1. CENTRO RICERCHE FIAT This document is property of CRF. It cannot be copied or transmitted to third parties without authorisation Automotive News Europe Congress, Barcelona, 4-6- May 2005 - RINOLFI THE FUTURE OF POWERTRAIN TECHNOLOGY Rinaldo RINOLFI Vice President, CRF - Centro Ricerche Fiat Automotive News Europe Congress Barcelona, 4 – 6 May 2005

2. CENTRO RICERCHE FIAT This document is property of CRF. It cannot be copied or transmitted to third parties without authorisation Automotive News Europe Congress, Barcelona, 4-6- May 2005 - RINOLFI LEARNING FROM THE HISTORY THE ROOTS OF THE FUTURE ARE IN THE PAST  AFTER MORE THAN 100 YEARS OF DEVELOPMENT THE MECHANICAL ENGINE TECHNOLOGIES HAVE REACHED AN ASYMPTOTIC STATE THROUGH A SLOW AND INCREMENTAL EVOLUTION.  DURING THE 70’s, UNDER THE ENVIRONMENTAL LEGISLATION PRESSURE, ELECTRONIC GASOLINE FUEL INJECTION WAS INTRODUCED IN ORDER TO CONTROL MORE PRECISELY THE WIDELY UNKNOWN COMBUSTION PROCESS.  IN THE FOLLOWING DECADES THE ELECTRONIC CONTROL OF COMBUSTION RADICALLY CHANGED THE RULES OF THE GAME, BOTH IN THE ENGINE TECHNOLOGY EVOLUTION AND IN THE MARKET.  TODAY THE ENGINE CAN BE DEFINED AS: “A COMPUTER THAT CONTROLS THE COMBUSTION PROCESS AND DRIVES THE VEHICLES THROUGH A MULTI-CYLINDER ACTUATOR”

3. CENTRO RICERCHE FIAT This document is property of CRF. It cannot be copied or transmitted to third parties without authorisation Automotive News Europe Congress, Barcelona, 4-6- May 2005 - RINOLFI LEARNING FROM THE HISTORY THE COMMON RAIL BREAKTHROUGH CASE STUDY - 1  ENGINE BREAKTHROUGH SYSTEMS ARE CONCEPTUALLY SIMPLE “The best way to inject the fuel is directly out of a fuel line kept under constant pressure” Rudolf Diesel “Die Entstehung des Dieselmotors” - BERLIN 1912  BUT TECHNOLOGICALLY COMPLEX (HIGH TECH ACTUATORS AND COMBUSTION CONTROL) HIGH PRESSURE PUMP EVOLUTION FROM HYDRAULIC SYSTEMS HIGH PRESSURE PUMP EVOLUTION FROM HYDRAULIC SYSTEMS ENGINE CONTROL UNIT EVOLUTION FROM GASOLINE ENGINE CONTROL UNIT EVOLUTION FROM GASOLINE INNOVATIVE INJECTOR WITH HIGH TECH SERVOVALVE INNOVATIVE INJECTOR WITH HIGH TECH SERVOVALVE INNOVATIVE COMBUSTION CONTROL STRATEGIES INNOVATIVE COMBUSTION CONTROL STRATEGIES

4. CENTRO RICERCHE FIAT This document is property of CRF. It cannot be copied or transmitted to third parties without authorisation Automotive News Europe Congress, Barcelona, 4-6- May 2005 - RINOLFI LEARNING FROM THE HISTORY THE COMMON RAIL BREAKTHROUGH CASE STUDY - 2  ENGINE BREAKTHROUGH SYSTEMS BECOME STANDARD IN THE INDUSTRY (MULTIPOINT INJECTION TECHNOLOGY – THREE WAY CATALYST – COMMON RAIL …) WHILE INTERMEDIATE TECHNOLOGIES, AFTER A LOWER PENETRATION, DISAPPEAR  THE PRESSURE OF ENVIRONMENTAL AND FUEL ECONOMY LEGISLATION PERIODICALLY GENERATES A TRANSIENT PHASE OF TECHNOLOGY INSTABILITY DURING WHICH VARIOUS DIFFERENT TECHNOLOGIES APPEAR IN THE SEARCH OF THE NEXT OPTIMAL, STABLE, TECHNOLOGICAL LEVEL DI DIESEL FUEL INJECTION 1980199020002010 MECHANICAL PUMPS ELECTRONIC IN-LINE PUMPS ELECTRONIC ROTARY PUMPS HEUI UNIT INJECTOR COMMON RAIL DIESEL EMISSION TIGHTENING

