1. © 2012 Eaton Corporation. All rights reserved. Past the Green Image of Hybrids: Finding commercial value. Craig Jacobs Eaton Corporation June 12 th, 2012

2. 2 © 2012 Eaton Corporation. All rights reserved. Eaton Hybrid Electric Power Systems >6000 Eaton Hybrid HEV Systems Sold >300 million accumulated miles  Safe and Reliable Service > 300 MILLION Miles SAFE CUSTOMER EXPERIENCE SALES IN REGIONS: Europe ~300 ASIA ~2,500 UNITS NAFTA ~3,300 UNITS

3. 3 © 2012 Eaton Corporation. All rights reserved. Image & subsidy driven markets are not sustainable. Green Image – Started the industry. Many early adopters – no need for repeat purchases. Subsidies – Bridging the industry to sustainable business. Industry has received subsidies at state, federal, and international level. Some have ended, all will eventually end, but will it be too soon? Acceptable / Excellent ROI? Makes market a sustainable success. What behavior will a 5 year payback drive? 3 years? Less? Not all applications work well for Hybridization. Which forces will accelerate or slow adoption?

4. 4 © 2012 Eaton Corporation. All rights reserved. Getting to acceptable or excellent payback. Challenges OBD – CARB rules may delay / suspend sales into California and other states. Cost of Hybrid technology. Low volume, diverse market & requirements Customers find benefits can be difficult to quantify. Competing technologies. Opportunities EPA GHG credit/de-credit rules may accelerate HEV technology. EPA has provided OBD relief until 2016/2017. OBD will improve CV products just as it did automotive. New battery channels will improve payback. Advancing technology will improve payback.

5. 5 © 2012 Eaton Corporation. All rights reserved. Eaton: Measuring Individual Payback Eaton’s HEV numbers sound great, what about: My Route? My Truck? My Driver? Eaton is using actual data from individual users BEFORE purchase to guide them on what to expect from purchasing a hybrid system.

6. 6 © 2012 Eaton Corporation. All rights reserved. EPA Green House Gas Rule Opportunity? CO2 credits in the EPA rule Part of “Advanced Technologies Credits” program Rewards CO2 reduction due to hybridization Credits get x1.5 multiplier unique to advanced technology Credits are fungible: Transfer anywhere. CO2 credits can be valuable to OEMs. Hybrids generate CO2 credits that can be used on any engine or vehicle This rule will allow selling engines or vehicles under-compliant in 2014/2017, while avoiding the cost full compliance. (As long as they are buying hybrids to offset) PowerPack testing is a simple methodology for getting credits: One hardware configuration certifying multiple trucks using Hardware in Loop Eaton has commissioned a Class 4-6 PowerPack stand and is building class 7-8 stand. Eaton test facility can help you gain certification.

7. 7 © 2012 Eaton Corporation. All rights reserved. What is Eaton doing today? Increased Battery Capacity – For a lower price. Fuel economy gain in motive applications Greater engine-off time for worksite operation Improved hybrid performance Engine off At Stop Functionality across multiple applications 115v Single-Phase Auxiliary Power Generator (5kVA continuous) Underground line truck (step van) Eliminates fueled generators Clean sine wave power Fits in Group 31 12v Battery footprint

8. 8 © 2012 Eaton Corporation. All rights reserved. What else is Eaton doing now? Reduction on aftermarket battery cost within the last year Aftermarket Battery Program(End of Life) 3 Year Warranty New Component – Program launched Q4, 2011 Price - $10.5K / $11.5K ~40% reduction in replacement cost to Fleet Remanufactured Battery Packs 1 Year Warranty (optional 1 Year Extension) Remanufactured batteries Replacement of other failed components on Pack Target Price – $6000 to Fleet Replacement Battery Cost Drives ROI!

9. 9 © 2012 Eaton Corporation. All rights reserved. What is Eaton doing next? Eaton exploring new channels for battery sales and cost models to benefit end users. Eaton is pursuing alternative technologies and systems architecture to dramatically improve ROI. Focus on applications with most potential for being able to take advantage of hybrid power. Eaton expects a game changing cost & payback model with next 2-3 years.

10. 10 © 2012 Eaton Corporation. All rights reserved. EATON: Committed to Hybrid Success. The market hasn’t lived up to expectations of a few years ago: Most of the reports on the hybrid CV market size were overly optimistic. Automotive HEV/EV sales are lower than expected as well. Many smaller companies are filing bankruptcy (or gone). Power management is Eaton’s mission: Eaton is a global technology leader in diversified power management solutions that make electrical, hydraulic and mechanical power operate more efficiently, effectively, safely and sustainably. Eaton is a $16B company that is committed to HEV technology: Eaton has already invested 10 years and $100M in this technology. Eaton believes in the potential of HEV and continues to invest today. Expect to continue seeing more innovative hybrid products from Eaton within the coming years.

11. 11 © 2012 Eaton Corporation. All rights reserved.