ePower engine systems confidential investor document
1. This document is the property of ePower engine systems llc and is confidential. Reproduction or release
of this document or any of its contents is not permitted without written consent of the company.
Investor Contact:
Andy Claypole
Tel: 412 225 7969
ePower Engine Systems LLC
PO Box 225
Leetsdale, PA 15056
2. Company Background
Confidential 1
•Established to develop and market a
highly fuel efficient engine system for
Class 8 heavy trucks
•Hybrid series diesel electric technology
•System development has focused on
retrofit market opportunities initially,
leading to OEM sales later
3. Target Vehicle Classification
Confidential
Light Duty
Medium
Duty
Heavy Duty
Class 1
0-6,000 lb
Class 4
14,001-16,000 lb
Class 7
26,001-33,000 lb
Class 2
6,001-10,000 lb
Class 5
16,001-19,500 lb
Class 8
33,001-150,000 lb
Class 3
10,001-14,000 lb
Class 6
19,501-26,000 lb
Class 8 Heavy Duty Trucks are the largest and most ubiquitous in the
logistics chain for moving goods in the U.S. and Europe. In 2007 Class 8
trucks in the U.S. drove 128.4 Billion Miles for an average of 45,000 Miles
and consumed $2.46 Billion in diesel fuel.
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4. Addressable Market Size
Confidential
Total Market Size (USA) : 2.7 Million Vehicles
Age of Vehicles 0-16 Years
Average Age : 7-8 years
0-5 Years
845,000 vehicles
6-11 Years
1,010,000 vehicles
12-16 Years
845,000 vehicles
Probably too young
for conversion.
Original drive train
still under warranty.
Conversion can be
made but not likely
until older fleet
vehicles have been
converted.
Probably too old for
conversion. Payback
on investment would
start to look
questionable.
Conversion can be
made but not likely
until younger fleet
vehicles have been
converted.
Sweet spot. Original
drive train out of
warranty - lots of life
still left in the
vehicle.
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5. Problem Statement
Confidential
- U.S. Transportation System: Nearly 70% of freight is moved by truck in the U.S.
resulting in $660.3 Billion in revenue for the trucking industry in 2008.
- Class 8 Heavy Duty Trucks are the largest and most ubiquitous in the logistics
chain for moving goods in the U.S. and Europe. In 2007 Class 8 trucks in the
U.S. drove 128.4 Billion miles for an average of 45,000 miles and consumed
$2.46 Billion in diesel fuel.
- As a percentage of trucks in the U.S. Transportation System, Class 8 vehicles
represent only 2.7% but consume 21.6% of the total fuel used.
- Records by the U.S. DOT show that for the past forty years beginning in 1970
the average fuel economy for the Class 8 truck segment was 4.8 mpg.
- Diesel fuel costs of Class 8 Heavy Duty Trucks are rising at 3-7% per year and
are now 30-50% of the operating costs of truck fleets in the U.S. and Europe.
- Class 8 trucks are ranked 2nd behind air transportation in terms of CO2
emissions (117 grams per ton mile).
- The leading global Class 8 OEMs have indicated as recently as 2010 that their
target for fuel efficiency increase utilizing improvements in a wide range
of components besides the drivetrain is 8-9 mpg by 2020.
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6. Government Response
Confidential
President Obama Announces First Ever Savings
Standard for Heavy-Duty Trucks, Buses
August 9, 2011. Washington D.C. - Under the comprehensive new national
program, trucks and buses built in 2014 through 2018 will reduce oil consumption
by a projected 530 million barrels and greenhouse gas (GHG) pollution by
approximately 270 million metric tons. Like the Administration’s historic car
standards, this program – which relies heavily on off-the-shelf technologies – was
developed in coordination with truck and engine manufacturers, fleet owners, the
State of California, environmental groups and other stakeholders. By the 2018
model year, the program is expected to achieve significant savings relative to
current levels, across vehicle types. Certain combination tractors – commonly
known as big-rigs or semi-trucks – will be required to achieve up to approximately
20 percent reduction in fuel consumption and greenhouse gas emissions by model
year 2018, saving up to 4 gallons of fuel for every 100 miles travelled.
Standard Goal – Class 8 Trucks
(Estimated)
2011 mpg 2018 mpg
5.2 6.8
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7. DoE Super Truck Program
Confidential
Program Launched in 2010 with $115.0 million in Funding
Goals:
-By 2015, improve heavy truck fuel economy (engine thermal efficiency) by 20% with
demonstration in commercial vehicle platforms.
- By 2018, improve heavy truck fuel economy by 30% compared to 2009 baseline.
Participants:
Cummins Inc. (Columbus, Indiana) - Develop and demonstrate a highly efficient and clean
diesel engine, an advanced waste heat recovery system, an aerodynamic Peterbilt tractor
and trailer combination, and a fuel cell auxiliary power unit to reduce engine idling. Focus
is on engine efficiency. Funding Amount: $38.8 million
Daimler Trucks North America, LLC (Portland, Oregon) - Develop and demonstrate
technologies including engine downsizing, electrification of auxiliary systems such as oil
and water pumps, waste heat recovery, improved aerodynamics and hybridization.
