PSA - 2019 Universal Registration Document

ANALYSIS OF THE BUSINESS AND GROUP OPERATING RESULTS IN 2019 AND OUTLOOK Investment in research & development

OPEN INNOVATION 4.5.3.1. To identify new trends, bring innovative technologiesto market faster and lower its developmentexpenditure,Groupe PSAdraws on an Open Innovationapproach,which brings together a broad range of partnersthat enable it to detect new trends and identify technologicaland scientificbreakthroughs all overthe world: The “individuals” ecosystem, which encompasses the Group’s employees,its customersand users of mobilityin the broad sense, aims to involvecustomersin the innovationprocess,right from the beginning.Thanks to the creation of incubators,689 applications were submitted, 110 incubationswere launched and 25 projects were initiatedby end-2019. The “academic” ecosystemfocuseson scientificpartnershipswith the most advanceduniversitiesand laboratoriesin their respective fields.This scientificnetworkis led by StelLab,in closecollaboration with PSA University.At end-2019, it comprised17 OpenLabsand three academicchairs.As part of this initiative,in 2019 Groupe PSA deepenedits joint-arrangementwith the Universityof Orléans by creating “Expl’O Energetics”, an experimentalplatform to study solutionsfor sustainablemobilityandfutureenergies.TheGroupalso renewedthe AndréCitroënteachingand researchchair, whichwas created in partnershipwith the École Polytechniqueand École PolytechniqueFoundation.In addition, Groupe PSAis a founding memberof the PRAIRIEInstitute,whichwas selectedby the French NationalResearchAgency(ANR)throughthe France3IA requestfor proposalsandinaugurated on2 October2019. R&D BUDGET 4.5.4.1. In 2019, capitalisedR&D investmentand expenditureamountedto €5,909 million(including€901 millionin non-recurring investment), of which€2,359 million for Faurecia,comparedwith€4,721 million in 2018, including€1,313 million for Faurecia,and €4,713 million in 2017. Groupe PSAwill continue its programme to optimise and make more effective its R&D expenses and investments,keeping them within a controlledscope. For further information,please refer to Note 5.3to the 2019ConsolidatedFinancialStatements,Section 5.6 below. Groupe PSA’sR&D fuels the DNA of its five automotivebrands in order to marketever-moreattractivecars. The vehiclesintroduced in 2019 epitomise their distinctive positioning and manifest Groupe PSA’s electrification strategy: Peugeot:new 208 and 2008, available in fully electric versions n (e-208and e-2008),and the 3008Hybrid& Hybrid4,508Hybrid and508SW Hybridplug-in hybrids; Opel: new Corsa,availablein a fully electricversion,the Corsa-e, n andthe OpelGrandland XHybrid4; DS: DS3 Crossback and DS3 Crossback E-Tense and DS7 n CrossbackE-Tense; Citroën: revealof the new Citroën C5 AircrossHybrid SUV. n R&D effectiveness 4.5.4.

The “institutions” ecosystem incorporates ministries, local administrations, the French National Research Agency (ANR), Agency for the Environmentand Energy Management(ADEME), competitiveness clustersand the EuropeanCommission.Underthis ecosystem,Groupe PSA is an activememberof automotive industry competitiveness clusters(MOV’EO, Véhiculedu Futur , ID4car)which foster collaborativeprojects, close relationshipswith SMEs and startups and encourage meetings with new potential partners. In 2019, Groupe PSA tookpartin: 16 projects funded by the European Commission, including n SCOOP and L3PILOT on the connected autonomous vehicle, EU-LIVE on new urban mobility objects, the Thomas, Versatile andScalable projects on the plant ofthe future, andmore; some15 projectssupportedby the Frenchgovernment,mainlyby n the French National Research Agency (ANR), the Public Investment Bank ( Banque publique d’investissement ) and the Agencyfor the Environmentand EnergyManagement(ADEME), including the Blind Spot Monitoring projects on safety and acceptabilityof autonomousdriving and mobility,AutoConduct on the adaptationof the autonomousautomationstrategy for vehicles, QAIcars on air quality in the passengercompartment andthe development of a cutting-edge batterypack. The “business”ecosystem incorporatesSMEs, VSEs, startupsand businessesfrom a variety of industriesinvolved in the innovation process to enhancebusinessagility and help seize new scientific, technologicaland businesses opportunitiesas early as possible. Since 2016, the Business Lab has been the point of entry for start-upsfor allGroupe PSA entities. the main base, in France, is responsiblefor the entire Core n Technology Strategy, programme launchers, “reskins” and derivative body styles and, like all the regions, for local integrationand manufacturing.At end-2019,the workforcein France consisted of 8,850 full-time equivalent employees, basedmostly at the three R&D centres and their testing site: Vélizy/LaFerté-Vidame,Sochaux/Belchamp and Poissy Centre d’Expertise Métiers /Carrières-sous-Poissy, one R&D centre in Rüsselsheim, Germany, tasked with n developing all new Opel/Vauxhall cars, light commercial vehiclesfor all of Groupe PSA’sbrandsbuilt on a specialLCV platform (1) , the new generationof four-cylinderpetrol engines, and leading the 15 competencecentres (expertisefields). The Rüsselsheim Technical Centre had 4,990 employees at end-2019; one R&D centre in Morocco (Casablanca),with 600 full-time n equivalentemployeesat end-December 2019, the “home base” for the development of pick-ups (crucial vehicles in the Africa-MiddleEast region)and responsiblefor “reskins”,updates and standard-lifevehicles and subassemblies,along with local integration andmanufacturing; oneR&Dcentrein China with570 full-timeequivalentemployees n at end-December 2019,responsible for the development of vehicles for the Asian market, adaptation of engines, local integration andmanufacturing; GLOBAL IMPACT OFR&D 4.5.4.2. Groupe PSA’s R&D is globaland structuredaroundfourclusters: an R&Dclusterin Europe: n

LCV: Light Commercial Vehicle. (1)

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GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT