I think this is one of the points that we wanted to highlight today. If you look at that next to the evolution of engine mix, this has an implication on indeed the overall positioning of Umicore relative to our competitors.
There is one thing, Jeff, that I would like to add in terms of to make sure that there is no misunderstanding about how we see volume versus value. The point that we wanted to make today is that, we don't want to really debate about volume assumptions. Volumes are going to be what they will be in a way, and you will use your own assumptions and your own data providers in order to model these. The point that we wanted to make is that if we're off by five or 10% on the volume assumptions, this is going to be marginal compared to the uplift in value terms per vehicle, per engine. This is really the key underlying message.
Hi, Jean-Baptiste Rolland, Associate from RCM. Marc, you have just highlighted that it's quite important in that business to have a distinctive technology, and the mix, as you said, is changing in light duty vehicles. I'm just wondering how you see this change, the market change evolving throughout the years in heavy duty diesel catalyst. I understand that you have mentioned that you have a distinctive technology. I'm still not quite clear what this distinctive technology is. I understand that the U.S. market has for historical reasons, not maybe always been easy. There are regulations which has not yet opened a window of opportunity. Yet, I guess the perception is still that heavy duty diesel is a more, let's say, a less strong area for Umicore. Would you say that's a misconception?
Could you perhaps highlight where you have a distinctive technology that's going to help you gain market share in this business? Thank you.
The heavy duty, we saw the market growth potential is mainly happening in China. There's so much work for our OEMs to develop these catalyst technologies that having a competitive technology, I would say, was sufficient to participate to this growth. That's what we have. I'm not going to say that we have a better technology in heavy duty diesel. I'm not going to say that. I said that for gasoline direct injection. I will not say it for heavy duty diesel, this competitive technology in this fast-growing market in China, where customers need all the help they need, is sufficient to build market share in China. In America, it will take more time. As Marc had mentioned, we need an opportunity. Opportunity can come with unique technologies, which we don't necessarily have today, besides maybe what we bought with Haldor Topsoe.
An opportunity can come with a customer wanting to make a change. Opportunities will come. With our current competitive technology, we have what we need today in the current business environment to participate to the growth.
If I may add, just wanted to say that I'm glad to see that Pascal was so keen to take your question on HDD, because I initiated the business in 2006, and it's good to see that Pascal has by now adopted my baby. This being said, I would also like to make sure there is no misinterpretation of what we say about the progress that we make in heavy duty. We will remain a smaller player than the leader in this market, even by 2025, and even if we seize very successfully the opportunities that Pascal has mentioned. As a late entrant, again, we are driven by winning profitable business and not winning market share at any cost.
Hi, morning. This is Max from Oxbow Capital. Just have a question. Earlier, you mentioned that you're gaining market share from the Chinese domestic gasoline catalyst producers, because obviously their technology is not as good as yours and you are way ahead of them. When I look at sort of what China is doing in terms of how they're driving leaders in EVs and in batteries and in NMC producers, who are the Chinese leaders in gasoline catalysts and what kind of market share do you have today, and what do you expect in 2025 in China?
The catalyst leaders in China are very clear. That's Umicore, BASF, and Johnson Matthey. There is no way around that. The Chinese domestic catalyst suppliers are marginal suppliers in the overall landscape. I don't want to preempt too much the discussion of later today regarding the battery materials. The leading, clearly, Chinese supplier of cathode materials is Umicore. China is technology driven like other markets. It's not nationality driven in terms of market shares and government attitudes.
What about share in that area?
We're not disclosing market shares. Actually, again, the reason we're not commenting on market shares is twofold. First of all, there are too many definitions and conventions about defining market shares, depending on whether you look at it from a volume point of view, from a revenue point of view, from a profit pool point of view, and typically that ends up in the sum of market share claims exceeding 100%. I think it's not always a meaningful metric. Secondly, and more importantly, we're not driven by market shares. Scale is important, clearly. I don't want us to set market share objectives because, again, profitability is more important than market shares.
Hi. It was a question on the technical leadership in particulate filters that you've touched on here, and also Marc has talked about being a driver to market share gains on recent calls. I just wondered whether you might be able, in simplistic terms, to explain the technology advantage that you have that's driving this. I know it's a complicated subject. Just to get a sense of where the competitive edge is.
I guess, the first thing is the customer feedback we get, okay? Customers are highly positive about the products we supply. Our GPF, gasoline particle filter, offers different functions And this multifunction. I don't want get too much into details, but there are different parameters you have to deal with a filter. You have to deal with filtration, you have to deal with back pressure, you have to deal with activity, you have to deal with other types of parameters. The combination of these parameters, our products, if I look at the feedback of the market, is very competitive at addressing all these different parameters of the customers at the same time.
Yeah. If I recall the early days of developing these GPF technologies, I recall that there was a discussion a while ago about whether the focus would be on particulate number or particulate mass. Unlike a number of other players, we have declared from the onset that we didn't know whether the focus would be on particulate mass or particulate number. Because we didn't know, we chose to develop in all directions and make sure that we would cover both the mass and the number. That's why our filters today have a better, I would say, overall performance because they cover indeed not only the chemical activity, but also they cover the filtration efficiency in a broader manner and better manner than competing technologies.
Thank you, sir. Sebastian Bray, Berenberg Bank again. Could I please ask one follow-up question on margin development? Pascal Reymondet, I think you mentioned earlier that if diesel market share were to, say, drop to 10% in Europe by 2025, you'd lose about 25% of the growth in RP. Please correct me if I'm wrong. If the electrification trend takes off to a greater than expected extent, or diesel falls faster than expected, to what extent is the operating leverage in this business, and how do you think you will be able to protect your EBIT margins? Thank you.
That was just a follow-up question.
I'll take it.
You can put, then I want to correct one thing. Our prediction was Not a prediction. The marketing study consensus today is about 30% market share diesel in Europe. I just said if it happened to be 10, it won't change the message that our business would basically double. That was the message. Is it going to be 10? Is it going to be 30? Nobody knows, okay? Whether it's 30 or 10, the business will double, okay? That was the message.
Because actually if it's not 30 and if it's 10, the impact on the market value, and we're not talking about the Umicore position, the impact on the market value is 5%. That's why it doesn't change the overall message of doubling. This being said, I would like to add two, I would say, elements of response. One is that our position in light duty gasoline market share position and in the direct injection engines and the gasoline particulate filters in particular, is so much stronger than in diesel that actually, we wouldn't see an impact of a faster decline in diesel sales on the automotive catalyst business. If we look at Umicore globally, actually, and I mentioned that on previous occasions, the faster the diesel decline, the better off we are.
First of all, we compensate significantly through better sales of gasoline particulate filters or gasoline configurations with the filter. Secondly, we benefit disproportionately from the higher number of electrified vehicles that will have to be brought to the market to make up for a lower diesel market share, because you know that diesel has a CO2 advantage compared to gasoline. If car OEMs sell less diesel cars in the mix, they will have to compensate for that through more electrified vehicles. I think you should basically ignore how it would impact the automotive catalyst activity on a standalone basis. Keep in mind that the broad picture, that Umicore benefits directly and significantly from a faster decline in diesel.
That's why we didn't want to have a discussion today, and we're not in a really position to have a discussion today about whether it's going to be 30% or 25% or 35% or 10%. We don't know, we are using market projections. We don't know because at the end of the day, the consumers will choose, we will see how that plays out. I'm just happy that our position from a technology and market point of view, as I highlighted earlier, is such that we would benefit from a faster move to cleaner mobility.
Can I make one thing? One more comment. I get that question all the time from my employees. My employees, the employees working for Umicore in automotive catalyst business, okay? We tell them the business will double between now and 2025. They tell me, "Pascal, it's all good, but I'm 40, okay? In 2025, I'm 47. What's happening then?" Now I will go even more long-term perspective. There are studies out there which shows that, because I say we need combustion engine. Combustion engine today, production worldwide, passenger car is about 90 million. Is expected to grow maybe to 100 million in 2025. Small growth again, 90 to 100, still doubling the business. Then long-term perspective, see combustion engine maybe going down to 90 million, back to 90 million in 2050. In 2050, almost completely plug-in hybrid, this 90 million.
The cars are growing, above the 90 million, you have full electrical cars and you have fuel cell. I will give you the answer I give the employees working for me, is combustion engine will still be there in 2050. If you're 40, you're okay.
I would say even if you're 25, you're okay because Umicore is so well positioned that, in a way, we're not concerned about where the engine mix is going, as long as it's going in the direction of cleaner mobility, because that is what we're betting on.
Thank you for your questions. You will have plenty of opportunities to interact with management later today as well and tomorrow. We have a break now, we'll come back in half an hour, Kurt will kick off his presentation. Thank you. Welcome back. We're ready to continue the presentations. Maybe one practical thing, because I got some questions. All presentations will be uploaded or being uploaded already on the corporate website. There's no need to take pictures. You will have access to all the material. I will now hand over to Kurt Vandeputte, who will talk about the widening gap in rechargeable battery materials.
Thank you, Evelien. Can everybody hear me at the back as well? Yeah, I see. Good morning, everybody here in Seoul. Good evening, the people in the U.S. following through webcast. I almost don't dare to say welcome to the European listeners because it's probably a terrible hour over there. Nevertheless, if there are brave people in Europe, welcome. My name is Kurt Vandeputte. I'm Senior Vice President for Umicore's Rechargeable Battery Materials. In the next hour or so, I would like to help you understand how we are going to increase the gap. When you say increase the gap, you can think of a lot of things. We think of increasing the gap with our products, our technology, our enthusiastic people. I would like you to think about increasing the gap. By the way, who is driving in the audience an EV or a PHEV today?
I didn't expect anything less than that's more than the penetration worldwide, that's good. When I talk about increasing the gap, ladies and gentlemen, think about leaving at the traffic light and letting, sorry, Pascal, an ICE-based Porsche behind, right? That's increasing the gap. That's how electrification feels. Once you've gone electric, I see barely no people go back to standard transportation modes. Closing or increasing the gap, sorry, sorry. You warned me, Evelien. Nevertheless. My presentation is basically structured the same as Pascal's. I will start by setting the scene, explaining a bit the business profile of today. What is our daily environment that Umicore's battery materials team is working in? Later on, I will explain where does that acceleration is suddenly coming from.
We all expected the market to increase, nevertheless, hundreds of smart people misjudged it for years, we were all taken by surprise by the speed. Thirdly, I want to focus on why is Umicore RBM? Why is Umicore's battery materials business so successful? I'm 20 years in this business, I think I have a fair credibility to look back and to explain or try to explain at least how I feel we made it to the position of today, how I hope that with the talents, with the motivation that we have, the technology that we master, how we are going to further increase the gap. Last but not least, of course, the key takeaways to conclude. I'm 21 years with the company. Since day one, I was either directly or indirectly involved with Umicore's battery materials project.
This means, in reality, that I've seen a project team with one young PhD material scientists and two researchers grow to a business unit of today, more than 1,000 people. That's the reality. That's the journey we've gone to. That's where we are. Believe me, this has not been through a very aggressive pricing model. This has been through the use of brains of people. This has been through technology. Technology and innovation is driving our current and future market presence. This is a timeline of the last 20, 25 years. Without going into all the details, the presentation is going to be available. I invite you to go and explore that later on. I will highlight a number of dates, the ones in red. 1995, a team within Umicore starts to look into an application that we are serving with cobalt chemicals.
We are serving the Japanese market with cobalt oxide. In the past, a chemical used for the pigment industry or the catalyst industry. Suddenly there is an use in Japan and Asia for the electronic sector. It seems to be it is a cathode material for lithium ion. A very, very promising market at that moment in time for portable electronics. Soon we realized the value is not in the chemical. The value is in the active electrochemical component. That's how we started, and that's how we tumbled into this industry. 1998. I remember vividly one of the very first product meetings that I attended was a product review when we were evaluating different chemistries. What is the potential of different chemistries as a cathode material? What products did we evaluate in that meeting? Lithium cobalt oxide, NCA, NMC, and LMO. In the early 2000s.
I want to correct maybe a wrong perception living now in the market that high nickel products are the products of today and the products of tomorrow because there is more energy inside. No, ladies and gentlemen. No. NCA was actually the very first mixed transition metal component, layered oxide that has been studied. The oldest patents have expired. That's the reality. Why did such a promising material then never make it to the market? Very simple. Because the product doesn't, or was very difficult to be applied in a battery, in the form factor that the battery makers were using or that you and I were using in our first mobile phone. The product was not matching the application. If that's not happen, if the product doesn't match the application, there is no application. If there is no application, there is definitely no customer.
This is really what you have to remember. It's all about having a product that, of course, works, but that is fit for the application. I will come elaborate. I will really discuss more about that in the next couple of minutes. We can go a little bit faster now over history. 2003, we produced the first NMC materials that are today the key products in our portfolio. In 2003, we made the first 5 and 10 and 50 gram of these materials. 10-15 years later, these products go mainstream. I invite you to analyze the battery industry. Many technical reference people will always say it takes 10 years to get a product from lab bench into mass scale production. This is the right example. This is also saying the same thing. It's not because it's NMC, it's not because it's LCO.
You see exactly the same happening with other chemicals. 2007, I was enormously excited when the first truck left this Korean plant, that you will see tomorrow, left for our customer overseas to produce the first EV batteries. That was a prototype series for one of the big OEMs still around, and Umicore material was inside. That was the start of NMC in automotive. 2011, I highlight this year because in 2011, based on years of technical research, we decided to buy an IP portfolio from the company FMC, which was a former competitor of ours. They left the business, but they had, to our understanding, a critical piece of IP. In this industry, IP has become key. I will come to that later. That was the start.
That is basically the foundation for our high energy LCO products that we have developed, and that we are currently still selling to the portables. 2012. Please rewind mentally 10 years, let's say seven years back. At that moment in time, the industry had absolutely not decided which technology they would use as a cathode material. Automotive industry had not decided what kind of battery technologies they would use for which different sub-segment in their portfolio. That's why we started our work on lithium iron phosphate. Lithium iron phosphate has some really specific product performances that are very interesting for certain applications. The products, the components are cheap. Iron, phosphate, they are abundantly available, so everybody has access to it. There could be a huge potential for that. Now, next bullet, 2015. I immediately focus to the bottom one. We decided to focus on LCO and NMC.
This is innovation. Innovation is daring to focus, is daring to explore things. At a certain moment in time, you also have to close doors. You have to say no. There is always a customer trying to convince you that you should continue. There is always one who sees the opportunities, but in the end, you have to make your own opinion based on data, based on experience. The last one, 2017. I want to conclude here the innovation history lesson. 2017 was for us also a very important and critical year because we complemented, we expanded our IP portfolio for NMC. You all know we had first a license on the 3M IP.
