2015: A Look Ahead

2014 was a phenomenal year for Achates Power.  To support the increased market demand for our technology, as evidenced by a 300% increase in revenue and customer base that grew by 3x, we hired more great new team members and added office space.  Within last year we accumulated more than 1,000 dyno hours of testing, now surpassing 6,000 hours total, and presented our test  results at 11 industry-specific conferences around the globe, including SAE World Congress, SAE Commercial Vehicle Engineering Congress and the International Engine Congress.  We also secured six new U.S. patents and 13 new foreign patents, bringing our patent portfolio to over 1,800 unique innovations, 71 global patents and an additional 103 pending applications.
 
But we’re not stopping, nor slowing down.  We’re accelerating.  We remain steadfast in our goal of bringing to market the world’s most efficient engines, engines  that enable a cost-effective and sustainable future.  As we jump into 2015 we are already continuing to build on our strong growth results from 2014. Just twenty days into the new year and we’ve expanded our customer base by another step and our revenues continue to increase.
 
So why the sudden burst of growth? We’ve reached a tipping point in proving the viability of our engine technology.  With multicylinder results from two different engines that validate our performance and emission predictions that were previously based on single cylinder results, there is no longer any question that our engine technology can meet the most stringent emissions standards while delivering significant fuel economy advantages compared to state of the art conventional engines.  And based on our customers’ plans, we know our engines will reach the market and dramatically change the competitive landscape for vehicle manufacturers.  Each OEM around the globe, then, is considering whether to be among the early adopters or late adopters.  Given the high cost and intense effort required of a new engine program, I can understand why this seems like a difficult decision.  But the asymmetric risk/reward is causing OEM after OEM to embrace our technology sooner rather than later.
 
It takes roughly $10M to create and test a prototype engine of a new design, including the cost to design, analyze, fabricate, build, and test the engine.  For that $10M, an OEM can measure the performance and emissions of an engine based on our technology but specifically designed for their application and their customers. A simplified decision matrix looks like this:
 

Technology Works

Technology Fails

Early Adopter

Gains billions in market cap

Loses $10M

Late Adopter

Threatens viability of company

Avoids loss of $10M

 

In the commercial vehicle space, even a 5% fuel economy advance is a complete game changer – customers will switch suppliers for a fraction of that given the economic value[1].  For passenger vehicles, increasingly stringent MPG and CO2 regulations around the world provide increasing benefits for efficiency-improving technology.

 

In the limit, the viability of an entire company is threatened if they miss an important technology shift.  In the heavy duty truck engine segment alone, two major competitors have exited the market since 2008 because the technical solution to tougher emissions standards did not work as well as their competitors.

 

Engine companies face a constant stream of decisions about which new technologies to embrace and all have asymmetric risk/rewards.  The opposed-piston engine is different in many important respects:

  • The magnitude of the improvement is so large as to represent existential threats to laggards.  An OEM may withstand a 1% fuel economy disadvantage for a period of time, using pricing and other tactics.  But with our OP engine technology, we can offer 20-30% improvements in efficiency, at no extra cost.
  • Evaluation of the technology does not require any research.  We’ve already done the research, over the last 10 years with an investment of $100M.  The technology evaluation requires a straight-forward, time-limited and budget-capped development program.

 

Early embrace of our technology is more than just a financial winner for our customers.  It also helps:

 

  • Reduce our reliance on fossil fuels

 

  • Reduce our production of harmful pollutants (HC, CO, NOx, PM, etc.)

 

  • Reduce our production of greenhouse gases, mainly CO2 but also methane, CFCs, etc.

 

 

As our momentum continues to grow in 2015 it will be increasingly difficult for executives to make the decision to be technology laggards.  This is good for them, good for us, and good for our planet.

 

The time is now, and we are ready. So here’s to 2015 and all the advances to be made!

 

Cheers!

David Johnson

[1]The average heavy duty truck in the U.S. travels 125,000 miles per year and gets around 7 miles per gallon.  Depending on the price of fuel, fuel costs are either the largest or second largest cost for truck operators.

Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedIn

Leave a Reply

Your email address will not be published. Required fields are marked *

*
*
Website