5. CENTRO RICERCHE FIAT This document is property of CRF. It cannot be copied or transmitted to third parties without authorisation Automotive News Europe Congress, Barcelona, 4-6- May 2005 - RINOLFI DRIVERS OF THE ENGINE TECHNOLOGY IN THE NEXT DECADE (2005 – 2015)  ENVIRONMENTAL REQUIREMENTS  REDUCTION OF DIESEL PARTICULATE AND NO X EMISSIONS DOWN TO THE EURO 4 (2005) GASOLINE LEVELS (“FUEL NEUTRAL EMISSIONS”)  NEED FOR ULTRA-LOW EMISSIONS FOR URBAN VEHICLES IN CRITICAL METROPOLITAN AREAS  FUEL CONSUMPTION AND CO 2 REDUCTION UNDER THE PRESSURE OF BOTH, REGULATION (EUROPEAN CAFE) AND MARKET (FUEL COST)  PERFORMANCE AND DRIVEABILITY IMPROVEMENT (“FUN-TO-DRIVE”)  EMPHASIS ON INCREASE OF DYNAMIC LOW RPM TORQUE RATHER THAN HIGH RPM POWER

6. CENTRO RICERCHE FIAT This document is property of CRF. It cannot be copied or transmitted to third parties without authorisation Automotive News Europe Congress, Barcelona, 4-6- May 2005 - RINOLFI DIESEL TECHNOLOGY EVOLUTION  THE FAST AND INCREASING PENETRATION OF THE COMMON RAIL DIESELS INTO THE PASSENGER CAR MARKET CAN BE EXPLAINED BY:  THEIR SUPERIOR DYNAMIC TORQUE (COMMON RAIL & TURBOCHARGING)  THE FUEL CONSUMPTION (-30%) AND CO 2 (-20%) ADVANTAGE OVER GASOLINE  THE POWER AND TORQUE DENSITY WILL FURTHER INCREASE (UP TO 70kW/l) HOWEVER  THE MAIN TECHNOLOGICAL CHALLENGE IS TO SATISFY FUTURE EMISSION LIMITS: EURO 5 (2010) AND EURO 6 (2015?)  ADOPTING DPF AS A STANDARD (PM)  LEVERAGING ON FURTHER DEVELOPMENT POTENTIAL OF COMMON RAIL (PM & NOx)  DEVELOPING LOW TEMPERATURE COMBUSTION TECHNOLOGY (NOx)

7. CENTRO RICERCHE FIAT This document is property of CRF. It cannot be copied or transmitted to third parties without authorisation Automotive News Europe Congress, Barcelona, 4-6- May 2005 - RINOLFI FURTHER DEVELOPMENT POTENTIAL OF COMMON RAIL NEW HIGH TECH SERVO-ACTUATOR RADICAL SIMPLIFICATION OF THE PRESSURE GENERATING CIRCUIT (BASED ON 10 YEARS OF FIELD EXPERIENCE) NEW 2-WAYS/2-POSITIONS PILOT VALVE:  REDUCED ANCHOR LIFT (<20 µm)  ONE-PART ARMATURE / SHUTTER  HIGH FLOW RATE WITH REDUCED ANCHOR LIFT TDC+60°-60° PILOTPREMAINAFTER COMBUSTION RATE FUELLING POST FROM MULTIPLE INJECTIONS …. ….. TO MODULAR INJECTIONS

