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John Petersen
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John Petersen is the executive vice president and chief financial officer of ePower Engine Systems, Inc., a Kentucky-based enterprise that has developed, built and demonstrated an engine-dominant diesel-electric hybrid drivetrain for long-haul heavy trucks that promises fuel savings of 30 to 40... More
My company:
Fefer Petersen & Co.
My blog:
ipo-law.com
  • Excerpts From EPower's January 26th Update 25 comments
    Jan 27, 2014 10:02 AM

    Since many stockholders of Axion Power International (OTCQB:AXPW) are following the progress of development work at ePower Engine Systems, I thought it might be useful to make excerpts from Jay Bowman's bi-monthly update letter available to a broader audience.

    "The weather has not cooperated with our testing program over the last ten days. We have only been able to take the truck out three of the last ten days to gather any meaningful test data. The preliminary results are very encouraging and meeting or beating my expectations. All of the testing to date has been in a bobtail configuration (without a trailer). This is due to the slick roads and continued snowfall. During our first phase of testing we often have to stop along the roadside to check or inspect certain items on the truck. This has been impossible to accomplish with snow covered roads and sub zero temperatures, as many of the components are contained in the under carriage of the truck.

    We have tested the truck on both local roads and at freeway speeds on Interstate 75. The real time fuel burn rates reported by our Engine Control Module, or ECM, at 55 mph, 60 mph and 65 mph was about 2 mpg better than we expected. This came as a surprise because the small John Deere engine we used in the Gen2 prototype worked well at GVWs up to 45,000 pounds so we didn't expect the Cummins 6.7L to make a noticeable difference at lighter weights. It's too early for conclusions, but still encouraging.

    I contacted the Cummins engineers to determine the accuracy of the ECM and their reply was that the readings are very accurate, but the only way to get reportable fuel economy data is with weighed fuel tank testing that complies with SAE protocols. This will be part of our phase 3 testing after power testing is accomplished next week at loaded weights. We will then take the truck to Columbus Ohio where the Cummins engineers will fine-tune our programming to optimize fuel burn rates and power.

    Peterbilt 387 out for preliminary test runs

    While weather conditions have been frustrating, we are making progress on the Day Cab conversion on our off testing days. We have completed designing and fabricating our electric motor mounts and transmission mounts for the Day Cab. This is a new design the makes installation much easier than previous versions. These components are now installed on the Day Cad and next we will begin dry fitting of the diesel and generator components. We have also begun reassembly of the cab itself in preparation for the electronics package installation.


    Day Cab bodywork


    Electric motor & transmission mounted

    We had visitors from the local trade college on Thursday of this week. All were very impressed with the performance of the truck during their demonstration rides. They were very knowledgeable in the area of trucking fleets and diesel engine design and performance. One has been working with companies like UPS in training mechanics in newer truck technologies."

    Disclosure: I am long AXPW.

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Comments (25)
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  • SMaturin
    , contributor
    Comments (2105) | Send Message
     
    Yum. ePower porn!

     

    Nekkid truck with honkin' electric motor!

     

    Wrapped in chains, no less.

     

    Keep it coming, John!
    27 Jan, 10:11 AM Reply Like
  • D. McHattie
    , contributor
    Comments (1826) | Send Message
     
    This is manna from heaven for an information-starved Axionista.

     

    !Vivan los Axionistas!

     

    D
    27 Jan, 10:34 AM Reply Like
  • DRich
    , contributor
    Comments (4429) | Send Message
     
    >JP ... I noticed that ePower was taking the electronics into Cummins to " fine-tune our programming to optimize fuel burn rates and power.". Is that more or less a check on ePower's mod to signal & harness, an OEM reset to proprietary specs or Cummins actually upgrading performance profile characteristics per duty cycle?

     

    I see a lot of these consumer after-market duty cycle tunable modules for diesels for light truck & Class rated. Things, for example, like are available from "Bully Dog". The mention just made me wonder how deep in the weeds ePower had managed to grab the Cummins engineering department. I know if I were them I'd be giddy and maybe even want one of those rigs to play with.
    27 Jan, 10:37 AM Reply Like
  • John Petersen
    , contributor
    Comments (29572) | Send Message
     
    Author’s reply » I'm not entirely clear about what they'll be adjusting, but the engine is currently optimized for a mechanical drivetrain, rather than a generator. So they seem to think there are some additional adjustments that could be beneficial.

     

    I think we've made a good impression on Cummins by avoiding short-cuts and going that extra mile to make sure we do things their way. Most recently, we decided to buy a 2012 engine for the day cab instead of using the 2009 engine we had sitting on the shop floor because it's fully EPA compliant through 2017 and has all their latest and greatest emissions control technology. It would have been quicker, simpler and cheaper to use the 2009 engine, but Cummins really wanted us to use their latest and greatest. So we'll take a little more time and spend a little more money to keep them as engaged and involved as possible.

