The conclusion of the action
Taking into account the positive recommendations received from the feasibility study activities, we are going to continue implementation of the iPHEV project. The company’s shareholders agree with the iPHEV product strategy and business model defined in the business plan.
We have detailed the project objectives and formulated our company’s vision:
• The overall iPHEV business innovation project goal is to develop and deploy in the European market a cutting-edge and cost-efficient iPHEV system for light truck’s electric mobility in short-term, and to find new application for innovation in long-term. This includes the medium truck’s applications to seize market opportunities. For this short-term objective, we will leverage our previous experiences, accumulated knowledge and our partner and client networks by targeting light trucks electrification as a first market segment. The long-term goal is to provide a scalable iPHEV system for expanding application range.
• The Elinta’s Vision 2020 is the European leading company in providing hybrid-electric drivetrains for the light and medium-duty truck fleets in Europe. Therefore, we have to be truck’s retrofitters in the innovation transition period in order to achieve long-term goal.
The concept of our iPHEV drivetrain for heavy vehicles will be a long-term market in the electric mobility trend. This growing sector encompasses a massive number of niche applications of huge economic potential in urban transport, for example, delivery of goods, service transport and construction and demolition traffic, reverse logistics for waste removal and for returns management, service vans, e.g. for maintenance and e-commerce deliveries. The project needs have emerged within the commercial fleets to add new relevant iPHEV functions for the urban and suburban mission such as top speed increased up to 90km/h that enables pure EV to use on highways or fast charging capability. Due to fast charging capability, a majority of users would cover all daily range in the pure electric mode at half of the standard pure electric van price.
In our approach we detailed the key factors for widespread deployment of hybrid vehicles:
• Advances in hybrid technology and production techniques will lead to greater efficiency and will result in lower costs. The increase in production volume will lead to an enhancement in the new economy sector. Business incentive programs can provide funding to cover some portion of the incremental cost to reduce the payback period of the hybrid vehicles.
• Performance and weight, are being aggressively pursued by manufacturers through research and development, which will lead to more hybrid vehicles meeting the performance requirements of trucking fleets.
• Another aspect of a wider hybrid acceptance and applicability is to inform fleet operators of the benefits of current heavy-duty hybrid technology through outreach and training efforts. For example, deployment stages should focus on informing fleet operators of the operational and maintenance savings hybrids can provide through reduced fuel consumption and reduced brake wear. Additional outreach would ensure that fleet operators will have the necessary data to make informed decisions on performance and duty cycles to achieve both operational requirements and attractive payback periods.
• Moving through the nine TRLs can take a significant amount of time and resources. In the technology demonstration/commissioning phase that includes TRLs 7 through 8, we have to begin the iterative process to validate the design, analyze the results, and reconfigure or optimize the design as needed.
• The technology developer needs to enlist the help of a transportation partner to conduct in-service tests on the truck. Updated trucks go back into demonstration and through the cycle until the design meets the performance requirements. Technical difficulties and setbacks are expected during this development phase.
Potential impact of the project:
• Collaborative customers, such as Scandinavian postal couriers, airports and service operators, have referenced their interest in the Elinta’s market focus. The first our market segment is the class N1 delivery and utility trucks up to 3.5t GWV with the intelligent PHEV drivetrains. By the year 2022, we project operating profit of EUR 26 million on iPHEV sales revenue, consisting of almost EUR 84 million.
• We estimate 428,000 annual units in the targeted vehicle markets that are expected to widen to 558,000 annual units by 2022. Our marketing plan reflects 6,000 units in 2022 and this represents around 1.1% share of our served market. The market potential for iPHEV in the Western Europe is about EUR 9.8 billion per year.
• The project will complete the pre-production, testing and installation of the new industry-leading technology. Eight engineering and ten technical work places will be created during the implementation of the project and the company's business plan predicts adding 200 more – highly paid jobs after the successful scaling up of their facility in the high-tech sector. With a high market penetration, the technology could eventually create as many as possible jobs in the EU, including assembly workers, technical and service staff, and sales and administration people.
• Our ‘EV’ business model will reduce capital investment, manufacturing risk, sale and service channel development needs. The implementation of the project of the iPHEV production will require capital investments and development costs of around EUR 7.1 million, which will be financed by external sources (EU funding and venture capital funding). The analysis of the financial model allows making a conclusion that, if the assumptions prove out, the activity of the projected business will be highly profitable with a fast return on investment. The payback time of project investments is 3.4 years.
The need for support:
For the development and full scale demonstration of the innovation project, we seek EUR 2.6 million to construct a demonstration infrastructure on a significant pre-work in our iPHEV system development, promotion and modelling. The technological and commercial risk of the iPHEV project is still very high. The iPHEV project cannot be implemented without the support of the EU funding. EU support brings the amount of aid up to EUR 1.9 million.
We need assistance to find venture capital funding and private investments. In the EU, the levels of venture capital funding and private investment available for Key Enabling Technologies remain comparatively low. The company that has been challenged in the innovation has also better prepared to address market sales and to attract external investment, such as venture capital funding. The ideal for us would be the private investor with long experience and interests in the automotive sector. The investor funding will make up to EUR 5.2 million for financing iPHEV manufacturing plant investments and start-up of the plant costs.