Focus is on hybridization. Funding Amount: $39.5 million
Navistar, Inc. (Fort Wayne, Indiana) - Develop and demonstrate technologies to improve
truck-trailer aerodynamics, combustion efficiency, waste heat recovery, hybridization,
idle reduction, and reduced rolling resistance tires. Focus is on aerodynamics. Funding Amount:
$37.3 million
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8. U.S. EPA and NHSTA
Confidential
U.S. EPA and NHSTA Standards for Medium and
Heavy-Duty Trucks: 2017
Source: NHTSA
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9. ePower Response
Confidential
50-65% Reduction in Fuel Use
0
3
6
9
12
15MilesperGallon
Current
Average
DoE Target
‘Supertruck’
ePower
System
5.2mpg 10.4mpg
100% improvement
30% incremental cost
11,538 46,152
Gallons saved
per year per
vehicle*
$ saved per
year per
vehicle*
* Assumes 120,000 miles per year and diesel at $4.00 / gallon
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10. Primary Driver
0
1.00
2.00
3.00
4.00
5.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Diesel Fuel Price & ePower Savings
$/Gallon
ePower annual savings at $2.50 per gallon:
$30,000
Payback time : approx. 24 months
ePower annual savings at $4 per gallon:
$45,000
Payback time : approx. 18 months
Source : EIA United States Energy Administration
Savings based on 120,00 miles per year, 5.5mpg average fuel consumption conventional drive train
Does not include subsidies which may be available at Federal and State level
Confidential 9
11. Cost / Benefit Illustration
Confidential
System
Cost
Year 1
Savings
Year 2
Savings
Year 3
Savings
Year 4
Savings
Year 5
Savings
$000’s
0
150
Breakeven
Does not include subsidies which may be available at Federal and State level
Assumes 120,000 miles per year and diesel at $4.00 / gallon
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12. Concept Inspiration
Confidential
ePower Engine System’s Hybrid System Drive Unit: Concept Inspiration
Comes from the Current State-of-the-Art Diesel Electric Locomotive
Drive System
Diesel electric hybrid locomotive
technology has enabled the
Railway Transportation Industry to
increase freight rail fuel efficiency
104 percent since 1980. In 2009,
railroads generated 67 percent
more ton-miles than in 1980,
while using 18 percent less fuel.
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13. I.P. Development
Confidential
ePower’s Core Proprietary Technology value proposition revolves around the way it
uses relatively low-cost off-the-shelf components to control the amount and delivery
of the electricity from the AC generator to and from the electric motor and, when
needed, the charging of and flow of electricity from the battery pack to the electric
motor.
• IP strategy is to protect its system design, component interaction and component
integration.
• Initial prior art search undertaken 1st half 2009, patent memorandum and invention
disclosures developed.
• ePower engaged patent attorneys Pietragallo Gordon Alfano Bosick & Respanti, LLP in
September 2009 to undertake a full review of prior art relating to diesel electric series
hybrid propulsion systems.
• Pietragallo issue favorable patentability opinion, October 2009.
• Provisional Patent Application No. 61/297,094 filed January 2010 covering 15 initial
claims.
• Patent assigned by Mr. Jay Bowman to ePower in 2010.
• Conversion to a conventional patent application, along with concomitant international
patent filings was completed in January 2011.
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14. I.P. Development
Confidential
Integration Delivers a System that is Greater than the Sum of its Parts
With Deep Intellectual Property and Patent Pending Protection Throughout
Diesel Engine &
AC Generator
Power
Electronics
Shifting &
Control Unit
Electric
Motor
Battery & Management
System
ePower
Drive
Unit
ePower has 27 Pending Patent Claims
•Instant peak torque
•AC induction motor
•No rare earth metals
•High efficiency
•High durability
•Lead acid technology
•Rapid pulse charging
•State of Charge
active management
•Active temp. control
•Small, efficient unit
•Active AC power
management
•Ability to provide
external power while
not moving
•Unique integration of
AC and DC power
•Power management/
direction software
•‘Driving experience’
fully programable
•Trade secrets
•Electronic
selection forward/
reverse
•Dynamic braking
functionality
•Electronic jake
brake
Comprehensive, Proprietary Technology
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15. Vehicle Conversion
Confidential
ePower Generation 2.0 Commercial Prototype Drive Unit:
2005 Peterbilt 387 Conversion
Peterbilt 387 Preparation
Vehicle’s Standard Engine and
Transmission Removed
Diesel Engine & AC Generator Set
Ready to be Installed
Battery boxes ready for
installation
Drive Unit Installed and Truck
Ready for Delivery
Electric Drive Motor
Being Installed
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16. Converted Vehicle
Confidential
Converted Peterbilt 387: Exterior and Interior View,
Truck Specifications, Demo Video
Demo Video: http://www.youtube.com/watch?v=DeU9CB68K-M
Exterior View Interior View
Truck Specifications and Operation: Compared to a standard Peterbilt 387 with a
485 hp. diesel engine and 10 speed transmission the converted vehicle has an
ePower drive unit with a 197 hp diesel engine, AC generator and electric drive motor
with a transmission range of forward, neutral and reverse (control box is now
located where the standard gearshift used to be in the truck cabin). While operating
a standard Peterbilt 387 requires a driver to start the vehicle and shift several times
to reach optimum highway speed the same vehicle retrofitted with the ePower drive
unit requires the driver to just start the vehicle and shift it once into drive to reach
optimum highway speed.
Control
Box
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17. Mid-America Truck Show
Confidential
First Public Display of ePower Retrofitted Peterbilt 387
March 31 – April 1, 2011
Mid-America Truck Show
* 1,000 Visitors
* 78 Requests for more
information from
controlling 7,000 vehicles
* High degree of
international interest from
all regions (Americas,
Europe, Asia Pacific)
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19. Global Market Opportunity
Confidential
All regions globally facing issues related to:
Reducing oil consumption
Developed economies at plateau while developing economies grow at very rapid
rate.
China now # 2 in terms of consumption, but per capita is only 1/10th of USA.
Reducing CO2 emissions
Major concern for all governments, particularly strong focus in Europe.
Economic impact of rising fuel prices
Savings achievable in USA are high, however USA has relatively low fuel costs
compared to ie. Europe at 2-2.5x cost per gallon.
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