     

    From our perspective the real prize is OEM certification for their engines and their rare earth permanent magnet generators. Earning trust and confidence is an important part of that process.
    27 Jan, 10:49 AM Reply Like
  • DRich
    , contributor
    Comments (4429) | Send Message
     
    >JP ... I totally agree that OEM cert is worth jumping through hoops for. Just from an engineers viewpoint, i.e. the Cummins folks, a new application for existing equipment is one of the joys in the job.
    27 Jan, 11:15 AM Reply Like
  • 481086
    , contributor
    Comments (3332) | Send Message
     
    John, exciting times I bet there at ePower HQ as the plan triumphantly comes together into corporeal steel. Now that the robust Cummins is in there at last, with headroom plenty and to spare, I'm sure everyone is thrilled to finally put the truck through its paces and really see what it can do. This has got to be the kind of moment these guys live for, and if the truck continues to outperform, well, we can just imagine the love...

     

    three questions:

     

    1) Any chance it's possible to read Jay's letter in its entirety?

     

    2) If and when you do make the switch to the PM generator, what kind of advance or improvement is that likely to bring? Is it lighter, smaller, more efficient, more durable etc?

     

    3) That SAE article I linked to on Class8 hybridization seemed to dismiss serial-hybrid drive outright for highway operation due to efficiency losses in the basic engine-to generator-to motor driveline, which they seem to imply would kill mpg. IIRC it mentioned dual mode hybrid as the preferred solution, ie mechanical drive at highway speeds, electrical at lower. Is there something they are missing there? For instance are you finding that the benefits gained from being able to downsize the engine overwhelm whatever efficiency losses might be incurred at highway speeds vs their favored mechanical driveline at those speeds?

     

    win lose or draw, I really think ePower is doing important work here by blazing the trail so intrepidly...
    27 Jan, 08:02 PM Reply Like
  • John Petersen
    , contributor
    Comments (29572) | Send Message
     
    Author’s reply » 1) I shared as much of Jay's letter as I thought relevant to non-stockholders.

     

    2) Jay's spitball estimate is that the PM generator could add up to 20% to overall efficiency, but I withhold judgment until we know a lot more than we do right now.

     

    3) The studies that dismiss series hybrid drive don't usually consider the benefits of engine downsizing. Going from a 12 to 14 liter power plant to 6.7 liters makes a huge difference.
    27 Jan, 08:26 PM Reply Like
  • 481086
    , contributor
    Comments (3332) | Send Message
     
    Thanks John. All appreciated. The answers are what I suspected, but still good to confirm. 20% though does sound like reason for additional excitement down the road. And as time goes on I imagine perhaps the power electronics and maybe even the motor itself may experience their own incremental improvements. All good stuff, even beyond the big achievement of today...
    27 Jan, 08:41 PM Reply Like
  • DaveT
    , contributor
    Comments (171) | Send Message
     
    jp, "PM generator", maybe I've missed earlier mention of this. Are we talking "Permanent Magnet" here?

     

    Anyone have a link to the best article entitled, say, "Why a PM generator is better" for my education?

     

    20% _overall_ is a huge improvement (an extra 20% fuel saved compared with non-hybrid?), how can the (non-PM) generator be responsible for so much loss for this to be possible, I contemplate....
    28 Jan, 04:25 AM Reply Like
  • John Petersen
    , contributor
    Comments (29572) | Send Message
     
    Author’s reply » Discussing the efficiency differences of permanent magnet generators vs induction generators is out of my depth and I really can't do justice to the topic, but it's my understanding that PM generators and motors are significantly more efficient than their induction counterparts. The 20% spit-ball estimate is simply a comparison between the relative efficiency of the two generators. So if a series hybrid with an induction generator improved fuel economy from 6 mpg to 9 mpg, the addition of a PM generator would theoretically bump it to ~9.6 mpg; e.g. a 20% improvement in the benefit of the electrical system.

     

    The biggest advantage of PM generators is that they're smaller and lighter. The downside is that they're more costly and less tolerant to heat. Until we have the baseline economics of an induction system nailed down, it will be almost impossible to say whether the gains from adding a PM generator will be good or bad for the economics.

     

    Assuming Gen3 works the way we want it to, we will face a series of cost-benefit evaluations over the next few years as we consider component substitutions. While we see many potential paths to improve efficiency, the most we can hope for from any particular change will be a modest boost in overall system performance.
    28 Jan, 06:15 AM Reply Like
  • DaveT
    , contributor
    Comments (171) | Send Message
     
    Morning jp, thanks for the clarification.
    28 Jan, 07:30 AM Reply Like
  • SMaturin
    , contributor
    Comments (2105) | Send Message
     
    Here is a brief overview about PM motors and generators:

     

    http://bit.ly/1jDZ7Zk
    28 Jan, 07:37 AM Reply Like
  • John Petersen
    , contributor
    Comments (29572) | Send Message
     
    Author’s reply » DaveT> It's amazing how quickly expectations can ramp from reasonable to absurd. So I figure wet blanket responses are just part of the job description.
    28 Jan, 07:49 AM Reply Like
  • Bylo-
    , contributor
    Comments (389) | Send Message
     
    As the word slowly spreads!

