Lester Erlston · Wed, 03/09/2011 - 16:33
Business
Business Overview:
KersTech is developing a high-efficiency, economical hybrid system to retrofit fleets of existing frequent start/stop heavy trucks & buses. The patent pending TorqPak hybrid drive and controller technology offers non-invasive installation, significant fuel consumption and emissions reduction, quicker paybacks and higher ROI. The 1 Million-plus urban-use heavy vehicles are an initial $40B US market. KersTech’s capital efficient business model outsources production to established US suppliers, with direct sales to fleets having their own installation facilities.
Project Type:
Industry:
What are your future milestones, and how much capital will you need to achieve each of the milestones outlined?:
Year 1: $800K in 2 tranches of $300K and $500K:
1st $300K will deliver in 6 months: First fully functional “Generation l” prototype installed on Class 7 or 8 truck, with basic operational and fuel consumption testing. This round offers reduced funding demand and will provide investor and customer confidence in the KersTech technology for the transition to the next $500K round.
2nd $500K will deliver, in following 6 months: Extensive performance and safety testing of the first prototype, and further development, refinement and computer simulation for the design of the Gen. II prototype. Business Development in areas of arranging fleet customer test partners for Year 2 testing, cultivation of investors, customers and suppliers, organizing facilities, recruiting for Year 2 operation.
Further Funding - $3.3 M: Additional investor/debt funding totaling $3.3 Million over Years 2, 3 and 4 is needed to achieve the projected sales and profits.
What is your total and operating cash burn (the amount you're spending) per month? :
$50 - $80K/month post-close
How many future rounds of financing do you project? :
Two further rounds of $1,2M and $2.2M. in Years 2 through 4.
Services Desired:
Accounting
Legal-Corporate
Human Capital/Recruiting
Distribution/Sales
Marketing
Who is the Customer?:
US fleets of frequent start/stop heavy vehicles. The existing 60K city buses, 300K school buses, 150K waste trucks, 250K military vehicles and over 500K delivery, beverage and utility trucks are an initial addressable $40B market. Projected sales for Years 3 through 5 are 3,600 retrofit units shipped, totaling $146M.
What is the Customer Pain that you are solving?:
Class 6, 7 & 8 heavy vehicle fleet budgets are squeezed by rising fuel costs and decreasing revenues. They operate many long lived, expensive non-hybrid vehicles, and new OEM hybrid vehicles have a high cost premium and very long paybacks, often exceeding the vehicle's operating life.
What is the Target Market?:
City buses: TriMet, King County Metro; School buses: Beaverton School District; Refuse trucks: CleanScapes, Waste Management; Beverage trucks: Cola, Ber; Military vehicles: US Army; OEMs: PACCAR (Peterbilt, Kenworth), Daimler Trucks.
How big is the Target Market in terms of Annual Sales?:
$200M-$500M
Sales/Marketing Strategy:
KersTech will initially sell direct to Class 6, 7 & 8 truck and bus fleet operators having their own service facilities, provide installation training and establish support centers. Pricing structure will allow for distributor sales to smaller fleets and for sale via OEM dealerships to existing vehicle owners. Potential customer engagement and response is very positive, and KersTech will use these relationships to build product confidence with collaborative prototype development and testing programs.
Competition:
No competitors have been identified for a universal bolt-on, non-invasive hybrid retrofit for Class 7 & 8 trucks and buses. There are four potential competitors that are developing conventional hydraulic-motor systems for specific refuse trucks, none of which use large diameter motors. Currently no competitive retrofit systems for rear-engine buses due to drivetrain and chassis space constraints.
One-line Pitch:
The KersTech hybrid system minimizes the impact of rising fuel costs. KersTech will make high-efficiency, cost-effective hybrid systems to retrofit heavy trucks and buses to significantly reduce fuel consumption and exhaust emissions.
Business Model:
KersTech will make high-efficiency, cost-effective hybrid systems to retrofit America’s fleets of heavy vehicles to significantly reduce fuel consumption and emissions. KersTech will do system design, R&D, testing and assembly in-house, outsource component and subsystem engineering & manufacture. Primary focus is retrofit sales to fleets having their own installation facilities. Future sales via distributors & OEMs.
Product/Services Overview (what does it do):
The KersTech retrofit can provide hybrid performance and benefits for a fraction of the cost a comparable new hybrid vehicle, offering quicker paybacks and attractive ROI.
Advantages:
• Large diameter, high efficiency, high torque motors in limited chassis and driveline space.
• Offers hybrid performance at significantly lower cost than new OE hybrid vehicles.
• Enables hybrid conversion of rear-engine city and school buses.
• Uses proven technologies and materials for durability, reliability and safety.
Benefits:
• Can significantly reduce fuel consumption and exhaust emissions (Estimated 20% to 35%)
• Can significantly reduce brake pad/lining wear (Estimated 40% plus)
• Offers early 4 to 6 years payback (depending on annual mileage & fuel price in 2014+)
Technology
What makes the technology/business unique and have a defendable competitive advantage?:
KersTech’s hybrid drive uses Large Diameter, Flat Format (LDFF) high torque electric or hydraulic motors combined with a 90º gearbox to retrofit in limited chassis & driveline space. The patent pending LDFF motor and 90º gearbox architecture is unique in automotive applications and enabling greater torque and higher effiency than traditional motor configurations. Energy regeneration recharges energy storage during braking/slowing. The system, designed to install in 1 to 2 work shifts, provides hybrid performance and savings for a fraction of the cost of a new OEM hybrid vehicle, offering affordable fuel consumption & emissions reduction, quicker paybacks and higher ROI.
Describe in detail the technology used in the Project - Address the innovation in significant detail :
KersTech’s design enables non-invasive retrofit installation due to it’s integrated LDFF motor and 90° gearbox configuration and autonomous hybrid control system. LDFF motors provide superior torque and efficiency over traditional motor architectures. KersTech’s motor, gearbox, hybrid controller and energy storage system components are based on proven production designs. KersTech’s combined motor and gearbox technology makes hybrid retrofits to rear-engine city and school buses possible.
Patent Numbers (Filed/Approved):
Kinetic Energy Recovery and Electric Drive for Vehicles
PCT/US 08/87726
Team
| Name | Title |
|---|---|
| Lester Erlston | CEO |
| Michael Miles, PE | CTO |
David McFeeters-Krone
John Beaulieu
Charles Beck
Mike McBride
Steve Tetrault
Current Investors:
Champion Technologies, Inc.
Financials
Amount Sought:
$800,000 If raising funds, what shall the funds be used for?:
First $300K (for 1st 6 months) for prototype design, fabrication and preliminary operational testing. Next $500K (for next 6 months) for business development, extensive prototype testing and refinement leading to 2nd generation prototype design and development.
Pre-Money Valuation:
$2,500,000
Funding Received to Date:
$100,000
Amount invested by Founders:
$75,000
Funding Stage:
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