We finally acquired that IP. In 2017, we complemented that with ANL IP and less-known, but nevertheless quite important for us, we bought also an IP portfolio from a company, CSEM. This is a Japanese joint venture that stopped operation, but that had both for NMC precursor and for NMC materials, quite critical IP. What I want you to remember, it takes time to build your technology position in this field. It takes time. You have to be quite perseverance, or you have to show perseverance to get where we are. Just like Pascal, I can show slides that I've shown three years ago in London as well. It's not because I wanted to save time to prepare it's because it works, and I'm proud to work under such a business model.
Our business model fits perfectly in the business model that Marc has presented for the group. We work with metals. We work close with the customer to develop active materials that provide a functionality. We bring this to market in the fastest possible way. I hope you agree with me that at this moment in time, speed in the battery materials world, speed is of strategic advantage. Last but not least, we have an integrated process flow. Integrated process flow means that we I come to that in more detail, but I want already somehow to define the criticality of that. When you make cathode materials, take NMC as an example, you are combining four critical metals. Of course, lithium and then nickel, cobalt, manganese.
All of that has to come nicely together at the right moment in time, with the right quantities, at the right price. It's not because pure cobalt metal today is the most competitive form of cobalt you can buy today, that it's the same thing tomorrow. Things change over time. It's function of supply and demand, depending how it evolves in the supply chain. It's because that integrated supply, together with the recycling, that we have such a solid and intensified supply chain. In the end, supply chains for such a cost competitive critical components in this application, full supply chains are going to compete, and we are part of the cost competitiveness of our customers. We have an exciting market in front of us. We are basically defining three sub-segments. First of all, the lithium-ion battery market is serving the energy storage systems.
Energy storage systems go from a kilowatt or a couple of kilowatt hour, all the way to megawatt hour systems that are connected to the grid or that are used as a backup power in remote areas. This market is going to grow. I think industry observers are at least agreeing that this market segment is, at this moment in time, the most difficult to predict. You see quite a bit of variability in size. In our predictions, we see this growing to 40, 50, 55 gigawatt hour in 2025. The second market segment is portables. Let's say the oldest, the historical segment, where we are present with our high-energy lithium cobalt oxide. This market continues to grow. We, as individual customers, we all like to buy more gadgets. We like to buy phones with bigger batteries inside. We like to talk more. We like to stream more, whatever.
Which makes that the overall battery capacity that needs to be produced for portables continues to increase a lot. Three years ago, I presented, at that moment in time, younger and proudly and enthusiastically, a market potential for transportation. I kind of left a bit flexibility, and I presented two cases. I presented a base case, and I presented a high case. Today I'm actually here to confirm that even that high case was by far not high enough. Pascal is saying some markets are growing strong or even stronger. Well, I don't know what else I can use, but I think this is even stronger than strong, Pascal. Sorry. This is, let's say, transportation for passenger cars. On top of that, you have still the heavy-duty segment. Buses, trucks, garbage collection, and so on. Heavy-duty is the smallest segment, nevertheless important.
I told you at a certain moment in time, you have to focus. Well, from now on, I'm going to focus my talk on the green part of the graph. From now on, we talk about transportation. I will focus there. In our case, transportation means NMC-type cathode materials. Where is that growth acceleration coming from, actually? What has changed compared to three years? How have we maybe been misled? What kind of ideas did we have in the past that were completely wrong? Well, honestly speaking, not that much. The regulator has further pushed the button. I'm going to give a bit more details on two important regions. Pascal has three important regions. I focus on only two, but the two regions are actually the same. I will focus on China subsidy scheme, credit system, and then the third one is Europe.
What has changed compared to three years ago when we met in London? That is amplifying. That is accelerating, actually, electrification. Let's have a look in China. The Chinese government is rolling out a two-track promotion subsidy incentive system for electrification. Two tracks. The first track is impacting or is influencing the car makers, and that's through a new credit system that they launched in April this year. This credit system is promoting actually higher technology, higher driving range, higher performance vehicles. The target of the government is partially through this credit system to increase the number of NEVs, so new electric vehicles, to increase that number to approximately 5 million by 2020. With this number, China is going to be 40% or more of total xEV markets. This slide alone shows the critical importance of China as a target market.
The second element of the policy is the subsidy system. The subsidy system basically helps the consumer. For the NEV cars, it's basically similar in a sense to the credit system. Similar in a sense that they promote higher performance, better batteries, higher energy density. That's the target. We've seen a similar system for e-buses, higher range, higher subsidy. Better batteries, better energy density, more subsidy. It's all about improving the technology. What is the consequence of that? 4 years ago, Chinese government basically promoted LFP cathode systems for electrification. Now they switched 180 degrees. With the new policy systems, basically, they promote NMC because of higher energy density, and that is an enormous driving force for our market. Let's go to Europe. We all know CO2 emission regulation goes in one direction, less. We have to produce less CO2 per driven kilometer.
The target is 95 in 2021. The numbers published by the European Environment Agency for 2017 show an average emission of 118 gram per kilometer. This is higher than 2016. Everybody is expecting now that even for this year, the numbers are going to further increase, not decrease as the target is. Increase, because amongst others, the impact of fewer diesel cars being sold. The regulator in Europe has also established what we call a super credit system. As of next year, car OEMs will get for electrified cars, so really low CO2 emission emitting cars, they will get double credit. They have 4 years to build up credits that they can use later on in the 20s to compensate and to include that in the calculation of their average CO2 emission number. This is critical for them.
It's not a coincidence that as of next year, you will see a lot more low CO2 emitting cars coming on the road. This is the background. With all the measures, we expect the European market, the European region market, to account for about 30% of total electrified cars in the future. China, about 40%, Europe, about 30%. Total, we talk about 70% of market potential. If we look what happens in these markets, we really have a good view on where this is going. This is partially the background of the acceleration. It's not only legislation, it's also perception of society, and very important, it's the change of strategy of the car OEMs. Until a couple of years ago, it was, I almost dare to say, denial, compliance, but now you clearly see that the strategy is changing with the car OEMs.
They embrace electrification, they make it a part of their strategy for whatever reason, because they have always followed a performance strategy, because they have to make up for things that went wrong the last couple of years. Nevertheless, I bring here a couple of quotes. I mean, your representative for, let's say, global car market, you see their brands from all over the world, basically all say the same. "We go for more electrification," in whatever degree that might be. It's not only more electrification, it's not only more cars. It's a very complex situation to be a CEO of a car company today. What do you have to prepare for?
With all the questionnaires, all the customer questionnaires they have, all the marketing teams they have, honestly speaking, none of these smart people know today what we as a society are going to buy in the next seven, eight, 10 years for electrification. What can you then do? Open the options. Keep your options open and be prepared for either long-range EV and, let's say, a lower cost, more compliance type car with a 48 volts complementary system on your ICE engine that reduces CO2 emission by 15%. All degrees of electrification are open, and let the customer decide in the end. This is what we currently see. Coming back to success factors. What do we typically do? How do we try to bring value for the customers?
What did we maybe do different than others in the last 10 years that gave us the position of today? What are we going to focus on in the next 5 to 10 years to further increase the gap? The title says it all. I mean, it takes a lot to play in the automotive league. I compare that with soccer. Do you think that the teams playing in the European Champions League, all the teams qualifying for European Champions League, do you think that there is low-quality teams in there? No way. To get there, you have to be the best of your country, otherwise, you don't get there. Take motorsport. If you are a team in Formula 1, even if you are doing sixth in the championship, do you have bad engineers? No way, you don't.
I mean, somebody was maybe a little bit smarter than you were. The same is true in this industry. Supplying for automotive today, there is no low segment. If you supply to automotive today, whatever kilogram you sell there for cathode material, this is high quality, and this is a high segment product. What do they actually want? What do we have to supply? First of all, high quality. Yeah, high quality. What is that? It has to be custom-made for different types of activity. I hope I already could convince you that there is not just one type of product or one type of cell that fits all. That means you have to customize your material. We have to provide that in massive volumes.
We have to do that fast and flexible, because you can make 10 plans for the next 5 years, you can be damn sure that it's going to be the 11th scenario that will happen in reality, and you will have to reshuffle. You are going to ask, as a car OEM, as a battery maker, you're going to ask flexibility from your material supplier. We have to do that at a competitive price. This is the key component of a future car. It's the biggest cost component of future cars. There is no relaxation on price or on cost price. There will be always pressure. Last but not least, the materials that are being used serve a sustainable application. Amongst others, people are buying electric cars because out of a certain conviction.
If you do that, would you be happy if you hear that in the supply chain, corners have been cut somewhere? No, you wouldn't. You would probably drop that brand the next time. We have to bring materials with a very clear and clean ethical sourced raw material. What is Umicore setting against these requirements? I hope I can, together with you, we can go over all these numbers. I can tick the box. We supply, we sell, we develop different products, quality requirements. I've recently not seen any specification document being signed with our customers with less than 20 items. That's the situation today. It's different than portable electronics. The technical, the quality requirements go up by the platform. Just like the emission control limits get harsher, also for us, quality requirements get more strict. We provide a wide family of products.
I'm happily inviting you tomorrow to show and to let you feel that we have very strong industrial capabilities, that we know how to scale up. Last but not least, Scale and technology is bringing us cost-efficient processes. Marc earlier on explained that we are a front leader in sourcing in a sustainable way our key materials. Summarizing on that part, what are the three key elements that I want to offer to our customers? It's product technology, it's process technology, because for long-lasting platforms, this is going to determine their cost competitiveness and my cost competitiveness, and it's supply. We talk about huge volumes.
A car OEM cannot accept that you're going to do all these investments, that you're going to roll out an electrification strategy, if after three years, they realize one of the key partners in the supply chain is just not able to deliver. This cannot happen. I try to visualize this a little bit more, talking about, let's say, an overall development cycle of a product. We start by synthesizing different compositions, different products, couple of gram scale, really in the lab. This is the starting point. Product technology you introduce from the first 10 gram you make. It's not only cathode material. Cathode material is produced out of an intermediate.
I can show you plenty of graphs where I make a correlation between some product parameters of the intermediate, and you will see a perfect correlation with the performance of the cathode material after this product has been heat-treated to a certain level that you don't want to bear. You will see tomorrow what that means, a heat treatment. These products have a memory. Sometimes I get a bit nuts, right? These products have a memory. They know what happened in their life before, even before they have seen 1,000 degrees. You don't have to master only the cathode making step. You have to master everything. You have to master precursor production. A precursor is produced out of metal. I need pure metal. All that comes together in, for me, product technology, and we do that for different grades.
Once you have an idea on, "I will make product X," and you see some interesting performances, you will bring this to scale. I already mentioned right now in the development of electrification, lithium-ion electrification, speed is of strategic importance. A car maker is typically testing its cars over at least two seasons, meaning they do winter tests up north in Europe, for instance. They do summer tests where it's very hot. If something or if you miss 1 deadline, the 12-month test cycle of a prototype is screwed up, and it becomes at least 18. If there is something that today, me, as responsible of this business, do not want to go and explain to a car OEM development team, it's that I missed a time slot during the scale-up.
Scaling up product technologies right now is of extreme importance. Scaling up is not something you learn at university. I've done a PhD myself. I had no clue what industrialization was. I dare to say that as a chemist. Scaling up is not something you read in published patents. Patents are about products. It's not about how you master processes. Scaling up is in the gray mass of 100 people at Umicore. That's what it's about. I'm proud also to give these people recognition and somehow the floor, because in the end, it's thanks to hard work and perseverance, like I said, on the technology front, that we are today where we are. This brings us to industrial capabilities. I can waste 10 or 15 minutes here on trying to explain you what that means.
That's not going to be half as efficient as seeing tomorrow what we are going to do. I'm sorry, I have now to apologize to people following on the webcast. People here in Korea, we can at least give them the feeling, give them a flavor of what we do in reality, and you will see. You will understand in battery materials today what scale means for Umicore. This is our definition of scale. Of course, our business fits perfectly in the closed-loop model, and also we offer more and more, and we interact more and more with cell makers and car OEMs to close the loop. Closing the loop goes from taking back production scrap of the cell maker, taking back off-spec materials during packaging, pack making. That happens, that things get off-spec along the road.
Taking back crashed car batteries for now, and finally, also end-of-life batteries. I'm looking forward, as a battery materials developer, I'm really looking forward to receive more recycled batteries in our plant. For the very simple reason that it gives me peace of mind. I know where the material is coming from, and I also know that whatever atom that I reuse is of the best and the highest quality I can ever buy. I've made it myself, I purified it myself, and we do this in a way that allows me to produce high-quality cathode materials. Maybe today, we talk about, I don't know, 10%, 15% that can be recycled, that will come back into the flow. As long as the market is growing stellar as it is today, it's impossible to feed the market or the new flow with recycled stuff.
As we go further, as we develop further, the fraction of recycled material is going to increase and is basically going also to help us, in a sense, to stabilize our quality and to further increase the performance of our products. Being successful today is a combination of developing in time a product, listen to your customer what he wants, and then bring that to scale in the fastest possible time. Where do technical product requirements come from? If you look at the wish lists, I made a wish list along the value chain for electrification, and then I tried to translate that into product specifications. Sometimes I wonder myself as well, why the hell are you now asking again an additional requirement? Why do we have to measure that? To increase complexity? Hope not. To increase cost? Probably not. There must be a good reason for it.
Let's go together through that. If you look at the, let's say, the chain of customers we have below us, we have, of course, directly the cell maker, then the car OEM, the regulator, somehow. It's a stakeholder. You can argue whether it's a customer, but let's call it a stakeholder. Finally, the customers. You, me, my brother, my sister-in-law, and so on. The cell maker has certain requirements, and his wish list, let's say, depends on technological choices that he has made. You have cell makers who have decided to make cylindrical cells, or you have people who may decide to make pouch-type cells. The type of cell they make is imposing certain requirements on the products, and it can be completely different depending on what they have chosen. The market is very diverse.
You have people who have chosen for 18650s or now 21700s, like Tesla. You have people who go to 120 amp per hour hard case prismatic. This is imposing completely different demands on our products. Secondly, what kind of electrode technology have they chosen? How do they produce cells? You have people who wind their cells. Basically, they roll the electrodes. Basically, the electrode is bent slightly in a circle. You have other people who stack, so who cut the electrode in pieces and really nicely stack the electrodes. The electrode is never really bound together. That is asking, again, other things to me. Can you imagine if some people is folding an electrode really 180 degrees at the neck where the folding is taking place? Your electrode, your material needs to be kind of glued to the substrate very well, and it has to show elasticity.