     

    Good job, thanks John.
    27 Jan, 10:40 AM Reply Like
  • greentongue
    , contributor
    Comments (753) | Send Message
     
    Geometric or logarithmic progression is possible when the right people get the word.
    "One has been working with companies like UPS in training mechanics in newer truck technologies."
    27 Jan, 01:27 PM Reply Like
  • iindelco
    , contributor
    Comments (8852) | Send Message
     
    John, Thank you ever so much for the sharing of your teams progress on such an exciting program. An openness that is rather unusual in the motive power industry. All the stake holders and auxiliary interested followers are truly advantaged by your addition to the team given the way you share your efforts and enthusiasm in your interests. You have to be one happy guy being a component of such a talented team. I have no doubt you'll make your mark.
    27 Jan, 10:58 AM Reply Like
  • John Petersen
    , contributor
    Comments (29572) | Send Message
     
    Author’s reply » I have doubts out the wazoo because of all the unknowns and uncertainties, but I'm confident that my team will do everything in its power to resolve those issues one step at a time. In the final analysis, it's all up to the battery.
    27 Jan, 11:03 AM Reply Like
  • LabTech
    , contributor
    Comments (1781) | Send Message
     
    John,
    Thanks to you and Jay for going the extra mile to give us an update. Though it was more expensive, I think ePower was wise to go with the new Cummins engine. It will be easier to show potential customers what is possible when you aren't using a motor that may not meet their EPA needs in the future. IMHO
    27 Jan, 11:05 AM Reply Like
  • H. T. Love
    , contributor
    Comments (17304) | Send Message
     
    "2 mpg better than ... expected".

     

    That's fantastic. After Cummins does their thing, a 2.2 mpg wouldn't be a surprise. Possibly a bit more is in their too.

     

    Doesn't sound like much, but multiplied by the annual miles driven it saves some real gallons of diesel.

     

    Thanks for keeping us informed as possible John!

     

    HardToLove
    27 Jan, 11:57 AM Reply Like
  • ARGE
    , contributor
    Comments (730) | Send Message
     
    Thanks,
    where is the GW when you need it...stinken' weather.
    27 Jan, 05:25 PM Reply Like
  • Dick Phillips
    , contributor
    Comments (90) | Send Message
     
    Are we hopefully about finished seeing so many new shares of AXPW being dumped on the market by the pipe loan people? Does that end in Feb? Maybe we will soon see the share price start to return to a new normal that is higher than it has been.
    27 Jan, 06:57 PM Reply Like
  • John Petersen
    , contributor
    Comments (29572) | Send Message
     
    Author’s reply » As far as I know January was the last month with a million dollar pre-installment share issuance. With the new arrangement, the amount will drop to a maximum of $625,000 for two months and then $375,000 for two more months. If there were more early conversions that we don't know about, the monthly obligations could be lower. The dismal pricing of the last few months is, in my estimation, purely a function of too much supply for the existing demand. When you cut supply by 30% to 40%, the price should see buy-side pull taking control from what has been supply-side push.

     

    In any event I'm in for the ride. I devoted too many years to the PbC to walk out in the middle of the big show.
    27 Jan, 07:19 PM Reply Like
  • AlbertinBermuda
    , contributor
    Comments (696) | Send Message
     
    JP
    You for sure but a lot of us relative newcommers too!
    27 Jan, 09:15 PM Reply Like
  • JamesBBecker
    , contributor
    Comments (177) | Send Message
     
    The discussion about ePower is certainly fascinating. I hope they succeed in a big way.
    Still, I wonder how big of an impact they will have on Axion in the medium term. ePower claims to use 56 batteries, which sound like something in the $20k - $25k range. Though I guess I don't know how many KWH that is.
    Assuming ePower builds 10 trucks this year on the their ramp to real production, that is about $250k for Axion. A nice proof of the technology, but still only 2% of last year's revenue - according to the financials here: http://bit.ly/1dVneut
    Not sure how much of that current revenue is legacy products and how much PcB, but it still doesn't look that substantial. Assuming the truck is successful, though - it might create a path to profitability in 2015 for Axion.
    1 Feb, 09:02 PM Reply Like
  • John Petersen
    , contributor
    Comments (29572) | Send Message
     
    Author’s reply » My goal with ePower for this year is to build a fleet of 10 company owned demonstrators and begin building a reservation book of fleet operators who have tested a tractor for a couple weeks and like the performance well enough to step up to the plate with an order.

     

    Basically, I want to build a back order book the same way Elon Musk did. If ePower can build a back order book of 50 or 100 trucks this year, that becomes a $1 to $2 million back order book for Axion. If ePower can demonstrate a credible path to meaningful market penetration in the 400,000 unit per year Class 8 overhaul market, It will be demonstrating an Axion path at the same time.

     

    The new Eaton hybrid drivetrain for medium duty trucks sold 6,000 units in the first three years. If we can match that record, Axion's three year revenue from ePower would be $120 million. At this point it's all about establishing a credible path.

     

    While most of Axion's customers want to keep things triple secret, ePower needs press and lots of it if we hope to achieve our goals. The same is true for our initial customers who are just itching for a chance to wear an economically compelling green armband.
    1 Feb, 09:19 PM Reply Like
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