Scenario Analysis of the Corporate andIndividual Auto Leasing Business

All Rights Reserved, Copyright © Tokyo Century Corporation1Scenario Analysis Details (by Process)
Risk Severity Assessment
Risks and Opportunities in the Automobility Business (corporate and individual auto leasing)
Only items assessed and identified as having a significant impact on business are shown below.
Expected Impact on Business

Items (Risks andOpportunities)

Risks

Opportunities

National carbon • Number of domestic vehicles could decrease due to theintroduction of a carbon tax, travel restrictions underemissions targets
energy conservation regulations, and promotion ofand policies
alternative transportation modes
Energy saving• Further shift to EVs may result in lower-priced used
policygasoline and diesel vehicles

Changes incustomer
behavior

Products andservices• Regulations and subsidies could encourage replacementwith newer vehicles and increase demand for new vehicle
leases• Demand for used EVs may increase and prices for used
EVs may rise after lease expires• Increased environmental awareness among customers
may reduce demand for gasoline and diesel vehicles• Increased environmental awareness among customers
could strengthen demand for EV leasing• Widespread use of EVs, which have fewer parts thangasoline and diesel vehicles, may reduce maintenancerevenues• Shift to EVs could generate new earnings opportunities,
such as recharging services and businesses for second-life
EV batteries• Earnings opportunities could increase by handling diverse
vehicles such as battery-replaceable EVs or thosepowered by either fuel cells or hydrogen engines• Heavy rainfall and flooding may cause vehicle production
Intensified
delays and damage leased vehiclesextreme weather

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2—FOR DISCUSSION ONLYScenario Group Definition
Data from the “Survey on Tax Revenue Simulation, etc. Concerning the Automobile-Related Taxation System” (March2021)*1 and the Global EV Outlook 2021*2 report were used as parameters to calculate business impact in thescenario. analysis.

Climate Change Scenarios

4°C Scenario

1.5°C Scenario

Sources of data used forimpact calculations“Survey on Tax Revenue Simulation, etc.
Concerning the Automobile-RelatedTaxation System”

Global EV Outlook 2021

Scenario world view
(Image of future society)

Leasing demand for vehicles withemission reduction features, including
higher fuel efficiency, gradually grows

Tighter regulations and more subsidies on
GHG emissions boost both the number ofEVs leased and the demand for EV
peripheral services

Main parameters• Number of vehicles owned in Japan (2040)• Percentage of EVs in new vehicle sales (2040), etc.

*1 A research report prepared by the Tokyo Metropolitan Government as a reference for planning future automobile-related taxation
systems, including simulated future trends in automobile-related tax revenues.
*2 An International Energy Agency report that provides policymakers with the latest trends in global electric mobility as well as otherinformation related to the creation of a policy framework for promoting EVs.

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3FOR DISCUSSION ONLYWorld Views of the 4°C Scenario

Leasing demand for vehicles with emission reduction features, including higher fuel efficiency, graduallygrows.
Some manufacturers develop and produce EVs.
Little progress in developing new regulations
and tightening those already extant.

Subsidies for theintroduction of EVs remain
at the current level
Buyers of usedvehicles in Japan
Sell or dispose ofGovernment

Vehicle production
delayed due toextreme weather events

Buyers of usedvehicles overseas
No change in sales ofused vehicles toforeign countries

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No change in demand
for used vehicles, sosales profits anddisposal costs also
remain unchanged

Vehicles gradually replaced
by EVs based on years of use

EV production anddevelopment promoted bysome manufacturers

4Auto manufacturers

Infrastructure such ascharging stations notadequately developed

FOR DISCUSSION ONLYWorld Views of the 1.5°C Scenario

Tighter regulations and more subsidies on GHG emissions boost both the number of EVs leased and thedemand for EV peripheral services.
Carbon taxes and emissions
trading introduced

More use of
second-lifebatteries

Subsidies for EVs increase

Government
Sell or dispose ofBuyers of used
vehicles in Japan

Battery exchange
locations

Used EV market expands

Battery-replaceable
EVs become more
popularDemand declines for used gasoline
vehicles, leading to an increase inthe number of scrapped vehicles
and a drop in sales prices