If not, it just breaks, and it peels off. Gone cycle life. Somebody who is stacking, he doesn't care because he's never bending electrodes. He's cutting electrodes in the production process a lot. He cannot afford that while cutting, product is kind of jumping left and right and contaminating all other stuff. This may sound all very, how should I say, trivial, but industrially, if we talk about 700 gigawatt hour in a couple of years from now, this is not trivial. I invite you to be with the production engineers of a cell maker. They break day and night their brains on these kind of things, and that is imposing on how we should make and cook and design cathode materials. Commodities, you think? I'm not so sure about that. The solvent.
Today, the first thing that people do with our material is they make a slurry. That means they have a solvent, a liquid. They bring cathode material inside, they make a kind of ink or a paint. You can compare it with a paint. The solvent today is an organic solvent. It's called NMP. Now, NMP is not one of the most nicest chemicals. Going that far in Europe, for instance, under REACH regulation, that it's going to be put on the most severe list, the end game is banning NMP. This means that cell makers today are actively looking, certainly the ones who go and produce in Europe, to change the use of NMP. It's hazardous. It's costly. You have to recycle that makes their production quite complex. The most obvious solvent is water. It's cheap, abundantly available.
The problem is a little bit with water, as a cathode maker, we are often the party pooper. The products contain nickel. They are sensitive to attack by water, or at least that the product is influenced by contact with water. We have developed technologies that prevent that. We have shown we are selling today cathode materials that are being used in water-based processes and coated industrially without any performance impact on cell. Future technologies are even looking at eliminating solvent at all. Printing cathode material on a dry basis on the electrode. These kind of industrial decisions impose requirements on a cathode material producer. Size. When you make a 21700, the cylindrical cell, most common cylindrical cell, the capacity is around four amp per hour. That's also why I put this one here on the slide.
A shortcut in that cell is caused typically just by one micron size, a couple of micron size. One particle is killing the battery. If you produce a cell of 40 amp per hour, 10 times bigger than a cylindrical cell A very same single particle is killing that cell for shorts. What does that mean for me? That the product has to be at least 10 times more pure to reach the same yield as a cell maker. Please realize in the future, people think about making cells of 120 ampere hour, 150 ampere hour. Today, commonly used already in industry is close to 100 ampere hour. We'll soon shift to 120 ampere hour. That means that for a 120 ampere hour cell, Umicore is making material that is 30 times purer than for standard used cylindrical cells. That's what I mean.
Playing for automotive is playing like in the Champions League, right? Tomorrow, I invite you, the ones here, I invite you tomorrow, we're going to visualize that. We're going to show what that in reality is. I'm going to learn you a new expression for seeking a needle in a haystack. As of tomorrow, you will have different nomenclature for that. A car OEM. He has also a wish list, not just a small one. How does he approach safety? On cell level or on system level? That's a big difference from a material maker point of view. What kind of strategy is he driving? Compliance or embrace? Remember, stepping massively into electrification means that he wants to offer maybe more performance. He wants to offer maybe a high range. This is determining material choices. Another one that I would like to highlight is warranty.
Warranty is, for car makers, a big headache because there are huge liabilities involved. It's very critical for them how they are going to approach the battery warranty. How are they going to achieve guaranteed performance after eight years? You have people who do that by, for instance, introducing an active cooling system, making sure that the battery runs during operation. You always add very similar temperatures. By doing that, you are not stressing the chemistry inside. There are other approaches. You have people who say, "Okay, I will not use active cooling, but I will be on the very safe side in material decisions. I will not use a cell that I charge to 4.3 volt. I will stay at 4.2, and I will have less capacity, but I don't add active cooling." All these things really impact what kind of material choice you're going to have.
The regulator. I explained already what happened in China. It's very clear that the way the regulator further defines incentive schemes and so on is impacting technology choices on cathode material level. It's hard to believe, but in the end, that's a fact. The decisions taken by governments basically impact what kind of material choices we have to make. Last but not least, the customer. What is important for us if we buy a car? Do we focus on TCO? Or is maybe for somebody else range of absolute importance? Most likely, if you go for a TCO offer, the car will have a different cathode material than if you would go for the absolute highest range, kilometer range. Who knows today, in five years or eight years from now, what we are all going to choose? I don't dare to bet my bets on that.
Obviously, the car size. Light duty, heavy duty, e-buses. The car size determines the battery size. As I will explain you, battery size has an impact on what kind of materials you want or you eventually even cannot use. If we bring now all this together, for the different wishes from the supply chain or the value chain, you can wrap that up in a set of cell specifications, cell performance specifications. On safety, on capacity, warranty that you have to give, power, cost, and cyclability. That's what it's all about, and that's what we have to serve with cathode materials. How does that translate now? A cathode material has different specs, and you basically can group them or bring them in 2 groups. The first group is what I call product specs. It's about how does the product Feel, smell, looks like.
Of course, in reality, it doesn't smell. It's all black powder. You know what I mean. It's about physical things. What does it mean, physical things? Particle size. How much more than five micron or 10 micron, or what's the largest particle that can be in a big bag of material? These kind of things. What's the purity? What's the composition of an NMC? How much nickel, how much manganese, how much cobalt? This is a product specification. The second group is about performance. As a material maker, I have to offer product that gives a certain performance in the cell. I'm not making the cell, but I have to guarantee that. What do we have to guarantee, amongst others? Of course, safety performance, capacity performance. Cycle life, obviously. Cycle life is hugely determined by the characterization of cathode materials.
All that, all these requirements and these requests, basically ask for a tailoring of different chemistries and different products. When you read certain market reviews, market reports, technology reviews, I'm kind of smiling in my seat in the airplane. That's typically where I read these kind of things. Smiling when people say, "There are 4 types of NMC." Come on, guys. There is more than NMC 111 and 532, 622 and 811. It's just like the world is only 4 grades. There's much more than that. There are an infinite amount of combinations possible. I'm not advocating for this complexity because I have our operations director in the back. That's a nightmare, of course, for the operations. That's not the way we want to go.
At least I want you to understand that within a family, a big family of NMC, and even within NMC 111, you have so many sub-grades that all serve a different specific customer application. Let me summarize a bit now. Per segment of transportation and per performance specification of the cell, where I believe that different NMC grades are more or less suitable. I have prepared this heat map for 4 segments. Battery EV long range, battery EV mid-range, PHEV, heavy-duty e-bus type. The graph shows from the left to the right, low nickel NMC. Let's say NMC 111, that's 30% of the transition metals are nickel. On the right side of the graph, high nickel NMC. The end of my heat map or my heat bar is really high nickel. Think of 95% nickel. This is today being tested in labs.
This is not being used in the industry at all, because the customers cannot handle that product. I just want to show how things evolve over that nickel axis, because it's usually a very hot point of discussion in the industry. Looking for long-range battery EV. Let me guide you through this one. If we look at safety, lower nickel cathode materials usually offer a much better safety than higher nickel. I think this is commonly understood and agreed upon in the industry. The more nickel you introduce intrinsically, the more difficult it gets to keep your cell and or your system safe. Driving range. With low nickel, it's difficult to get to the necessary driving range. Durability. The less nickel, the better the product holds upon cycling. The more nickel you introduce, the more difficult it gets. I'm not saying that it's impossible.
I'm putting it here yellow or orange. It's getting more difficult. On the cost side. The lower the nickel, higher the amount of We all know today that we are at high cobalt prices. This can be pretty painful. On the other hand, going to high nickel gives you also a cost disadvantage. Power, because of the big battery, there is usually not really a constraint. This is for long range battery EV. If we go now to the mid-range, it's a similar pattern. However, you do have less constraints on the range, for instance, here, with low nickel NMC. An interesting one is PHEV. For PHEV, you basically load the battery very heavily. You cycle a lot. It's a sizable battery. Which means that the use of high nickel gets pretty complex in terms of cost and durability.
Getting a PHEV to cycle 5,000, 6,000 times over its lifetime and still having a performance with high nickel products. That's at this moment in time a real challenge. Last but not least, more bigger systems. For bigger systems, using high nickel, you are limited with the safety. Having a 350 kilowatt hour high nickel battery on top or below a bus chassis, I don't see that happening very soon in terms of safety. Of course, these kind of systems are less volume sensitive, but they are very price sensitive, so you get into trouble here as well. If we combine all that for transportation, where do we see the use or how are different NMCAs being used? Basically you see depending on the range or on the sub-segment and then the nickel composition, that specifically at the extremities you have some difficult usage.
In the middle, that's where the compromises in the industry are being sought at this moment in time. Product technology, of course, process technology is another important element that is supporting our growth and our cost efficiency. Fast growth from lab to industrial scale and guaranteeing high product quality at industrial large scale volumes. This is really at this moment in time pretty key. Being cost efficient, obviously, how can you do that? Control your capital intensity. I think at this moment in time, thanks to our process technology and equipment being used, we control this very well. We have introduced a couple of years ago, really high throughput production processes that differentiate us from others and maximizing first-pass yield. I think first-pass yield is critical on the cost side in our industry. That brings us really to the total package.
We bring industrial capabilities for excellent products, and we do that in a cost-efficient way. Where are we with our expansions? We are expanding right now in Korea, getting close to the expansion. In China, we are in the midst of it. We are on track. We have communicated earlier this year that we project 100,000 ton sales in 2019. With the current expansion plan that we have communicated, we should reach at least 175,000 ton cathode material production in 2021. As I mentioned, currently Korea most advanced, China following suit, and in Europe, we have decided to increase our efforts on the process side. We are going to increase the efforts on the process competence in Belgium.
As we communicated last week, we have selected a site in Poland, that's a city of Nysa, south of Poland, where we are going to be operational towards the end of 2020 to serve the European market. Our position in the market, I would say, is unique in that sense that we combine scale, geographical presence, and recycling capabilities. We cover, we span the supply chain from raw materials coming out of the mine. We source pure metals there where needed and where we can, and then we transform that into an active cathode material. That helps us to be extremely agile in this industry. Marc has mentioned the recycling. There was already one of the questions going into that direction. Where do we want to go? I think that has been addressed.
In, let's say, five years from now, we definitely see there the potential to further industrialize that and to combine it with the production of our cathode materials. Increasing the gap. I hope I could help you to understand where we are and that we have definite plan to continue to do so, that it is based on technology and market leadership in that area. You're not going to be a leader in this industry if you don't master your costs well and that aspect is very critical to be successful in the future. Of course, last but not least, this industry will need strong ties, almost, let's say, from mine to consumer. I'm coming to the end of my talk, at least if this wants to accelerate. Yes.
What do I want you to remember tonight at the dinner table when I ask you the question? There is a huge market. There is a huge and massive market demand. I think, at least I hope, with explaining the background on where the technology requirements come from, that there is a trend to product customization, not commoditization. Last but not least, I hope I could also convince you that Umicore is today and in the future, uniquely positioned to grab a big share of this massive market demand. With that, I would like to conclude, and I think I have to invite Marc to the stage for a Q&A session.
Actually we're going to have probably the Q&A session in two sections. We're going to start now with 15 minutes, so that we stay on schedule with the other day's agenda. We'll have another section of Q&A for Kurt later in the day before we close the session. As you understood from Kurt's closing remark, we will also quiz you tonight during dinner. A reverse Q&A.
Hi. It's Tom Wrigglesworth from Citi. I guess I'll keep my question high level. Can you see any technologies that are in development today that will solve or provide, address a number of the challenges you face in process and manufacturing? I guess I start that question with solid state batteries in mind, given you were talking about the heat management, the safety, the processing, et cetera. Is there going to be, it won't be a single shot solution, but can you see a step change coming already? Thank you.
The answer is no. There isn't going to be a single technology that will solve or that will address all the challenges. For more details, I would ask you to bear with us because Denis Goffaux, CTO, is going to explain that this afternoon and is going to outline the innovation roadmap including elements such as solid state and how solid state, why solid state could make sense.
Hi. Jean-Baptiste Rolland, Bank of America Merrill Lynch. Very recently one of your, let's say, a company which you expect to become a more significant competitor within the next 10-15 years, claimed that ultra-high energy density grades would basically account for about 50% of the overall cathode market. I'm just looking at the heat map that you presented, and I'm just wondering, would you expect this sort of average, industry consensus between low and high nickel content to actually be shifting to the right within the foreseeable future? Thank you.
Maybe the first element of my answer is that it's not because you go to a high nickel that would go or that would translate in a high end of the market. For me, automotive market is basically.
High-end
All high-end. Nature is nature. Every % of nickel gives a certain capacity and, whether you're company A or B or C, we are not going to transform nature. The capacity is linked to the amount of nickel being used. I don't see there any specific change or any step change being able to be made by person one or person two.
Yeah. It's not going to be a binary market.
No
a product technology point of view at all. Far from that. It's going to be a market which will be characterized by a wide spectrum of product technologies, meeting a wide spectrum of requirements from the customers at large. If you bear in mind what Kurt presented about the requirements from each participant in the value chain, the cell makers, the car OEMs, the customers, et cetera, these are plentiful. Actually, the way you have to look at it is the number of permutations considering all the possibilities that these permutations mean. It's going to be a play, a technology play, requiring a vast portfolio of technologies and nothing that looks like a binary market.
No.
Hi. Mark Newman from Bernstein. I appreciate there's lots of different types of chemistries that are always going to continue for the long term. I'd appreciate if you can give a little bit more information on Umicore's blend today, in its chemistry, within NMC, and how that might change going forwards. I think the two big trends we're seeing at the moment is cobalt price has gone up a lot. At the moment, I think cobalt is about 10 times more expensive than nickel, so that motivation to go to high nickel content is getting higher and higher. Plus, of course, a lot of the new EVs that are coming out in the next few years are with longer range. The motivation, again, towards high nickel content is getting higher and higher.
I think it would be very helpful to talk about what Umicore's blend is today. For example, NMC 111 is X%, or any kind of comment you can talk about that and where you are in the move to high nickel content going forwards.
In terms of our blend, I explained that we offer a wide set of compositions, and that we really fine-tune these compositions depending on the requirements. Our blend is a natural historical blend. The technologies evolve over time, our business and our activity is purely reflecting that.
Well, I would put it somewhat differently to add to that response. The blend is what the customers want, to put it very simply. We have the entire spectrum of technologies and chemistries available, and we produce what the customers require in function of the application requirements, as was demonstrated by Kurt. There isn't a Umicore blend or there isn't a Umicore product. There is a vast portfolio of products and chemistries that we produce. This afternoon, during the technology presentation of Denis. Denis will also explain and demystify some misconceptions about high nickel, because you pointed out things that nickel brings. Like, for instance, a higher range and a cost differential compared to cobalt. Denis will also bring you a more balanced picture by also explaining what you give up in terms of characteristics and performance, when you use more nickel relative to cobalt.
I think it's important to understand the trade-offs that the customers have to make when selecting chemistries. It is not only just a matter of higher nickels being a holy grail that brings everything, lower cost and higher driving ranges. It's a matter of trade-offs, this will be outlined in more detail this afternoon. Will also help you understand the complexity around the questions that you've raised, and the reason why having a vast portfolio of technologies makes a lot of sense to play in this market.
