Since many stockholders of Axion Power International (OTCQB:AXPW) are closely following the progress of our development work at ePower Engine Systems and it's been a month since I offered any insight, I thought a lightly edited version of the update Jay Bowman sent our shareholders last night would be worthwhile.
"We had several meetings at the Mid America Truck Show that took place March 27th through March 29th. We drove the truck down two of the three days without any problems. Everyone that saw the truck was impressed, but we were unable to give many rides due to the parking arrangements at the show. We had meetings with the Cummins Hybrid engineers as well as a great meeting with Eaton in regards to their Ultra Shift automatic transmission. I'm certain being introduced by Cummins helped us with the Eaton representatives. We have contact information from Eaton as well as a clear path forward when we decide to incorporate their transmissions into our drivetrain.
The last three weeks we have been heavily involved collecting data for the Cummins and Marathon engineers. This is in an attempt to solve an efficiency problem in regards to our drivetrain. When we tested on the dynamometer at Cummins their engineers reviewed the data and determined that our drivetrain is only 60% to 66% efficient. A typical automobile is around 80% efficient at delivering its engine power to the rear wheels. The only way to determine where the losses are is through a process of elimination, beginning with the diesel engine, generator, digital voltage regulator, AC drive, electric drive motor and transmission.
This has been very slow going but we are down to the digital voltage regulator programming as the only unknown. We have determined that the speed control on the diesel has been corrected, eliminating this issue. A major source of loss we knew about in the system is running our electric motor out of its torque range; this was done in order to use a stock Allison transmission. We have ordered a custom valve body for our Allison transmission that should allow us to change out our rear end ratios for a more traditional set of ratios. This will allow the operation of our electric drive motor at 1800 rpm, keeping it well within its optimal torque range. I am suspecting and the engineers agree this will up our drivetrain efficiency. Our only unresolved area after these two changes will be the DVR programming. This unit was programmed with sections of ePower operational specific coding and may need to be tweaked to gain some efficiency. We are showing a power factor of .619 during road testing and this number should be closer to .800 for optimal performance. I am hoping the Marathon engineers can resolve this for us shortly.
Our testing lately has been mainly to gather and share data for the various engineers after our initial fuel burn and power tests were completed. This second set of data points will help us determine areas of inefficiency in our drivetrain. This is being done in preparation of exposing our trucks to real world testing in day-to-day fleet operations. We want to be certain all potential customers will be impressed with what we are working on and will be excited to place our trucks into their operations. The delays have been frustrating for all of us but a necessary and a normal part of a new system roll out.
The first week of April we had a meeting in our facility with Jim Smith, our new Axion liaison, John Petersen, our lead investor and myself. Jim had seen the truck at Axion's stockholders meeting but was called away before he could take a ride. Jim has a history in the trucking industry as his family has operated a trucking company for many years. Jim took a ride this time in the truck and was very impressed with the truck's performance. We discussed the relationship between Axion and ePower in depth along with several business related items. I believe Jim will be great person to have working with us at Axion Power. Axion had a press release in late March in regards to our progress; here is the link for those that want to take a look. http://www.onlinetes.com/tes0414-hybrid-engines-trucks-benefits.aspx
A lot of time over the last two weeks has been spent on the day cab design and conversion. Any time that has not been spent out on the road with the sleeper was spent working on the day cab.
Andrew has been busy dealing with corroded and shorted original truck wiring, while Mario fabricates and mounts various system components to the truck. In an attempt to save weight and space on the day cab we have decided to run 48 of the Axion PbC batteries rather than the 56 we have been running in the sleeper truck. This was done with the approval of the Axion engineers and shows their growing confidence of their batteries performance in our system. This change will save an additional 503 lbs of weight and allow for better placement of the emissions control systems. These components have service intervals that are required to maintain emission compliance and must be easily accessible for maintenance.
The following photos show some of our wiring replacement and component fitting work.
If not for the opportunity to have this truck running hub to hub in the FedEx distribution system, it would have been a bad choice for a conversion. The original truck condition has required a lot of time to update and repair. Typically we would not be converting a truck in such bad condition.
We are on the downhill side now and spring has finally arrived!"
Now I'll add a couple clarifying comments of my own.
We think most of our drivetrain inefficiencies arise from running the drive motor at 2,800 rpm instead of its optimal torque band of 1,800 rpm. When we were using the John Deere engine and didn't have ready access to a dynamometer it was easy to blame parasitic loads. So we didn't recognize the issue until we upgraded the engine and didn't get the increased power we expected. Slowing the drive motor into its optimal band, changing the transmission shift points and adjusting the rear-end ratios should resolve the problem, although it will reduce our low speed torque and may reduce our ability to work with loads in the 75,000 to 80,000 pound range.
The most common criticism of our tractor is that the transmission is rough, which isn't surprising when you remember that the Alllison transmission we're currently using is built for garbage trucks. We chose the Allison transmission because it was cheap and readily available, but the shift points are the big reason we had to run the drive motor out of its optimal torque band. Changing the valve bodies should resolve the efficiency issue and allow us to start fleet demonstrations, but we believe we'll want to upgrade to the Eaton Ultra Shift for drivetrains we sell to customers. Our plan is to get the first two tractors on the road with the Allison transmission and then upgrade to Eaton in our third prototype. That strategy will give us the time we need to integrate a new set of electronic transmission controls without putting everything else on hold for several weeks.
Our decision to reduce the number of batteries from 56 to 48 boiled down to an available space issue. The engine we're using on the day cab has Cummins newest emissions control systems and the urea tanks and other hardware require almost as much space as a battery box. Since the day cab is designed for lighter overall loads, Axion is convinced that we'll be able to get the performance we need from a slightly shorter string.
During the development phase we've been quite open about our work because nobody else has an interest in keeping things quiet. We expect that dynamic to change when we start having meetings with fleet owners and negotiating demonstration tests. Potential customers won't want to be identified until they're ready to make a purchase decision and even then they'll want to tightly control the information flow. While we hope some will be willing to share their historical operating data, we know others will only be willing to tell us about the results they got using our hardware. When our business dynamic changes and we start dealing with potential customers or new component vendors who want to keep a tighter lid on the flow of information, we will meet their expectations because the customer and the supplier are always right.
When the work is finished we expect both tractors to offer fuel economy in the 9.0 to 9.4 mpg range because the Cummins diesel only burns 6.8 gallons of fuel per hour. The big question will be the maximum weight we can effectively haul. We remain confident that the most common GCWRs in the 55,000 to 70,000 pound range will not present any big issues but we may not get all the way to 80,000 pounds without losing top-end cruising speed. We should know for sure within a couple weeks.
Disclosure: I am long AXPW.