8. CENTRO RICERCHE FIAT This document is property of CRF. It cannot be copied or transmitted to third parties without authorisation Automotive News Europe Congress, Barcelona, 4-6- May 2005 - RINOLFI LOW TEMPERATURE COMBUSTION TECHNOLOGY FROM THE CURRENT TECHNOLOGIES … ….. TO LOW PRESSURE EGR & ELECTRONIC VALVE CONTROL TECHNOLOGIES

9. CENTRO RICERCHE FIAT This document is property of CRF. It cannot be copied or transmitted to third parties without authorisation Automotive News Europe Congress, Barcelona, 4-6- May 2005 - RINOLFI THE DIESEL TECHNOLOGY ROAD MAP 0 0.20.5 NO x Emission [g/km] 0 10 20 40 30 Reduction of CO 2 Emission (%) 0.1 0.3 0.4 MULTIPLE INJECTION (DPF) DPF EL. VALVE CONTROL COOLED EGR LOW PRESSURE EGR 2000 Euro 3 Diesel 2005 Euro 4 Diesel / 2010 Euro 6 Diesel REFERENCE Gasoline PFI Euro 4 Diesel DI Present Production Part. < 0.05 Part. < 0.025 Part.<0.005 Euro 5 Diesel 2015 Part.<0.005 IMPROVED EGR COOLER MODULAR INJECTION DPF (ADV. COMBUSTION) ADV. COMBUSTION MODULAR INJECTION

10. CENTRO RICERCHE FIAT This document is property of CRF. It cannot be copied or transmitted to third parties without authorisation Automotive News Europe Congress, Barcelona, 4-6- May 2005 - RINOLFI SPARK IGNITION ENGINE TECHNOLOGY EVOLUTION  THE SPARK IGNITION ENGINE IN EUROPE HAS BEEN MARGINALIZED IN THE UPPER PASSENGER CAR SEGMENT BUT STILL HAS A LARGER SHARE OF THE MEDIUM-LOW SEGMENTS AND MAINTAINS SOME STRATEGIC ADVANTAGES  THE ROBUST AND LOW-LOST EMISSIONS CONTROL TECHNOLOGIES (3-WAY CATALYST)  THE INTRINSIC COST ADVANTAGE OVER DIESEL, WHICH WILL BE FURTHER INCREASED  THE MAIN TECHNOLOGICAL CHALLENGE FOR THE SPARK IGNITION ENGINE IS TO REDUCE DRASTICALLY FUEL CONSUMPTION / CO 2 EMISSIONS AND TO IMPROVE FUN-TO-DRIVE  WITH AN ADD-ON COST EQUAL / LOWER THAN WHAT NECESSARY FOR EMISSIONS CONTROL IN DIESEL ENGINES  WHILE MAINTAINING THE INTRINSIC CHARACTERISTICS OF COMFORT  AND LEVERAGING ON ITS POTENTIAL TO BURN LOW CARBON FUELS SEARCH FOR A FUNDAMENTAL BREAKTHROUGH IN THE SPARK IGNITION ENGINE

11. CENTRO RICERCHE FIAT This document is property of CRF. It cannot be copied or transmitted to third parties without authorisation Automotive News Europe Congress, Barcelona, 4-6- May 2005 - RINOLFI BACK TO BASICS  IN THE DIESEL COMBUSTION PROCESS THE KEY PARAMETER IS FUEL  IN THE SPARK IGNITION COMBUSTION PROCESS THE KEY PARAMETER IS AIR (AND THIS IS THE REASON FOR THE LEAN DIRECT INJECTION TECHNOLOGY FAILURE)  THEREFORE, THE NECESSARY BREAKTHROUGH MUST BE BASED ON THE DYNAMIC AND DIRECT AIR CONTROL, CYLINDER-BY-CYLINDER AND STROKE-BY- STROKE ELECTRONIC INTAKE VALVE CONTROL  IN THE STRIKE BACK, GASOLINE ENGINES SHOULD ADOPT THE STANDARD WEAPON OF THE COMPETITOR TURBOCHARGING AND LOWERED DISPLACEMENT