Wim Hoste, KBC Securities. I have a question on raw material sourcing. With the accelerated scenario you now provide, are you confident there will be enough metals, cobalt and other metals out there to accommodate for that? How do you see the kind of metal pricing risk to your accelerated growth scenario?
That's indeed quite a big concern. The raw materials availability in absolute terms and also in terms of timing. In certain cases, you can think of new sources that could come on stream in the future, and the question is, how fast will that happen? When I raised the question earlier in my presentation about how much faster electrification can go, clearly one of the limiting factors today is the time it takes for the supply chain upstream to develop and to grow and to adjust to the kind of growth rates that we see today on the demand side. I would answer to your question also by saying that without recycling in the long run, the bottlenecks to electrification will be significant. Recycling will be a major contributor to the electrification by easing the scarcity of certain raw materials like cobalt or certain others, clearly.
Without recycling, there will be a limit to how far we can go with electricity. The other aspect is that I don't see, again, I repeat myself, I don't see one technology or one family of chemistries taking the entire market for two reasons. One, because there isn't one solution that addresses all the requirements that have just been presented. Secondly, because in many cases, the technologies to cleaner mobility are hitting raw materials constraints, whether it's an absolute value or in terms of timing. I think electrification can get where society wants it to go using a combination of technologies, provided recycling kicks in in a significant manner in due course.
Chetan Udeshi, J.P. Morgan. You mentioned the trend towards more customization of different grades. Is that coming from OEMs, auto OEMs or battery OEMs, and is there a risk that with more customization, some of the IP is then owned by either the battery OEMs or car OEMs, and you just become a blender as such in the long run?
Thank you for the question. Actually, a very relevant one. I think the request comes from a combination of the two, and it is either linked with the performance of the cell or sometimes linked with how cells are being produced. In terms of IP, that's more or less defined on product level. I would say we see there even quite a bit of opportunities. I would like to refer, for instance, to the example I gave to make products for water-based systems or even for dry coating. There are quite a bit of requirements asked from us as a cathode material maker. I really see that as an opportunity for us to differentiate and to excel, actually.
Yep. Actually, there is an analogy with the catalyst industry where, indeed, the automotive industry relies on the leading catalyst makers to come up with new and innovative formulations to meet ever more stringent regulations, and where the catalyst makers are not or have not developed into toll producers that are actually just making the recipes or producing the recipes that are owned by the car makers. We see the same model developing in the electrified drivetrains technologies.
Yeah. Good morning. Thank you very much for holding this meeting. I had a question. I wanted to go back to the high nickel discussion just a minute ago. Just curious. I guess the reason there's so much interest about that is we're trying to understand what the economic impact of this transition will be, and I appreciate that there won't be one solution, and I think that's really helpful to note. We all need to make our assumptions as to where we evolve to and if there are different solutions for different parts of the market. At the same time, as far as Umicore is concerned, can you just help us get our heads around, is high nickel good for you or bad for you?
It's a don't care, and you can evolve to basically experiencing the same type of economic benefit you do with low nickel type of strategies? I think that's the kind of one question that you could really help us get comfort with. Appreciate that.
It's very hard to predict where the market will go. That's basically also what I tried to give as a key message. In the end, you and me and society, the regulator will decide what the technologies of choice will be. In the end, for us, as I've shown in the beginning, all these materials are layered oxides. As soon as the customer is asking them, either a low nickel component or a high nickel component, we have the capabilities to develop and to produce that.
Adding to that, if I want to address in a possibly more specific manner, your question about the margin-
Yep
The economic benefit impact, we don't mind. For us, it's about the same, because we have the technologies, we have the products, and we have the industrial capabilities. I would like to reuse a sentence that I've used earlier in another context. It's not an aspiration in our case. It's equipment that is on the ground that is producing. We have versatile process technology. Sorry. The product can be made, is being made at the request of the customers. From a margin point of view, we don't mind. The mix is going to be what the consumers decide, depending on their requirements and depending on what they buy. For instance, I drive a PHEV with Umicore materials, of course. That's a key selection criteria.
I need a robust battery because I'm going to be in a configuration that Kurt alluded to earlier with thousands of charging, discharging cycles, not hundreds, thousands, because I'm charging during the day, when the car is in the underground parking in the office, and I'm charging home overnight. Over the warranty life of the battery, which is 8 years, I'm going to have thousands of cycles. High nickel is not relevant for me, for that model of cars that I've chosen so far. Its robustness of the battery is more important, is more relevant. Again, we don't know where the mix is going, and we have prepared ourselves actually to be able to deal with any mix depending on where the consumers decide to go.
We will take a last question for this session, and then we will have a chance to extend the Q&A on this topic sometime this afternoon.
Hi. Ranulf Orr , Redburn. Just a quick question on the guidance to your output capacity of 175,000 tons. As I understand it, the higher grade nickels have a much slower production throughput. The multiple sinterings, for instance. What is the mix assumption in your tonnage, or how do you derive that? Thank you.
We have made a rather conservative assumption in defining that number. Depending on which direction it goes, I don't see us getting, in the end, below 175,000.
Well, conservative because, in a way, we're talking about 2021, and things are known pretty much for that period of time between now and 2021. There is a significant proportion of higher and high nickel products in the assumptions, and it's probably overstated, considering what we see as the market take-up rate and how we see the market take-up rate progressing nowadays. That's why we mentioned at least 175,000 tons, because your observation is absolutely right. The throughput is not the same. Okay. I'm sorry that we have to break this Q&A session for now. Again, there will be more occasions to come back to that subject later in the day. We would like us to stay on schedule because we have a pretty full program for now.
Welcome back, everyone. I hope you enjoyed the small cultural escape. We are now ready for the last presentation given by Denis Goffaux. Denis, the floor is yours.
Thank you, Evelyne. Good afternoon, everyone. Glad to be here. Kurt talked a little bit about the last 20 years, what has made us what we are in rechargeable battery materials. I'll try to draw a picture of what we are going to do in the next 20 years. It is about our innovation roadmap in clean mobility materials. I will try to picture a little bit the why and the how we are working on these products. First, some background information on what we call the well-to-wheel efficiency. Well-to-wheel efficiency is actually a way to picture the efficiency in transforming oil, crude, fossil fuels into motive energy. Well-to-wheel is made of two components. One is the well to tank. This is the energy that you are using to extract, transport, and refine the crude into a usable fuel, gasoline, diesel, whatever.
By extension, we are going to use the concept of well to tank to characterize the efficiency in transforming this fossil fuel into electricity, because this is going to be useful as a comparison for electrified vehicle. Then you have the second component, which is called the tank-to-wheel. This is what happens actually in the car. This is the efficiency in which you transform your fuel, your chemical fuel into motive energy. If we look at tank-to-wheel efficiency, which is very often the main focus of the automotive industry, nothing can actually beat the battery electric vehicle. You'll see that a BEV has an efficiency of up to 90%. Why? Because an electric motor is actually a very efficient way to produce motive power, starting from electrons. The electric motor also is fairly flexible in terms of torque and power.
A fairly wide range of rotational speed provide very good torque and very good power. That's one part. This is the electrical motor. You have also the power electronics and the battery. Power electronic also have pretty high current efficiency. Increasing over time with new semiconductor being introduced. The battery, in most of the conditions, it's fairly efficient to extract electrons from a battery. All in all, we can reach efficiencies in the range of 90%. This is a big difference with internal combustion engine, because there we are more in the 25%-30% average efficiency. Why is that so? First of all, there are some thermodynamical consideration. There is something called the Carnot cycle, where depending on the temperature, you cannot go above a certain efficiency. It's actually very difficult to transform heat or thermal energy into motion.
An internal combustion engine is really a marvel of technology because you basically transform heat, the heat produced by the combustion of the fuel into motive energy. We get to this 25%-30%, partly because of thermodynamical constraints, partly because the internal combustion engine works in a very narrow range. That's why we have gearboxes in normal cars. That costs some efficiencies. Fuel cell is somewhere in between. It has some thermodynamical limitation as well, but you benefit from the efficiency of the electric motor. All in all, it's around 50%. If you look at this, you may wonder, knowing that the electric motor exists for more than 200 years, the batteries has been invented more than 100 years ago, why are we still using internal combustion engines? There is a good reason for that.
This is the energy content of the fuel. Here, the comparison is a little bit unfair, because for the gasoline, diesel, and hydrogen, I'm counting the energy content of one kg of the stuff. I'm not counting the tank, the pipes, all the ancillary equipment. This is really the energy that you have in one kg of gasoline, 13,000, diesel, same range. Hydrogen, much higher. Of course, it's one kilo of hydrogen. The volume it would take at normal pressure is a bit larger. In hydrogen, actually, the tank is not negligible, because you need to handle 700 bars, so you need thick carbon fiber. In terms of handicap, in terms of energy density, this is more relevant than for gasoline and diesel.
If you look at lithium-ion battery, you have all the container is there because the chemicals, the battery itself, is actually what stores the energy. You see that there is a factor, nearly an order of magnitude between these. This is what has limited the penetration of electric vehicle for a long time. That being said, these extremely high efficiencies and the fact that you can have a low CO2 vehicles is worth the effort. You would understand easily that our main focus is there to improve the energy density of the battery. If we translate this percentage into gram CO2, because you can do that. When you have an efficient process, you basically burn part of your fuel, and this creates CO2. You can express these efficiencies in terms of gram CO2.
You'll see that, the purple part is actually the tank to wheel. The green part would be the well to tank. In many cases, when we talk about gram CO2 for cars, we look only at the tank to wheel. The well to tank is actually proportional, because there is a certain percentage of energy that you lose during the extraction, transport, and conversion of the crude into usable fuel. You see that even if we look at the 95 gram per kilometer of the target of 2021, it's going to be difficult for gasoline and even diesel to reach these targets. If you look at the right side of the graph, then you see that life is much easier for battery electric vehicle, because actually you will not produce any CO2 during conversion, during when you're using the car.
You only have the CO2 that has been produced during the manufacturing of the car, the manufacturing, if we can say, the production of electricity. Maybe coming back to internal combustion engine, you'll see gasoline, diesel, compressed natural gas is a little bit better. You can improve the efficiency somewhat by going hybrid. You reduce the overall tank to wheel and the proportional well to tank. If you go plug-in hybrid, then you have a mix of electricity and fuel, and you can get much lower in terms of gram per CO2. This is all calculated for a C-segment car, let's say the size of a Golf or something like that. The emission for the electric vehicle, you see that there are two values. One is when you start from full renewable, then you have basically no CO2 emission.
The other one is based on the EU mix expected for 2030. It obviously depends on how much coal versus gas versus nuclear versus renewable you have in your mix. Europe in 2030 will be around 300 gram CO2 per kilowatt-hour. This will give this picture. If you are in China, you're probably going to be a bit higher than that. If you are in very low-CO2 countries like the Nordic countries or France, then you will be lower than that. This draws a picture that's why we go to electrification, and it is very much supported by legislation. However, this is an evolution. This is not a revolution, because the electric vehicle cannot fulfill the needs of all customers, cannot fulfill all needs or all uses. You will have a mix of these powertrain, an evolution towards more electrification.
We need, one, cleaner ICEs, cleaner in the sense of emitting less CO2, but also fulfilling the emission legislation, and more and more xEV. Guess what? This is something we like at Umicore. This is to paint a little bit the picture. Let's look at what we do in term of active battery material development to reach these levels. First, a graph which is expressing two values, the volumetric energy density in function of the gravimetric energy density. Energy density is range. Energy in density is in watt-hour or kilowatt-hour. This is a unit of energy, and this is giving you a given range for a given car. You want the energy density to be as high as possible, but of course, you have limited space and limited weight in a car, you want it to be also dense.
Volumetric energy is actually more important than gravimetric energy for automotive application, because the car makers do not want to touch the usable space in a car. They don't want to force you or me, consumer, not to be able to put, or I don't know, our golf equipment in the trunk, or our kids in the back or whatever. There is a limited amount of space available, and you want the battery. Basically, this space gives you the autonomy. If you have 100 liter at 400 watt-hour per liter, you will have that much energy and that much range. Gravimetric is a bit less critical, but it's not unimportant because at the end of the day, you don't want to spend a big part of your energy just moving your battery around.
Where you want to be is actually in the upper right corner of this graph. You understand easily why we actually stopped doing work on LFP. We stopped LFP because it is limited. It is basically a cathode material which gives limited gravimetric and volumetric energy density. You see also that if you move towards iron nickel, you get more density. Kurt mentioned about it. This is electrochemistry. This is thermodynamics. It is a fact if you move. These moves are small steps. This is limited. Every percent counts. There is a trend towards more nickel. Nickel can only bring you that far. What do we do at Umicore to achieve that? We develop products. Products, we then take it in a wide sense. It's cathode, but you will see there is more than cathode in the future roadmap of battery materials.
We also develop processes. These are two faces of a coin because you need a process to make a product. Basically, it is rather easy. Fine. It's not easy. You can make a few grams of a product that is very well-performing. The challenge is very often to produce it in thousands of tons because the application needs these thousands of tons. When you develop a product, you need a process to make it, and the process needs to be cost-effective. We spent R&D money on both. What is the path towards this longer driving range? I split it in three areas. The first one is cell design. This is mostly in the hands of the battery makers or customers, because what you can do is reduce the useless parts, reduce the thickness of the casing.
Useless is not the right word because you need a casing in a battery, obviously. If you can reduce the volume it takes and the space it takes, you basically get more energy density. These are problem with sound? Okay. Good. The cell design is in the hands of our customers, the cell makers, so they can reduce the thickness of the separator. They can reduce the additives, things that are not providing more energy but are still costing some volume and some weight. Very often they need us for that because the materials we are delivering are enablers for that. If you want to reduce the thickness of your separator and you have a cathode supplier delivering parts which are not well-controlled, you are going to pierce the separator, create a short circuit, and have a lot of problems.
We are an enabler, but we are not really in the driver's seat for the cell design. This is very different for the cathode material because there, this is really our business. This is in our hands. We make the cathode what they are. Let's first demystify something. The products that we are all talking about, the LCO, lithium cobalt, all grades of NMC 111, 532, 622, 811, 9, whatever, NCA, they are all part of the same family of product. This is the layered lithium metal oxide compounds. They all have the similar structure. This is what you see on the slide. The part in blue is the metal oxide side. You have a metal surrounded by oxygen. This is an octahedron.
You have the metal, and you have oxygen around, and then you have a layer full of lithium, and this is basically this lithium that you take out during charge and back in during discharge. The metal oxide can be made of a number of transition metal. There are three metals that actually work well, nickel, cobalt, manganese. Each of these metals have specific qualities and drawbacks. If we look at the first one, the first one was cobalt. Why was cobalt used first? Because it has a lot of advantages. It is good in terms of cycle life. It is good in terms of power. It is good in terms of manufacturability. Why? Because the cobalt stays where it needs to stay. It means in the metal oxide site. It does not go in the lithium sites. It is basically stable through its characteristics.
