Over the past hour we have shared information about the market and hardware trends

we will see in the next 5 years. However we would not be fully addressing future trends
if we did not discuss all the news that has come out in the past year regarding dramatic
actions to reduce CO2 generation and pollution. Many statements regarding
electrification have been made by OEMs around the world and also a number of
positioning statements by countries and cities regarding the banning of ICEs at some
point in the future. All of these statements contribute to a wide variety of views of the
future of the lubes market in 2030 – 2040 and we’d like to share our vision of the
future.

© 2018 Infineum International Limited. All rights reserved 1

 Over the past hour we have shared information about the market and hardware trends
we will see in the next 5 years. However we would not be fully addressing future trends
if we did not discuss all the news that has come out in the past year regarding dramatic
actions to reduce CO2 generation and pollution. Many statements regarding
electrification have been made by OEMs around the world and also a number of
positioning statements by countries and cities regarding the banning of ICEs at some
point in the future. All of these statements contribute to a wide variety of views of the
future of the lubes market in 2030 – 2040 and we’d like to share our vision of the
future.

© 2018 Infineum International Limited. All rights reserved 2

 Over the past hour we have shared information about the market and hardware trends
we will see in the next 5 years. However we would not be fully addressing future trends
if we did not discuss all the news that has come out in the past year regarding dramatic
actions to reduce CO2 generation and pollution. Many statements regarding
electrification have been made by OEMs around the world and also a number of
positioning statements by countries and cities regarding the banning of ICEs at some
point in the future. All of these statements contribute to a wide variety of views of the
future of the lubes market in 2030 – 2040 and we’d like to share our vision of the
future.

© 2018 Infineum International Limited. All rights reserved 3

 Electrification is the long term direction for transportation propulsion systems but the
technical and practical challenges vary by vehicle type and these will control the rate of
adoption. Motor cycles for basic transportation are electrifying now with low power
requirements and limited range demands facilitating this move. Passenger cars have
seen limited electrification to date but this will change going forward. Hybridization
presents the lowest technical and economical challenges and will likely be the dominant
electric propulsion source in the near and medium term. HD vehicles are facing greater
challenges with freight capacity concerns, battery charge times and charging
infrastructure needing to be overcome to allow electrification of the long haul hardware.
Finally shipping will be the last to experience electrification with the obvious challenges
of power requirement and infrastructure. When we think about the pace of
electrification we will face, we’re drawn to simple lawn mowers, that face few
challenges for electrification but are still struggling to make the transition. As was
discussed earlier in Trends, the large base of existing ICE based vehicles will also
influence the impact of electrification on the lubes market.

© 2018 Infineum International Limited. All rights reserved 4

 A number of factors will shape the future lubes demand over the next 20-25 years. The
global vehicle population will grow as the middle class grows, as personal mobility
increases and as the volume of freight grow with global GDP. Increasing oil drain
intervals will drive lubes demand down Penetration of battery electric vehicles will drive
lubes demand down. However this broad mix of drivers, combined with the pace of
Technology innovation and advancement, societal changes, and government mandates,
leads to a highly uncertain future. Therefore any strategic planning and longer term
assessment of the Lubes market must rely on evaluation against potential scenarios
rather than betting on a single future state. Infineum is considering 3 scenarios in our
strategic planning. 4 Degrees of Global Warming by end of century, which represented
current policies and practices carried forward. 2 Degrees of Global Warming by end of
century, which represents a plausible outcome achievable with current technologies.
Below 2 Degrees Scenario (1.7 degrees), which represents a stretch case with very
aggressive social and technological advancements

© 2018 Infineum International Limited. All rights reserved 5

 As you would expect, the degree of uncertainty increases as we move further out in
time and IAH modelling the outcomes of the potential scenarios shows significant
difference in Road Transportation fuel demand by 2040. Signposts are needed to
evaluate current and near term events to give indications of which scenario may be
playing out. While the Fuel demand projections are shown in the plot, our modelling
showed that in each scenario, peak fuel demand preceded peak lubricant demand by at
least 5 year, due primarily to the significant penetration of hybrid technology. Certainly a
slowing of fuel demand growth can serve as a key signpost as we go forward. In all
scenarios, rapid and potentially disruptive changes in a number of areas impacting our
business will bring significant technical and marketplace challenges to the lubricant
market . However these challenges will also provide significant opportunities for
innovation and value creation for those who are ready to meet the challenges.

© 2018 Infineum International Limited. All rights reserved 6

 Chis Locke, Infineum Executive Vice President of Marketing and Technology provides his
thoughts.
Chis Locke: “Infineum has invested significant time and effort in assessing the long term
future of the lubricant and fuels businesses. It would be very easy when reading the
external press to believe that the entire value chain associated with the internal
combustion engine is about to collapse, but we do not believe this to be true. The large
currently installed capacity, the expansion of global demand for personal transportation,
the emergence and expansion of technologies such as hybridisation which will extend
the lifetime of the ICE, and the infrastructure challenges associated with fully electric
powertrains will all drive this towards a multi decade evolutionary change as opposed to
a sudden discontinuity. In this world, lubricants will continue to play a critical role, both
in maximising the efficiency and durability of current hardware but also enabling ever
more environmentally sustainable powertrain developments. We are entering a time of
dynamic and unprecedented change for our industry, with many challenges to be faced
and overcome – both technical and perception. However, all industries must evolve to
both survive and thrive, and personally I am excited by the possibilities that the future
brings ; as the world diversifies its powertrain mix to make personal transportation ever
more sustainable, I am convinced many opportunities will exist for those who identify
and meet the emerging needs.”

© 2018 Infineum International Limited. All rights reserved 7

© 2018 Infineum International Limited. All rights reserved 8