12. CENTRO RICERCHE FIAT This document is property of CRF. It cannot be copied or transmitted to third parties without authorisation Automotive News Europe Congress, Barcelona, 4-6- May 2005 - RINOLFI THE SPARK IGNITION TECHNOLOGY INSTABILITY 1990200020102020 NATURALLY ASPIRATED MULTIPOINT PORT FUEL INJECTION THROTTLED GDI LEAN TURBOCHARGING CO 2 EMISSION TIGHTENING AND DIESEL FUN-TO-DRIVE COMPETITION CO 2 EMISSION TIGHTENING AND DIESEL FUN-TO-DRIVE COMPETITION GDI STOICHIOMETRIC VARIABLE CAM PHASER SWITCHABLE TAPPETS VALVETRONIC TURBOCHARGED ENGINE WITH ELECTRONIC VALVE CONTROL PFI OR GDI

13. CENTRO RICERCHE FIAT This document is property of CRF. It cannot be copied or transmitted to third parties without authorisation Automotive News Europe Congress, Barcelona, 4-6- May 2005 - RINOLFI ELECTRONIC VALVE CONTROL TECHNOLOGY ELECTRO-MECHANICALELECTRO-HYDRAULIC ELECTRO-MAGNETIC VALVETRONICUNIAIR ( R & D ) IN PRODUCTION SINCE 2001 AND IN EXTENSION TO ALL ENGINES FUEL ECONOMY < 8% SIMULTANEOUS CONTROL OF ALL CYLINDERS SLOW DYNAMIC RESPONSE HIGH COSTS OF MANUFACTURING (TOLERANCES) IN PRODUCTION SINCE 2001 AND IN EXTENSION TO ALL ENGINES FUEL ECONOMY < 8% SIMULTANEOUS CONTROL OF ALL CYLINDERS SLOW DYNAMIC RESPONSE HIGH COSTS OF MANUFACTURING (TOLERANCES) READY FOR INDUSTRIALIZATION FUEL ECONOMY ~ 12% VALVE-BY-VALVE AND CYLINDER- BY-CYLINDER CONTROL FAST DYNAMIC RESPONSE COSTS SIMILAR TO VALVETRONIC READY FOR INDUSTRIALIZATION FUEL ECONOMY ~ 12% VALVE-BY-VALVE AND CYLINDER- BY-CYLINDER CONTROL FAST DYNAMIC RESPONSE COSTS SIMILAR TO VALVETRONIC AFTER YEARS OF R & D STILL PRESENTS PROBLEMS OF NOT EASY SOLUTION: REMARKABLE ELECTRIC POWER REQUIRED NVH – WEAR - RELIABILITY NOT APPLICABLE TO DIESEL VERY HIGH COSTS AFTER YEARS OF R & D STILL PRESENTS PROBLEMS OF NOT EASY SOLUTION: REMARKABLE ELECTRIC POWER REQUIRED NVH – WEAR - RELIABILITY NOT APPLICABLE TO DIESEL VERY HIGH COSTS

14. CENTRO RICERCHE FIAT This document is property of CRF. It cannot be copied or transmitted to third parties without authorisation Automotive News Europe Congress, Barcelona, 4-6- May 2005 - RINOLFI PME CONSUMO[g/kWh] 10 - 15% 1.4TC UNIAIR >10% CONSUMO SPECIFICO 1.8 NA UNIAIR 1.8 NA “THROTTLED” PME CONSUMO[g/kWh] 10 - 15% 1.4TC EVC >10% CONSUMO SPECIFICO 1.8 NA EVC 1.8 NA “THROTTLED” MEAN BMEP IN NEDC = SPECIFIC FUEL CONSUMPTION BMEP “DE-THROTTLING” DYNAMIC AIR CONTROL (TC + VALVES) TO MINIMIZE RESPONSE TIME DURING TRANSIENTS DYNAMIC AIR CONTROL (TC + VALVES) TO MINIMIZE RESPONSE TIME DURING TRANSIENTS DE-THROTTLING AND DOWNSIZING 20 – 25% FUEL ECONOMY INCREASE DE-THROTTLING AND DOWNSIZING 20 – 25% FUEL ECONOMY INCREASE ELECTRONIC VALVE CONTROL “ENABLING TECHNOLOGY” ELECTRONIC VALVE CONTROL “ENABLING TECHNOLOGY” SMALL SIZE TURBOCHARGER STROKE-TO-STROKE AIR CONTROL IMPROVED TRANSIENT RESPONSE SMALL SIZE TURBOCHARGER STROKE-TO-STROKE AIR CONTROL IMPROVED TRANSIENT RESPONSE THE TURBOCHARGED ENGINE WITH ELECTRONIC VALVE CONTROL THE FUEL ECONOMY AND FUN-TO-DRIVE BENEFITS