Shift to EVs continues withassociated decline in therevenue from maintenanceservices

Buyers of usedvehicles overseas

HH Development of EVs,Overseas EV market expands, anddemand for used gasoline vehicles
decreases

All Rights Reserved, Copyright © Tokyo Century Corporationfuel cell vehicles, andhydrogen engine
vehicles advances

5Charging Service

Auto manufacturers

Development ofinfrastructure such as
charging and hydrogenstations advances

FOR DISCUSSION ONLYBusiness Impact Assessment
In order to evaluate the impact of climate change on the Automobility Business (corporate and individual auto leasing), the impact onoperating income in 2040 was calculated using data from the Tokyo Metropolitan Government’s “Tax Revenue Simulation and OtherStudies on Automobile-Related Taxation Systems” (equivalent to the 4°C scenario) and the IEA’s Global EV Outlook 2021 report (equivalentto the 1.5°C scenario). Operating income before the 2040 scenario projection was estimated based on the growth rate of operating incomein the current business plan and by considering the government policy of banning the sale of gasoline and diesel vehicles by 2035.

4°C Scenario
Insurance coverage limits the impact of flood damage to leased vehicles from intensified natural disasters, and the impact of vehicle
procurement delays due to supply chain disruptions is expected to be minor. On the other hand, the operating income of theAutomobility Business (corporate and individual auto leasing) is expected to increase slightly from before the scenario projection
because the ownership ratio of gasoline and diesel vehicles with higher maintenance revenues than EVs will slightly increase.

1.5°C Scenario
Operating income in the Automobility Business (corporate and individual auto leasing) after the projected scenario is expected to belower than that before the projected scenario, mainly due to a decrease in the ownership ratio of gasoline and diesel vehicles with higher
maintenance revenues compared to EVs. However, profit is expected to remain at a reasonable level through aggressive efforts in new
businesses, such as recharging services and businesses for second-life batteries, in line with the shift to EVs.

The scenario analysis results show that the impact of climate change on the Automobility Business (corporate andindividual auto leasing) will be limited. Drawing from these results, we will continue to pursue sustainable growth bystrengthening our resilience to climate change and leveraging business opportunities.

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6FOR DISCUSSION ONLYDefinition of Countermeasures
Given the results of analysis for our corporate and individual auto leasing business, we will pursue the following initiatives(countermeasures).
IssuesMajor Ongoing Initiatives (as of January 2023)

Initiatives (Countermeasures) forFuture Consideration

Shift to EVs

 Promote the introduction of EVs to customers, such as by providing EVs to the NTT Group,
which has declared EV100
 Propose BCP measures to use EVs as emergency power sources in the event of a naturaldisaster Accumulate know-how on EV leasing by starting to handle EV taxis, EV buses, and electric
micro-mobility
 Strengthen the value chain to provide EV-related services• Form a capital and business alliance with MIRAI-LABO Co., Ltd. (battery evaluation andreuse)• Form a capital and business alliance with PLUGO Inc. (recharging services)• Form a business alliance with Yanekara Co., Ltd. (energy management services)• Form a business alliance with The Kansai Electric Power Co., Inc. (stationary storage batterybusiness) Provide EV package services such as EV body and charging management for municipalities incooperation with the NTT Group Provide a support program for companies considering the introduction of EVs, in cooperationwith Tokyo Gas Co., Ltd.
 Raise funds through the Sustainability Linked Loan Strengthen the value chain to launch
new EV-related services for corporateand individual customers
 Establish an appropriate maintenancesystem for EVs
 Expand the use of preferential interest
rates for procuring EVs through theissuance of green bonds

 Set the residual values after considering fluctuations in the price for used gasoline and diesel
vehicles and the diversifying of prospective buyers
 Explore new businesses such as EV battery reuse Strengthen the monitoring ofchanges in the used vehicle market
for gasoline, diesel, and electricvehicles and set appropriate residual
valuesSale of assets

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7FOR DISCUSSION ONLY