This is solid chemistry. The cobalt stays where it needs to stay. The only disadvantage of cobalt is actually cost, because it's a scarce metal and in portable electronics, cobalt remained used in spite of its cost because it has a lot of advantages. If you look at nickel, you have a big advantage with nickel, the energy. You gain a little bit in energy. This is due to the voltage curve and at a given voltage, you gain a bit in energy. Nickel has big disadvantages in terms of safety, manufacturing and cycle life. The third one, nickel has the bad habit to move in the lithium site and then it's in the way. It actually make it difficult for lithium to get in and out of the structure. If we look at manganese, there we have a big cost advantage.
Manganese is even much cheaper than nickel. Safety is also good with manganese, the power and cycle life are problems. It's actually very difficult to keep, if you would go to pure manganese, it would not stay in this stable layered state. It would move to a spinel to a different shape. You can play with these three metals. It's a balance. You get pros and cons, in whatever. What we did is actually, Kurt mentioned that in the 1990s, we were working already on high nickel, we had 80-20. We even filed some patents at that point in time, in the early 1996, 1997, 1998 area. The breakthrough for the non-cobalt products was actually when NMC 111 was introduced, because NMC is something that could be used. It could be used and manage cycle life, safety, power, and at cost and energy advantages.
What do we have at Umicore? Is basically the full spectrum. We have this 33%, this 50%, this 60%, 80%, 90% and more because we can play everywhere there and some customers are asking us specific composition. Again, our operation manager does not like that too much because it creates a lot of complexity. You can basically play with the composition. This is relatively simple in terms of decision-taking. You need to make the product work in a real battery. We can consider that we have a toolbox at our disposal to make products with higher energy density and composition is one of the tool. It's not the only one. I've put here four tools. We have very creative scientists. They have 20 additional tools in their hands. I'm not sure I want to share all of them with you.
Some of them would be a little bit less relevant than others. These are four main ones that are known and can be used, to optimize the energy density. Let's review them. We have these tools at hand, at the end of the day, it's always going to be technology differentiating because you use these tools, you give the product to your customer, and guess what? They come with more questions and remarks than solutions because they tell you that this and this and this and this needs to be improved, changed. This is the way we develop product in interaction with our customers. Composition. Again, it's electrochemistry. You put more nickel, you get more energy. Each step provides a few % more.
It's not changing the face of the world, especially if you go from, let's say 50 to 60 or 80 or 60 to 80. You see that the difference is fairly limited, but it goes in the right direction. If you can manage the disadvantages, of course, you want to put more nickel in your product. At the end of the day, you always need to tune a number of other characteristics. If you put more nickel, you will have problem of safety, so you will need to do something else at the cathode material level or at the cell level to compensate. Same with cycle life, same with power. There, I believe it's fair to say that our 20 years of experience is going to be extremely helpful because this is not the first time we tune a product.
It happened with lithium cobalt and all the variation we made out of lithium cobalt. It happened with 111 and all the variation we made about 111. There is more than composition in a product. If you ask us, do we plan to make this? Of course. We are interacting with our customer, and we will land somewhere with our customer. Sometimes we will propose something, and they will ask us, "No, give me something different because actually I cannot use this as it is, but this one is a much better compromise for me." If we then look at another tool that we have in our box, that will be using the voltage window. The nickel, maybe let me go back one slide. If we talk about the impact of nickel on the energy density of the battery, this is always at a constant voltage.
If you cut at 4.2 volt, putting more nickel will give you so much %. You can also decide to cut at a higher voltage. Standard batteries are normally sized between three volt and 4.2 volt. The normal cut of voltage is 4.2 volt. If you stop at the given voltage, you stop at a given delithiation. You leave some lithium in your structure because you don't want the structure to collapse. If you stop at a given voltage, you have removed so many % of the lithium. If you cut at a higher voltage, you remove a little bit more lithium, gives you more energy density, but has other impact. You can gain 8%. It's mathematical, 4.2 to 4.35, you gain 8%. You need to tune, not only the cathode material, the electrolyte need also.
There is a big interaction between the cathode and the electrolyte. Either you need to improve the electrolyte so that it can handle the voltage, or you can actually tune the cathode so that it does not react in the wrong way with the electrolyte. We use a lot of coatings and surface engineering to avoid this reaction between cathode and electrolyte. Actually, this approach works very well. This has been used in portable electronics for the last 20 years. The portable electronics went from a cut of voltage of 4.1 volt at the very beginning, 4.15, 4.2, 4.25, 30, 35, 4.4. Some of you have cell phones cutting off at 4.4 volts. Portable electronics stayed with lithium cobalt, they didn't have the luxury to play with the composition.
One of the way to get more energy out of it was to cut off at a higher voltage. You can basically do the same with a high nickel product, with a NMC, with different grade of high nickel. One thing that is worth noting, is that if you take a 60% nickel and you cut at 4.35 volt, you actually end up with more higher energy density than a 80% nickel cutting at 4.2 volt. Again, you have two tools in your box. Use one, use the other, use both, but know that in any case, you will have to deal with the drawbacks of each of the tools. There we have patented technologies. It's a lot about surface engineering, surface treatment. We have learned a lot from the lithium cobalt. For the same reason, we applied today to the nickel composition.
Let's look at our third toolbox. This one was also very much used in portable electronics. This is dealing with the packing density. Kurt mentioned that there was a memory, that he was a bit nuts, that I can confirm, but that there was actually a memory in the product. It's true. The shape of the precursor that you make will be kept in the cathode material. It's very important to be able to control the full supply chain, because by tuning the precursor, you're going to tune the cathode material. Packing it better in the battery, gives you 10% additional capacity at no cost, because there you won't have, at no cost, no disadvantages. You won't create safety problems. You won't create power problems. You just need to manage geometrically, mechanically, to put more product in a given volume.
That has to be done together with the customers. There, too, we have patented technologies banking on our experience in portable electronics. This is totally valid for electric vehicles. I believe that most of our NMCs used today in automotive platforms are using this technology already, but we can push it even further. A fourth tool is that sometimes you decide to go to high nickel, and then you need to deal with some of the side effects. A side effect which is well-known in nickel, because the nickel goes in the lithium side, you also create surface impurities in the process. This surface impurity generate gas when you keep the battery at high temperature. Here, this is a standard test, which is done at 90 degrees C.
It's fairly harsh, but it's not very different from what you would get if you leave your electric car on the top floor of an airport parking in, let's say, Atlanta or Seoul during summer. You may sometimes have a charged battery being held at high temperature. This happened a lot in the past in computers, when you had the CPU heating up the computer and heating up the battery, which was plugged and charged. We all remember that, sometimes we never really used the batteries of a computer, but they were gone very quick. This is because of that. In case of high nickel, it's bulging. Bulging means that a pouch cell would increase typically at 90 degree by 100% in volume. The cell doesn't look like a pouch anymore. It looks like a pack of crisp.
It's really bulged, like by the pressure of the gas that you put inside. This is not good for the geometrical integrity of the cell. Think about that happening in a car where you have a lot of cells piled against each other. It's also not good in terms of safety, because if you puncture, then you will have gas escaping. This is clearly something that needs to be avoided. This is something that prevents the use of high nickel chemistries in most applications besides the small cylindrical cell. A cylindrical cell, because of the cylindrical shape, can actually hold the pressure pretty good. If you create a bit of gas, basically the shape of the cell can hold that. If you go to pouch or to prismatic cell, this is not possible. We have been working on that.
Again, it's all about surface engineering, to avoid these gas-generating substances that are on the surface of the cathode material. We have been able, and we patented that, to decrease the bulging to 20%. 20% in this specific test at 90 degrees means that in real-life application, this is acceptable for the customers. This gives you a picture of four of the tools that we have. We have many others, you can actually use them to increase capacity and energy density in your cell. One question that I've been hearing a lot from my colleagues, from customers, and from some of you already, is high nickel the holy grail? High nickel is part of the solution. If you go to high nickel, you get more capacity, you get more energy. This is what we want. You need to consider the drawbacks.
The cycle life, which in some application will be simply unacceptable. Mark mentioned about plug-in, there are other applications where cycle life matters. Automotive application, you cannot play with cycle life. The battery needs to last as long as the car. OEMs do not want to take any risk with that. The high voltage stability, if you want to use them at higher voltage, which brings a number of benefits, you have more problem with high nickel than others. I would say that in general, there is limited experience of integration by the current cells maker. Back in the 1996, 1997, 1998, 1999, the product was already available. It was mostly 80/20, 80 nickel 20, or NCAs.
Most customers would say, "Look, very nice, I can use it in button cells in my lab, gives very high capacity, I cannot really use it in a real application." On top, performance come at a cost, the cost of manufacturing, we mentioned it. At some point in time, is it worth to spend much more CapEx to get a few % more in your product because the CapEx will be a cost to the customer. The balance will need to be found on the cost equation as well. Basically, when we talk about high nickel, most of the time we go to 80, sometimes 90, above 90, this is really a territory which is not demonstrated at all. We believe that we can deal with this, in the future, it's not going to be like a miracle solution.
This will be, again, an evolution over time. The full spectrum is and will be needed. We have it. That's the good news. Okay. Let's look at the third path that we have towards a longer driving range. This is shifting the anode material. Anode material stayed the same for the last 25 years. It was graphite from the beginning. It is still graphite. The graphite, they made progress on the graphite. There is R&D done on the anode materials. The shape is different. The graphite can deal much better with high power than in the past. Basically, the capacity has not changed much over the last 20, 25 years. What is the idea is to replace graphite. It's not a new idea, neither. It's to replace graphite by silicon.
Silicon has up to 10 times more capacity per gram than graphite, so it's an obvious choice. If you manage to use silicon, and I will tell you why it's difficult to use a silicon, you can have up to 50% additional energy in your battery. This is sizable. Look at the graph. You could go from, let's say, 220 watt hour per kilo to 330, counting on the 50% additional capacity. If you compare the difference between 60 and 80% nickel, and you look at the difference between the anode. The anode material brings you much more bang for the buck than increasing the nickel. Is it easy? No. The capacity increase is large enough to be very appealing to the OEMs. Silicon composite is in the roadmap of all OEMs these days. Why is it difficult? Silicon has a bad behavior.
When you put lithium in it expands by 300%. If you visualize the electrode, and we have taken picture of it live, it behaves like a lung or a bladder. It just goes up, down, up, down, up, down. The electrode physically bulges. This can still be managed. If you can make the silicon fine enough, you can still manage the mechanical constraints. You have also another drawback, is that every time this silicon expands, you create fresh surfaces, and these fresh surfaces react with the electrolyte and deteriorate your cycle life. You are actually using part of the lithium, and the lithium which is not available cannot be used in the battery. We have developed a unique material. We have worked on it for quite some time.
We have developed product that can actually cope with this variation in volume and the interaction with the electrolyte. We are in product qualification. We are sampling customers. We get extremely good feedback. This will certainly go to other application before getting into xEV, into vehicles. We believe that this is going to be a very important building block going towards higher energy density in lithium-ion system. Okay. Up to now, we stayed in liquid state batteries. There was one question this morning on solid state. I will come to that. Even if we stay with liquid state, starting from 33% nickel cathode material, 111, moving to 90%, you will gain 17%. You can stop on the way. You can stop at 80 or at 60. You will gain a bit less.
You can use the low-weight cell design, so this is in the hands of the cell maker. Higher packing density, higher voltage, and then the potentially very high jump by the silicon anode. You can see that your range can actually increase a lot because you would more than double your watt hour per kilo. There is still a lot of life in liquid systems. The beauty of the liquid system is that this is proven technology. The battery maker plants, they are designed for it. They can handle it. You can have drop-in solution, new cathode, new anode, more packing density, higher voltage. These are things where you can still use a manufacturing line exactly the way it is and still gain a lot of energy. The 500-700 kilometer range is within reach by evolution, by continuous improvement.
We are not going to stop there. Let's look at solid state. Just to put things in perspective, let me remind you what a liquid lithium-ion battery is. Most of you know, you have the cathode material, which is coated on an aluminum foil. This is a cathode. This is the positive electrode. You have either graphite or silicon composite coated on a copper foil. This is the negative, the anode side. You have a separator, which is a polymer. This is a polyolefin, this is plastic. Let's call it for what it is. This is a polyolefin. Engineered polyolefin, definitely with micropores in it to let the lithium through. Very thin, needs to be resistant. There is a lot of knowledge in the separator, but basically, this is a piece of foil of plastic.
You need to transport the lithium ions from the cathode to the anode and back from the anode to the cathode. What you do, you put electrolyte in it. With a liquid, you fill the gaps. You could do it with a syringe. That's what we do in the lab, or you do it in automated plant. Basically, it's pretty, I would not say easy, but it's pretty obvious that if you wet all the particles, then the path for lithium is clear. The lithium gets out of the cathode, it gets into the electrolyte, it moves its way through the separator and goes to the anode. When you discharge, you can basically get it back to where it come from. Energy density target, 280 watt hour per kilo, 660. This is advanced lithium-ion.
This is already beyond what we have today. What is a solid state battery? First of all, you can replace the separator by the electrolyte. If you look at the yellow, not the yellow strip, because this is the lithium metal side, the yellow bubbles. This is the solid electrolyte, is that it has a double function. It is the electrical insulator because the role of the separator is to insulate the cathode from the anode to avoid having a short circuit. You do it with this solid electrolyte, the solid electrolyte is also the stuff that transport the lithium ion from the cathode to the anode and vice versa. You see that there are also some yellow dots in the cathode side. Why?
You need not only to transport them through the separator, but you also need to take the lithium ions from each particle of cathode material and bring it to the anode. You need what you call a catholyte and the solid electrolyte. These are both solid electrolyte, but with different characteristics, because one needs to not react with the lithium side, with the anode side. The other one needs to be stable against the cathode material. What are the advantages of the solid battery? I describe what it is. The solid electrolyte is a big enabler because it allows the use of lithium metal as the anode. Lithium metal can be used theoretically in liquid-state batteries, but will create a lot of safety concerns. When you plate lithium, you create dendrites.
The dendrites can pass through the separator, create short-circuit explosion. Not desired. Also, when you plate lithium, you create a very high specific surface, which also creates a safety problem. It has been tried in the past. A company went bankrupt because they could not manage it, and basically, people more or less decide that metallic lithium in liquid electrolyte, better to stay out of that. If you replace the liquid electrolyte by the solid electrolyte, you enable the use of lithium metal, and this also participate a lot into the energy density gain. I described a little bit the way the battery function. There, too, cathode material will be used. A solid battery uses cathode materials, NMC, NCA, LCO, whatever.