15. CENTRO RICERCHE FIAT This document is property of CRF. It cannot be copied or transmitted to third parties without authorisation Automotive News Europe Congress, Barcelona, 4-6- May 2005 - RINOLFI

16. CENTRO RICERCHE FIAT This document is property of CRF. It cannot be copied or transmitted to third parties without authorisation Automotive News Europe Congress, Barcelona, 4-6- May 2005 - RINOLFI ULTRA-LOW EMISSION PROPULSION FOR URBAN TRANSPORTATION  AFTER THE FAILURE OF THE CONVENTIONAL ELECTRIC PROPULSION, AND WAITING FOR THE LONG TERM HYDROGEN OPTION, THE SPARK IGNITION NATURAL GAS ENGINE IS THE ONLY REALISTIC AND INDUSTRIALLY AVAILABLE SOLUTION FOR THE URBAN TRANSPORTATION ISSUES  THE TURBOCHARGED SPARK IGNITION ENGINE WITH ELECTRONIC VALVE CONTROL WILL LEVERAGE THE CHARACTERISTICS OF GASEOUS LOW CARBON FUELS (NATURAL GAS  HYDROGEN)  PROPULSION SYSTEM WITH NEAR EZEV EMISSIONS AND ULTRA-LOW CO 2 LEVELS  THE PROGRESSIVE INTRODUCTION OF NATURAL GAS ENRICHED WITH HYDROGEN ON PUBLIC TRANSPORTATION FLEETS REPRESENTS A SAFE AND REALISTIC TRANSITION TO HYDROGEN PROPULSION IN THE LONG TERM

17. CENTRO RICERCHE FIAT This document is property of CRF. It cannot be copied or transmitted to third parties without authorisation Automotive News Europe Congress, Barcelona, 4-6- May 2005 - RINOLFI ALTERNATIVE PROPULSION STATUS  HYBRID PROPULSION SYSTEMS “NOT REALLY CONCEPTUALLY SIMPLE AS A BREAKTHROUGH SHOULD BE”  FUEL CELL PROPULSION SYSTEMS “A LONG LASTING PROMISE WITH FORWARD MOVING PRODUCTION TARGET BELOVED BY POLITICIANS AND NEWSMEN”

18. CENTRO RICERCHE FIAT This document is property of CRF. It cannot be copied or transmitted to third parties without authorisation Automotive News Europe Congress, Barcelona, 4-6- May 2005 - RINOLFI / 50 40 30 20 10 0 60 CO 2 Emission Reduction (%) NO x Emission [g/km] 0.020.04 0.25 0.080 0.06 Gasoline PFI Euro IV NMHC < 0.08 Gasoline PFI EVC NMHC < 0.05 Gasoline PFI  GDI TC - EVC CNG PFI Euro IV NMHC ~ 0.01 CNG PFI EVC NMHC < 0.01 CNG PFI TC - EVC NMHC < 0.01 H 2 -CNG TC - EVC 0.08 Euro 4 Gasoline Euro 4 Diesel 0.25 Euro 6 Diesel MODULAR INJECTION L.P. EGR + EVC + DPF Part. < 0.005 Diesel MULTIJET (+DPF) Part. < 0.025 THE SPARK IGNITION ENGINE TECHNOLOGY ROAD MAP