You can use many different kind of cathode materials, you still need something that holds the lithium where you can take it out and taking it back in. This is not the plain, normal cathode materials because you need to engineer it so that it does not react with the solid electrolyte. The cathode material of today have been designed to interact with the liquid electrolyte. If you want them to interact with the solid electrolyte, again, you need coatings, you need surface treatment so that you don't destroy the electrolyte because this is a charge cathode material, a delithiated cathode material is a fairly oxidative material and it would try to oxidize whatever it can put its hand on. What is available is the solid electrolyte. A lot of potential for us is we like solid electrolytes.
We will be able to sell more complex cathode material in the future. We are actually doing it. We are working with a number of customers at tuning our cathode materials for them to use in solid systems. Many advantages. I mentioned the safety, temperature stability, high energy density, partly because of the electrolyte, partly because of the lithium metal, easier integration into a pack. You will need to change all the manufacturing systems, there is potential gain in terms of integration. Solid state is on all major OEMs roadmap for quite some time for some of them, very recently for others. The drawbacks are always there. The electrolyte conductivity is a big issue. Making the liquid electrolyte conductive has been done. It's okay. It works.
Even if today you've all experienced that when you go skiing, your phone has less capacity and shuts down faster than when you are in normal day. This is because the conductivity is also proportional to the temperature. Even in a liquid electrolyte, when the temperature goes down, you start to have problems of conductivity. Solid electrolyte make it even worse. Managing the conductivity of the electrolyte is one of the challenges for the solid state battery. The material stability and purity. To avoid all this side reaction, you need very pure and very stable electrolyte. There are the processing issues you will need, basically, to change most of the industry. What could be next on the roadmap? Lithium sulfur, lithium air. The optimistic people will always list the good side of life.
Lithium sulfur has a good gravimetric energy and potentially low cost, it sounds good. Lithium air has a very high theoretical gravimetric and volumetric energy. Lithium air is the favorite of people doing theoretical calculation because until you start to try to make it work, it's perfect. You reach the highest energy density, you need to deal with practicalities like, what do you do with the anode? Because you are using oxygen, but in fact, you produce lithium oxide. Where do you put it? You need a place to put it. What do you do with the CO2 in the air? Because it's a lithium air, but actually lithium oxygen. If you have CO2 in the air, it creates some problem at the battery.
How do you manage the fact that you have something which is very reactive with air, the lithium foil, and you need to separate it? The more you try to get into lithium air, the more the problems you find. We have listed here the problem. Back to lithium sulfur, the very low volumetric energy, which makes it unappealing to say the least for the automotive application. Limited power, limited cycle life. Today, the typical application for lithium sulfur will be drones or things like that, where cycle life is less important and the weight is the most critical thing. For lithium air, low cycle life is also one of the problem, the most fundamental one is that this is today still a proof of concept. Universities, academics are working on it, people that get funding. We are still extremely far from a reality.
We would define that as a technology readiness level 1 or 2. Really ideation level, very far from practical application. Our conclusion is that these technologies are unlikely to play a role in automotive application in the foreseeable future due to their critical limitation. We do benchmarking, we do watch these technologies, we are not actively pursuing them because we believe that there is much more to gain by making the lithium ion better with anode and solid state batteries than venturing into these, besides some niche applications. If I want to conclude, the best way is actually to come back to my graph, which we call the Ragone plot, between volumetric energy density and gravimetric energy density. You see that you can basically go somewhere with the nickel composition.
The silicon-based anode would bring you much higher. You could draw dots between the 90% nickel and the silicon-based anode if you are mixing, basically, the silicon anode with graphite, you can then have a continuous progression, putting every time more and more and more silicon. This is still ongoing. If you go to full solid state, you would go even higher. You also see that the lithium sulfur has practical limitation, and in terms of volumetric energy density is even worse than the current lithium-ion technology. We don't see much future there. There are practical limits for lithium ion in liquid state and practical limits in solid state. When I show this to our scientists, they hate practical limits. They want to go beyond them.
Indeed, if you try to model and to get to the theoretical limit, you could even go a little bit higher for both. The lithium ion could be a little bit higher, the solid state could be a little bit higher than that. Let's keep our feet on the ground. This today, it would already be so good to be at 1,000 watt hour per liter and 500 watt hour per kilo. It would basically nearly double or triple the range of our cars. Okay, changing subject completely. Let's talk about fuel cells. Fuel cell is actually a system where you are using a chemical carrier, hydrogen. Remember the 38,400 kilowatt hour per kilo that you get from hydrogen, you use it not in an internal combustion engine, but to make electricity.
If you put hydrogen and oxygen together, there nothing happens until you get a flame or a spark, it either burns or explodes. If you want to harvest that energy in an internal combustion engine, you will still be stuck with this efficiency problem. If you put some catalyst in it, you can generate electricity directly from this reaction between hydrogen and oxygen, use this electricity in a very efficient way in an electric motor. That's the beauty of the fuel cell system, is that you have a very high energy carrier, the hydrogen, and a very clean use of the energy, which is electric. The key driver there is a catalyst. Pascal would agree with me that we tend to know a number of things about catalysts. We have been working on fuel cell catalysts for close to 30 years.
Also because of our history in automotive catalyst. Fuel cell has seen a number of highs and downs and highs and down, we see the technology becoming really mature today. This can be used. You have cars on the road here in Korea using fuel cell. You can buy it. You can order a fuel cell car, use it every day on your commute. We have a competitive product portfolio with a strong R&D pipeline. We are very well positioned. Our products are on the road in cars that are sold today and are present in most of the development platform of the biggest OEMs. What is the sweet spot for fuel cell cars is that it provides the best of both world. You have zero emission, like a battery electric vehicle. Actually, this is not correct.
Water is produced during the reaction. Besides that, you have zero emission and you have an electric car. You can be in the center of the city, no NOx, nothing. You can have the driving range and the refueling time of an internal combustion engine, because basically what you do is to transfer a fuel from a tank into another tank. It fits very well when you need a lot of energy. When are you needing a lot of energy? Long range, heavy vehicle, large vehicles, trucks come immediately to mind. But it can also be used in cars and provide the kind of range, especially when you have very large cars, which are very difficult to electrify with batteries. Drawbacks, always.
Cost, the platinum use. We need to reduce, and this is something we are used to do, reduce the platinum utilization by catalyst engineering. We managed to disperse the platinum to put very thin surfaces of platinum where you get a lot of activity, but with a very limited amount of platinum, and this is a big cost driver, obviously. Then economy of scale. This is not so much for us, this is more for the automotive industry. A fuel cell car uses, besides the catalyst and the membrane, a lot of parts that are, let's say, known to the automotive industry. Blowers, compressor, pipes, valves, the kind of things that if you produce in large amount, you can basically reduce the price quite substantially. Maybe the biggest drawback is the need for infrastructure programs. You need the hydrogen to be available where you need to refill.
This is one of the beauty of the electric car, is that the electrical network exists. You are never very far away from a plug. Even if there is a need to develop more charging points, typically you need to go a few meters and then you get a power line. It does not cost that much. In case of hydrogen, you need either to transport it by pipeline, by trucks, or produce it on site. There will be a big investment needed. This is a little bit of a chicken and egg problem, is that until the infrastructure is there, people don't buy cars. This is something that can be managed. It will require a bit of government willingness to get there. We really believe that it will serve a part of the need.
It's very coherent with our view that we have a number of technologies. Each technology will find its sweet spot. You will have internal combustion engine, gasoline and diesel. You will have battery vehicles and plug-in vehicles. You will have fuel cell vehicles. They will all find their way in the spectrum. Okay. I'm coming to the end of my talk. With a wrap-up and basically using this picture will sum it all. We are in internal combustion engine with our catalyst technology. We are in plug-in, in hybrid vehicle and plug-in hybrid vehicle with our catalyst technology and with our battery technology. We are in electric cars with our battery technology and in fuel cell with our catalyst technology. It's all about technology. The future of clean mobility is within reach. It's all based on materials and it's all based on technology.
This is our job, to provide the technology to our customers. Thank you for your attention.
Thank you, Denis. We have our Q&A session. Marc and Kurt, can you also join on stage again? You can now raise all the questions that you still had for Kurt and obviously also for Denis.
Need to put it, three, two, one.
Hi. Afternoon, it's Alex from Barclays. You mentioned in the presentation before lunch that, in 2015, you gave some estimates for the total storage capacity for the transport markets that were out by a factor of three or four compared to your latest estimate. Could you just run through the two or three things you think you got wrong in 2015? Indeed, the rest of the world got wrong in 2015 compared to the way that it's materialized. Thanks.
I think the main thing we all got wrong is the fact that there was a strategic uptake of the car OEMs to go into electrification. Most models started from the base assumption that we had to look at, let's say, economic parity. There should be no financial penalty of going to electrification. This is now clearly changing. Secondly, let's not forget that the push in China to go faster to electrification is really very significant. This is almost half of total market.
There is an additional factor, that's diesel again. Please bear in mind that when we spoke in 2015, diesel in Europe was accounting for 50% of new car sales. Today, it's down to I don't know how much. less than 40%, and still going down. You cannot achieve the same CO2 targets with such a reduction in the diesel sales in the mix. That requires then to be compensated by more electrified vehicles. That's having a big impact on the assumptions for the European region and explains part of the acceleration, and that has started to take place after the 2015 presentation. I'd like to add maybe to the first point that you raised, Kurt, that clearly what you see is that a number of car OEMs have today moved from a defensive position
Which is environmental regulations are a constraint, environmental regulations come at a cost, and we need to push back. A number of them have moved away from that to looking at where are the opportunities that are being supported by environmental regulations. Those players that have moved from the defensive position to the opportunistic view, have truly embraced the opportunistic view. Those players are actually accelerating the move to electrification, in a certain number of cases, regardless of the cost per kilowatt hour of the batteries.
Hi, Tom Wrigglesworth from Citi. A follow-on question again from earlier. LG Chem announced that it was going to deeper vertically integrate into cathode materials the other day. Given the complexities that you were talking about between the different levels of the chain of who wants what and the criteria, how do you think over the medium term consolidation will work? Is there a long-term future to have separate cathode material manufacturers from battery manufacturers? Will those two have to consolidate, versus to have a single face to the OEM? Thank you.
To clarify the context, a number of battery manufacturers have produced cathode materials and certain other materials, some of them separators, anodes, et cetera, for more than 20 years. That's been part of their strategy from the onset to master the technological content, and especially the materials content. We presented today why materials were bringing so many properties and functionalities, and how they were bringing these properties and functionalities to the battery. If you want, as a battery cell maker, to optimize the interaction between the different components, you'd better understand how these materials are being made and how they work and how you can tune them to optimize the performance and the interactions. It's been their strategy. You have a number of them. Some of the Korean battery makers, some other battery makers have decided to go down that path from the onset.
However, the limiting factor in that type of strategy is that eventually what they want is the best technologies. They want the best materials. You don't see anywhere a battery cell maker willing to go for 100% captive materials production. Because that means that you cut yourself as a battery maker from third-party developments, from other technologies that may be better than your in-house developments. You don't see that. Typically, they keep a balance with a minority of captive production and a majority of third-party sourcing in order to have access to the best technologies, whoever makes them. We don't see this type of vertical integration going much further than that.
Hi, Ranulf Orr, Redburn. Just could you please elaborate on the anode technology you have in qualification, the timeframe for that? Is it pure silicon or is it doped graphite? Do you need new capital investment for production? How would the economics vary versus cathodes? Thank you.
We are in qualification stage, which means that we are already at pilot and pre-production stage. Because you cannot qualify something that you are not able to produce in larger quantities. This is only the very beginning. We will first go to applications where the battery maker can test the technology before going into something bigger. In terms of adoption in electric vehicle, we are certainly talking about five to 10 years horizon. It's not for tomorrow. It's not trivial, again, to use these technologies.
For the intermediate use in other applications like portables, you're talking probably of a timeframe of 3 to 5 years for market adoption. Only if the cell manufacturers are satisfied with the, I would say, the performance and the durability, they will move to the next stage, which is testing for automotive applications. I'll add to be complete on the capital requirements. They are not so big. They are not comparable. They are not of the same magnitude of what we have for cathode materials. In terms of technology, what we have developed and are producing are composite materials. It's not pure silicon, it's composite materials. Pure silicon comes at too many drawbacks, as Denis indicated earlier, in terms of managing the swelling of the electrode, and that is not something that could be overcome.
Hi, it's Adam from Liberum. I had some questions on the limitations of high nickel. It's a three parter, but it relates to the same theme. First of all, Denis, you talked about the fact that the gas creation
-factor is a limiting issue in terms of the packaging that can be used for high nickel. Rigid formats is what you said was required, rigid small formats. In the portable electronic area for high energy, LCO prevails because of the inability of high nickel to be used in a thin polymer structure. You talked about the fact that you found a solution to the swelling issue, you could limit it to 20%. Do you envisage a scenario longer term where high nickel could displace high cobalt in portable electronics at the high energy stage? That's the first thing. Just on the large formats, high nickel. I wondered if you could just talk about, as you see it, what the limitations are for a cobalt-free, large format battery.
In terms of technology, this is definitely going in the right direction. If we are able to-- we are not suppressing, we are reducing the bulging, there is still some work to be done. Indeed, this opens new perspective, I will need to turn to Kurt to see what is the market position on that. Cobalt has been entrenched in portable electronics for quite some time, because of the specific requirements of portable electronics. It's not going to be an easy path to displace, who knows, maybe a few % of the application, some application can be switched from cobalt. This will ease a little bit the pressure on cobalt.
Adam, the requirements on swelling for portable electronics are, at this moment in time, extremely harsh. I remember a discussion I had during a spec discussion with one of the bigger OEMs, and they were debating amongst themselves about the criticality of the thickness of the paints when they put the unique identification number on the cell. That was, for them, critical. You can imagine that any small swelling issue in a cell is really deadly for a smartphone at this moment in time.
I think you can realize that in a car, you can make a pack that could be a little bit against the volume. When you have a cell phone, it's really a no-go. On the large format question towards zero cobalt, I would need to turn to the material scientist there, really making a product with zero cobalt is extremely difficult because cobalt is the bad behavior of nickel. At least cobalt helps to stabilize the bad behavior of nickel. If you go to zero, then you are left with no support at all, and I believe it's close to unrealistic to go to zero.
Maybe if I can add a small clarification, the product can be made.
It's extremely difficult to be used.
Yeah.
I don't want to give the impression that it's much more difficult to make than very high nickel. It is quasi impossible to use for a battery maker.
Chetan Udeshi, J.P. Morgan. Question, do you have any visibility on what your competitors are doing? You guys are talking about difficulty in reducing or getting to zero cobalt batteries in practical use cases. But just few days ago, Panasonic was talking about it, reducing the use of cobalt to almost zero in near future. Is there a risk that somebody is sort of going ahead of Umicore in the next generation platforms? Or how do you track it, in terms of if there is a way? Second question was more on the catalyst side of things, where it was mentioned in the morning presentation that the number of platforms that will be developed in the future might go down as OEMs try to reduce cost.
Wouldn't that raise the competitive environment in the industry in general that you guys have maybe 30% less platforms to win, essentially everybody's trying to be more aggressive in getting that limited number of platforms?
You take it, I will.
Glad to take the first one. If I would not be knowing what my competitors are doing, then my team is doing a lousy job. Of course, we have an indication and we are one of the contenders for business. We are one company in the race for product development. All I know is that what happens in the meeting room and in the lab is not always publicly shared, and vice versa. I would say development mainstream goes for most companies in the same direction, but that doesn't mean that we all do exactly the same at the same speed.
Maybe I should clarify a little bit my comments on the help that cobalt brings to keep nickel tinned. Definitely, you can synthesize products without any traces of cobalt. It's going to be difficult, it's going to be costly, it's going to be difficult to use. At some point in time, you may wonder, okay, why am I going the last mile just for bragging that I have put all cobalt out of the battery? It can be done. Does it make sense? I'm not sure. Reducing cobalt, going for iron nickel, this makes sense definitely.
Please bear in mind what Denis presented. This is science. It's not numbers that we have estimated. This is the laws of science. Going from 111 to 90% nickel gives you a 17% gain in energy density. The step from 80% to 90% nickel is a few percentage points in terms of energy density and a lot of drawbacks that you have to make up for because you cannot just say, "I'll take the drawbacks." No, you can't. You have to make up for the drawbacks by adding components, adding equipment to control the performance and the durability of the battery, by doping some of the components, et cetera. You're adding costs. At a certain point in time, as Kurt mentioned this morning with the heat map, you move completely out of the sweet spot from a cost point of view. You defeat the purpose.
There is a balance to be found between the different, I would say, performance requirements that a battery has. This doesn't mean necessarily that you will go for the last bit of elimination of cobalt. There are many other levers that can be utilized, as was shown on the packing density, on the anode, in the future by going solid, et cetera, to increase the energy density much more than by removing the last percentage points of that metal. Then, there was a question about the catalyst platforms. I'll take the liberty of answering that question on behalf of Pascal, and then I will see from Pascal's body language whether I've done a good job. The platforms are getting larger and fewer indeed, which means that there is a lot of homework to be done on the technology side to win these platforms.
As was indicated this morning, the platforms are not won with great technologies. They are being won with the best technology only. There is a lot at stake. What you see actually as a result of that is not more price pressure, more competitive pressure on the pricing side, because that doesn't help, because only the best technology wins. What you see is more effort being put on the technology development side and the testing side and the joint development work with the customers to make sure you can come up with the best technologies.
Thank you. Mutlu Gun again, ABN AMRO. A question on your CapEx versus capacity ratio. I think that was broadly stable when you did the various announcements. I think you've said it yourself a few times, that it's a competitive advantage where you stand versus competition. Just wondering how you see that developing in the next, let's say few years, where it could go theoretically. If you can spend some words on that would be nice. Then secondly, with these larger platforms, does it also mean that you have higher synergies between Catalysis and RBM? Because you might be sharing information back and forth between the various teams.
In terms of CapEx density, of course, this is for us something of prime importance, I would say. We make big steps forward. At this moment in time, like I mentioned before, speed and standardization is of strategic importance. Currently, I would prefer a stable line and maybe a slightly higher investment than continuous change, because that's uncontrollable. This being said, the industry is going to grow to that magnitude that we have to improve. There are significant ideas in the pipeline. I do see us improving over time, yes. It is no coincidence that we are opening a new process competence center. One of the goals is actually to find processes that are less CapEx intensive and less OpEx intensive than the existing processes.
We have a competitive advantage, we have a strength, a clear strength in the process know-how for cathode materials, and we want to leverage that, and we want to make this strength even stronger, and increase the process gap with our competitors, clearly. That will have an impact on both the CapEx density in the long run as well as our operating expenses. These are the goals that we are pursuing through these process development programs. On the synergies between Catalysis and RBM, what you describe is the ideal state that we have in mind. It is not reality yet.
Yes, I would expect that in a number of years, and I cannot tell you how many years it will take to get there will be more synergies as far as the interface is concerned with the customers between the catalysis side and the battery material side.
Hi, Geoffrey Haire from UBS. Just a quick question. You said on your bridge of increasing energy density that the silicon anode gives somewhere between a 10%-50% uplift energy density. Why such a wide percentage? Could you give some more detail on what drives that?
The 50% is what is achievable with the composite that would be used as such. Normally, customer would blend the composite with existing graphite. Depending on the blending they do, they can go anywhere from a 10% increase up to the 50% increase. Maybe there is more potential for the future, but we believe that this range is manageable, but it will take time, and they will probably go to 10% first, and then to 20, 30, 40 before going into 50. That's why the range is so large.
The reasons the customers are doing that is to manage the risks, and so they work by smaller increments than what is theoretically possible. That's why some of these new technology introductions take 10+ years, as was mentioned earlier in the day.
The last reason is to keep it compatible with what they have as production technologies. A cell maker does not want to change its mixers, its coating lines because they start to use a couple of percentage silicon. It is really critical.
Hi, Mark Newman from Bernstein. Appreciate all the presentations here today. Very helpful. What would be very interesting for me to learn a little bit more about is, in the move to the higher nickel content cathodes you have talked quite a bit about today. Appreciate a lot of the drawbacks in high nickel content. Some of the pros and cons. What is really the main hindrance in moving to NMC, like a high nickel content earlier? What is the main hindrance? Can you talk about what Umicore is doing to overcome those things? Is it particle size? You talked about the packing and the particle sizes earlier. Is it something around that? Is it something around dopants? Is it around coatings? Is it something like that you haven't really talked about much today?
I guess the reason I am asking that is not just to get an idea about adoption, it is to try to get an idea on, is Umicore going to maintain its lead on high nickel content that it has today? We know that Umicore has great technology for today's NMC due to its process technology advantage. Is that going to be, in your opinion, more for the future chemistry or less, or similar in terms of Umicore's lead? Second question, if I may, a shorter one. Some of the next generation chemistries that you talked about, such as solid state and silicon anodes, is Umicore going to be involved in any of those chemicals? Not talking about fuel cells, I am talking about some of the electrolytes. You mentioned some of the things there. Or are you just talking about collaborating with other partners? Thanks.
You take the first.
I will go for the first one. Yes. First of all, I would like to correct a statement you make. You say a move to higher nickel. I'm not talking about a move to higher nickel. We should talk about the increased use of higher nickel cathode materials. The hindering step today is the application. I mean, we, the industry, does not meet all the customer requirements at battery level or at pack level with high nickel components. This is a fact. It's not because company A or B at a material level is more or less advanced in making these products. It's the application. I'm happy to invite you tomorrow. I will ask my collaborators, I will show you physically what it means to integrate a high nickel component in a polymer cell.
We can together have a look at it, then you can judge yourself. It has nothing to do with us being more or less advanced. Honestly, as a material maker, I don't care whether people want to use NMC 111, 522, 811, 9xx, I don't care. We have the base set of capabilities to develop that, to scale it up. We have the assets, and it's being made today. I want to be very clear about that. Umicore is selling, producing a different set of NMC products today, and whether it's now 10% of that or 20% of that, honestly, again, we don't really care. We are agnostic to that. The most important thing is that the customers know that whatever they need at that moment in time, that they find somebody who has the capabilities to react fast, who's there with big volumes, and who's reliable.
That's the key element today, and I think we are unique in that respect. There are very little companies in the world who can offer this.
On the solid state battery, this is a technology move that is upcoming. The first thing you do when we are faced with a new technology coming in, is that you figure out what it does really mean. We start from the product we know well. The solid state battery will require cathode materials. We are specialized in cathode materials, so let's try to make cathode materials that are compatible with the solid electrolyte. This is always our entry point. Now, when you start to understand what a solid electrolyte is, you might get ideas and say, okay, maybe I should partner with that company. Maybe I have some ideas to make it better. Maybe I can contribute to that, this is way too early to say. At this point in time, we focus on the cathode.
Cathode is what we make. Cathode will be used in solid state batteries. More [inaudible] , but today, cathode.
This being said, if the difference between solid state and liquid state is that the liquid electrolyte in the current generation of battery technologies is organic material, we don't have competencies in organic chemistry that would, I would say, push us or convince us that this is something that Umicore should do and develop these competencies to try to compete there. When you move to solid state, it's a new game. There may be a move away from organic to inorganic materials. Then this is our territory. I would put it in a broader sense than just cathodes. With the move to solid state, the game is open again. Cathodes is a known thing for us, and the rest is a possibility.
That's the difference between the liquid state, where clearly our focus should be on cathode and anodes because the rest is organic and we're not qualified to or not competitive to play there. In solid state, there are more possibilities. It's a door opener.
Hi, it's Scott McLellan from Schroders. I have two questions. First was on customer concentration for your battery materials. Not in terms of the OEMs. I'm assuming you have a diverse range of OEMs you're selling to. It's more the cell OEMs. Whether or not you feel more aligned to one particular cell OEM or whether you're happy with the current diversification of customers that you have at that level. The second question was around investments and cash flow. We spent the whole day talking about the exciting opportunities that you have, haven't really spent a lot of time talking about how much it's going to cost you to get there. Can you give us any numbers or any indication on a CapEx R&D side to help us understand the funding of this growth in each of the individual areas if possible? Thank you.
Let me start with the second one. Clearly, we're going to continue to invest significant amounts of money to grow this business at a very fast pace and faster than anyone else out there in the industry. We have, I would say, a strong balance sheet that allows us to do that. Plus, we have a fairly or a very strong cash flow profile from the other two segments, from the Catalysis and the recycling businesses, that allows us to sustain that investment effort and that kind of investment intensity. More guidance on the CapEx in the longer run than we have given so far is not on the agenda for today. Because we still have some homework to do on what's beyond 2021, what we announced earlier this year, the EUR 660 million investment program, will bring us to the capacity that we need in 2021.
Clearly, our growth doesn't stop there. There is homework being done in order to figure out what's coming next, in order to move us then to 2023, 2025, and beyond that, including then the impact on some process developments that are currently in the pipeline. It's too early to say that. Too early to quantify that, sorry. Suffice to say at this point in time that we will sustain the investment effort because the rewards are definitely justifying that. Do you want to address the customer-
The customer question
concentration or lack thereof?
Of course. Indeed, so far, customers have been concentrated in Asia. Umicore has actually run the last 20 years, always a multi-product, a multi-application, and a multi-customer strategy. In the beginning, that was rather exceptional in an Asian business where there were a lot of one-to-one business relationships. Thanks to this strategy or the strategy has brought us where we are today. This being said, as heading a business, you can or you should always be happy if your team brings additional customers. Of course, these are welcome. At this moment in time, we clearly see from our customer basis, we have a strong shift towards Europe. It's not a coincidence that also our next investment is going to be in Europe. The geographical expansion is, for me, actually more critical than adding an additional customer to the list.
Every customer and all the business is, of course, valued.
If I may add to that is, yes, we're happy with the level of customer diversification and platform diversification we have in the portfolio, satisfied enough to give us comfort about our investment programs. What I would not want to have to do is to decide an investment for one customer or for one platform, even if it's a very large platform. I'm happy we don't have to do that.
Thank you. Charlie Webb from Morgan Stanley. Just maybe one point of qualification or clarification on your qualification processes. Given your wide range of product offerings and the competencies you have in battery materials, are you currently going through the qualification process for high energy or high nickel-based materials with your customers? Is that on the agenda in the qualification process out to 2021? Is that happening right now? Secondly, just on the IP backdrop, you've obviously bought and acquired a number of licenses over the years. How do you see those licenses moving forward? I believe they start to roll off 2021 through to 2024. Are there certain materials within the NMC family that aren't captured in those licenses, or does that cover the whole spectrum?
I guess, just trying to understand your protection from a kind of license standpoint, given you've made decisions to acquire them over the last couple of years.
Let me start with the first question on the qualification programs. At this moment in time, we are running qualification programs covering all products. This may sound as a surprise to you, but even today, we run qualification programs for a product that everybody believes is already gone, NMC 111. There are still platforms open with SOP 2021, 2022, where NMC 111 is seen as a valid candidate. Two years ago, we already started qualifying platforms with really high nickel products. The qualification program, the evolution of chemistries, this is a continuum. This is not something that goes into steps. It depends on what type of platform you're qualifying for, it depends on the customer OEM strategy, and it depends on the readiness of the product for the application. That drives it.
I think, Kurt, the heat maps that you presented this morning, for the four applications, BEV long range, BEV mid-range, PHEV, and buses, is a good guide to what is currently in the qualification pipeline. It covers the whole range, but depends on the application.
It may also happen that customer change mind during qualification, wanting to go for a given nickel rate and then change either down or up during qualification phase, depending on their requirement and the platform requirement.
It's actually standard practice nowadays. For the bigger platforms, there is usually 2 or 3 tracks going in parallel, making to the very last stage of decisions for a technology choice of a platform. The second question on the IP. A bit similar to qualification being a continuum, you have the same on IP. There is, at this moment in time for NMC, really very little patents that are called base patents. And some of these we now own. Apart from that, most of the patenting activity is more improvement patents, really patenting specific performances of products. NMC materials are now long enough available and on the market that it's impossible to still patent compositions. Some of the patents indeed end their lifetime at the beginning of the 2020s.
On the other hand, they will be somehow replaced, or our products will be covered, are covered by most of own IP that we have been generating the last 8 to 10 years. I'm pretty confident, I'm really highly confident that the products we bring to the market are covered with Umicore IP at this moment in time. Now and going forward.
Even better covered because, I would say you can cover with IP the basic chemical composition. It is known. The kind of very specific IP protection that we have now, as Kurt described, the improvement IP, is much finer and much more complicated for anyone to reproduce. It's higher quality. I would even call it a higher quality IP.
Thank you. A question about the battery management system and cooling systems. I think the rate of degradation in the Tesla batteries shows how integral those components can be in managing the battery life versus, with their particularly unstable chemistry they use, when compared to some of the batteries that use higher cobalt content, such as like the Nissan LEAF, for instance. I just wonder, whilst you're spending all this time and effort working on improving the stability of these high nickel chemistries from a material perspective. A competitor of yours might team up with a battery management system provider, cooling system provider, and realize actually the material only needs to be so good if you have the appropriate management systems right around it. Is there a risk there? Do you work with these providers? Thank you.
Improving battery technology is nowadays always a collaborative effort. Times that one material maker, being that cathode or anode, really can do something on their own and make a big step forward on improving the battery, these are over. If we talk about stability, degradation of electrolyte, and leading to indeed reduction of the performance over time, we always talk about the chemical reaction, the chemical interface between cathode and electrolyte. As Denis mentioned, you should see that as a pretty aggressive nickel atom or ion, actually, who wants to eat in the structure of the organics. This is a chemical process, and every chemical process can be speed up with temperature. You cannot stop that. Also, that's continuum. This is one important thing I would like to add, this is a logarithmic relationship, so increasing temperature is dramatically speeding up these chemical reactions.
They are parasitic reactions, we really don't want them. The approach now most system integrators are approaching is to really keep temperature stable. This is something we can handle. We can feed them with the base data, how materials are going to react at these temperatures given within five or 10 degrees, and then they can model how the systems will really survive after eight or 10 years. Like I said, it's a system effort. Are there other companies looking into collaboration with, I mean, people who supply cooling system? Maybe yes, maybe no. I have the feeling that at this moment in time, really system integration is only handled by the car OEMs themselves.
If I may add, what we don't see is, I would say, the concept that, if you can make up for a certain drawback by the management system or whatever, that you would settle for a lower quality product. Every time there is a quality level that is reached, that is taken for granted by the customer basis, you have to build on that. You cannot just decide to arrive at the same level of performance differently is not good enough.
Don't forget that people look for more energy. If you can manage your system better by managing the temperature, you would rather use that to use a more energetic product and get less weight, less volume in your car than just settle for something.
Of less quality
of less quality.
Wim Hoste, KBC Securities again. I have a question on the competitive environment. We know from the CapEx amounts, et cetera, that you shared that you are outpacing the industry growth, but could you maybe elaborate a little bit on the competition? Do you see new players emerging that are gaining credibility with the OEMs, or is it a fairly limited amount of competitors you're facing?
As I have mentioned on previous occasions, for the time being in the automotive application segment, it's a game of a handful of players that are qualified and that are growing at different pace, but growing, I would say, simultaneously. It's a limited number of players, Asian players, Japanese players, Chinese players, some smaller Korean players. Please bear in mind, as I indicated earlier, that some of the battery cell makers have captive production, too, which is not directly competing because they use it for in-house purposes only, so they don't put it on the market. That also is a part of the growth. I would say the landscape has not fundamentally changed over the past three or four years. It's still a handful of players that are qualified today.
Again, like in previous communications, I'm not meaning or pretending that there will not be newcomers to the segment. The only thing that you have to bear in mind is that as the acceleration is taking place now, it's getting somewhat more difficult for new entrants to step into this demanding segment.
Hello again. Again, I really appreciate, really an enlightening presentation. I was just curious if we could take a little sideways step and looking towards 2025. We did this with Catalysis, and I think it would be helpful for us if we touched on it here, just on metrics of growth and margins. The margins have grown a lot here. What kind of a trajectory we have in our minds in the medium term for that. Also on the growth side, I know there's a lot of growth. In one of the charts, there was a huge amount of growth in gigawatt hours. What kind of growth numbers are you looking at in the medium term? Could you just help us with those? Thanks.
It's a little bit premature, I have to say, to start talking about metrics, financial metrics, beyond 2020. As I mentioned, we have a capacity plan in place that brings us to 2021, and the homework has started to figure out what's coming next. As usual, that will be based on what we know, because we have qualified for platforms that go beyond 2021. That will support the next phase. It's too early to translate that into metrics. The only thing that I would like to say today is that there is no way we are going to reduce our ambitions beyond 2020 or 2021. We will seek to grow at least as fast as the market between 2021 and 2025, indeed, based on technology, based on innovation, and based on the competitiveness of our processes.
More, I would say meat and more metrics to quantify that, you have to bear with us. Yeah. We'll take two or three more questions. Possibly from people who have not yet had a chance to raise questions.
Thank you. If you look across the qualification programs that you have right now and the work that you're doing with your customers, do you see any meaningful difference in, I guess, the technology roadmap for the Chinese complex versus the rest of the world in terms of composition, in terms of the anode materials and some of the features that Denis mentioned just now?
I do not really see significant differences regionally. What I do see is capability differences at cell makers or even at car OEMs to integrate different type of cells into a workable system. Some of these companies have 20, 25 years experience in lithium-ion, and you can feel that. The quality of the interactions with some teams are just deeper or of a higher quality, and these teams typically better understand things beyond pure cell design, pure cell chemistry. I think this is an important measure for us to understand what kind of relationship development, relationship we can have with them. Some nuances, yes. Dramatic differences, I wouldn't say so. Again, playing in automotive, you are already at a high level of quality.
If I can add to that, the innovation roadmap that Denis has just shown with the different avenues to increase energy density, including the composition, including the packing density, including the anode materials, including the solid-state, et cetera, that is a Umicore roadmap, and that is very much aligned with the industry roadmaps as well. You see that across the industry, across regions. We are working on the same themes as our customers and the car OEMs indeed, including up to the solid-state batteries. There you don't see major regional differences. This is basically the industry roadmap.
Final question.
Jan Laager.
That's your privilege, Jan, to raise the last question.
Thank you. Jan Laager from Franklin Templeton. I wanted to follow up on the cash flow question. There's an indication of EUR 660 million by 2021 in CapEx that's relatively fixed now. The working capital part of it, I think the indication is about half of that is, let's say EUR 1 billion in total capital. If I recall my recycling days from years back, there was significant amount of variability of working capital depending on what's happening in the revenue side. How variable is working capital within this segment? And if it is variable, how sure are you of sustaining that 15% ROIC in this segment?
There is a degree of variability, that is mostly related to metal prices, to fluctuations in metal prices. The reality is that if we have higher metal prices, we have higher working capital requirements. Not in the recycling business where, as you will recall, we work with negative working capital. In the energy segment, energy and surface technology segment, we have a more conventional situation where indeed, where metal prices go up, we have more working capital requirements. From a profitability point of view, we make up for that through the recycling margins indeed. For Umicore, it is not necessarily affecting the profitability in terms as we measure it in ROIC terms.
Okay, thank you. Mark, you can start now with your closing remarks.
We'll have a chance, at least for those attending physically, the presentation. Today we'll have a chance to continue informal discussions and to address some of your follow-on questions later today. That was quite a bit of substance for the day, I bet, and lots of information to digest. Again, for those attending here in Seoul, there will be a chance to follow up with your additional questions informally. Before we do that, though, I would like to wrap up the day and the presentation part of the day and offer some perspective and concluding remarks. In order to do so, I will reuse a slide from the 2015 Capital Markets Day. Once more, we will reuse a slide. I will reuse a slide, and it is not out of laziness.
Like in the case of Kurt, it's simply because this slide is still very much relevant to show how to visualize our unique position in clean mobility. Unique position in the sense that Umicore, as I mentioned in my introductory remarks as well, is the only company that offers the full spectrum of materials technologies to address the technology needs of cleaner mobility, and the only company that, in addition to that, is offering a closed loop model with recycling capabilities to deal with end-of-life materials coming from these more sophisticated and cleaner drivetrains. It doesn't mean we don't have competition. That's not what we mean by being unique or uniquely positioned. We do have competition. In automotive catalysts, clearly, we have well-established and strong competitors in the segment. We discussed about some of the competitive positions and some of the technology developments in that segment.
Clearly, we have well-established competitors in that segment. Some of them do aspire to become also competitors, do aspire to play in the EV space or in the cathode material space. I would say that today, their focus from a practical point of view is still very much on catalysts, while they are at a relatively early stage in terms of development in cathode materials or in other applications like fuel cells. We also have competition in battery materials. We have just touched on that. It's not changed a lot over the past years, but we have strong and well-established competitors with a long-standing experience in cathode materials, for many of them originating, like Umicore, from the portable electronics segment and having developed over the past 10, 15 or 20 years, significant product and process competencies from the electronics industry, moving then into qualification for automotive side.
Well-established competitive landscape as well. With one exception, I would say all cathode materials competitors in the battery materials space are really focused on cathode materials. The one exception I have in mind is a well-known Japanese company that is also very active in recycling and has also, to a certain extent, very significant closed loop capabilities for some of the battery materials. In the fuel cell space, we also have well-established competitors, less than a handful of them. Two, three good and strong competitors with significant, like in the case of Umicore, development programs to bring very good electro catalysts to the market. One of them being a company specialized in precious metals with no other activities than fuel cells addressing the clean mobility requirements, and another one being a company with a broader, I would say, spectrum of offering.
Again, I'm using this slide to show that the positioning of Umicore is pretty much the same, or assessment of the positioning is the same as it was three years ago when we launched the Horizon 2020 strategy. A unique positioning, which doesn't mean that we don't have competitors. Unique in the sense that we are the only player that has the full spectrum of materials technology offering to support the drive to cleaner mobility in the automotive segment. Why does it matter to have this broad offering and to cover, I would say, all technology developments, all technology avenues in terms of cleaner drivetrains? It matters because when we spoke three years ago, I told you that there was quite a lot of uncertainty about the future engine mix.
It was difficult three years ago to figure out or to make out what the future engine mix, what the future drivetrain mix, I should say, would be. It is still the case today. The engine mix has changed quite a lot since 2015, it's still difficult to make out what it's going to be in the future. We have an idea of the trend, nobody knows today what precisely it will be and in which precise proportions. That's why it really makes a difference in being able to offer the full spectrum of technologies. Also recall having told you a number of years ago, when we started to implement that strategic concept of covering all the bases from a technology point of view, I remember having used the adjective agnostic.
Having said that, the strategic rationale behind this concept was to make Umicore agnostic to the consumer's choice. Indeed, because we didn't know where the engine mix would go, because that depends on consumer's choice eventually. It is still the case today. We still don't know, we still want to be sure that whatever the consumers choose, we have the technology to support our customers. I have to qualify that statement, though, in the sense that we're not agnostic in terms of value. There are certain drivetrains, there are certain technologies, that create more value for Umicore than others. I think this is important for you to appreciate so that you can also understand where our focus is in terms of investment and in terms of development.
The way I'm going to explain the difference in terms of what is creating most value to Umicore, is by using a combination of factors. I've tried to aggregate three factors. One is the revenue potential per car for a materials company like Umicore. Secondly, it's our technology leadership in a given type of technology. Thirdly, it is the market share. It's the combination of these three factors that I have used to characterize what we prefer in terms of value creation. Clearly, what comes out first from that exercise is that what creates most value for Umicore is full electric long-range vehicles. Next to that, or following that, second in order of preference in terms of value creation, is a little bit of the same. That's the mid-range full electric vehicle drivetrains. Following that, would be the plug-in hybrids.
We discussed earlier, the potential of a plug-in hybrid from a catalyst point of view, combined with the battery materials. I would say this creates a fairly compelling equation. This is, in terms of value creation, only second to the full electric drivetrains. Following that will be fuel cells. Typically, fuel cells are working in combination with a small battery. That is helping also the value proposition for Umicore. This is one of the very compelling drivetrain developments for the company. Next, in terms of value preference, will be the gasoline configurations with gasoline particulate filters. Only after that would come the diesel engines, the clean diesel engines, cleaner diesel engines, Euro 6d, for instance.
Again, just to make sure this doesn't get misinterpreted, it doesn't mean that the revenue per car is lower for a diesel Euro 6d than for a gasoline car with a particulate filter. This presentation, this order of preference, takes into account our technology positions and our market shares as well. Last in the order of preference would be the gasoline configurations without the particulate filter. This is, I think, important and an important qualifier to the earlier statements about being agnostic to the consumer's choice. Again, it is agnostic in terms of we cover all the bases. It's not in terms of value creation. In terms of value creation potential, this is the order of preference that clearly plays out most in our favor.
That is why it is so important for Umicore, and also because we don't know what the precise engine mix is going to be in the future. Because we know that there will be a coexistence of different drivetrains, this is why it is important for us to have the versatility and the breadth that I have mentioned before, and that my colleagues have presented in more detail during the day. I've been asked several times over the past few years, whether the catalyst business was close to the tipping point, or how close it was to the tipping point, whether it was making sense to continue to invest in catalysis.
Clearly, I hope that we have convinced you during today's presentations that there is way more value to be captured from the catalyst business in the next 10 years, and that it is not a story of having to make a choice between catalysis or battery materials today. What we want to do is continue to pursue both, continue to develop and grow both, because there is a lot of growth potential in both and not just in the electrified drivetrains, not just in the battery materials part of the business. In both cases, there is significant growth ahead of us. In both cases, it is driven by a combination of innovative technologies and tighter environmental regulations. This is an analogy that will continue to drive the two businesses. The other analogy is that in both cases, the growth is predominantly in China and Europe.
China and Europe are the leading forces from a geographical point of view to cleaner mobility, and that is clearly translated in the market potential and in the value creation potential for Umicore in clean mobility materials. In both cases, this is another analogy, there is a lot of technology and a lot of innovation that is required, and there is a diversity of technologies that are required in order to meet the variety of customer requirements and consumers' requirements in terms of performance, quality, and durability. Last but not least, I would like again to repeat that I'm fairly convinced, I'm really convinced, and I'm confident that Umicore is uniquely positioned to thrive in both areas simultaneously. That's the key messages I hope you will take away.
I cannot impose you to take those away, but if there are key messages that I would love you to take away from today, these are the ones that you see on the slide now. Talking about growth, I would like to close my presentation with one slide that show that there is one area in which the growth in our business is being matched, and that's the growth in your interest in the company. I will go back six years to the Capital Markets Day that we had in Korea, here in Seoul in 2012. We had 20 people attending, both sell side and buy side, and that's not including the Umicore team, I guess. Evelien? No. Okay.
Today, for the Capital Markets Day and tomorrow for the site visits, we have 70 of you, and I would like to thank you very much for having joined the event today here in Seoul. It is really rewarding for the Umicore team to see that increased level of interest from your side. Time has come now to say goodbye and thank the audience that is watching us on the web. Thank you, and of course, if you have follow-on questions, you can address them to our investor relations team. The webcast is thereby closing. Before we finish, and I would like to say one more thing, as I assume that you understand that this event has required quite a lot of preparation.
I would be really happy if you would join me in thanking the Umicore team that has prepared this event. Before you go for the applause, specifically, I would like all of us to thank my fellow presenters, Pascal, Kurt, and Denis. I would like to thank Evelyn, our master of ceremony for the day, and our head of investor relations. Eva, Evelien's colleague in investor relations. We also have Marjolein here in the front, and Ji-Yoon at the back of the room from our communications team, and Hwayeon from our Seoul office, who has actually made all the arrangements so that this event could take place today and tomorrow in Seoul. For them, thank you, and please join me in thanking them. I would also like to thank the Nasdaq team for the wonderful technical support for today's event.