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August 9th Update From Jay Bowman

|Includes:Axion Power International, Inc. (AXPW)

Since many stockholders of Axion Power International (NASDAQ:AXPW) are following the progress of our development work at ePower Engine Systems, I thought a modestly edited version Jay Bowman's most recent shareholder update would be worthwhile.

"We have completed our road testing on the Peterbilt 387 sleeper truck as of last Friday. I will outline our test results below."

Version 3 capabilities:

  • Generator power maximum 150 KW.
  • Battery power 50KW to 110 KW dependent of the state of charge of the battery pack.
  • Top Speed: 70 mph
  • Fuel economy: 8 to 11 mpg.
  • Weight capacity: Up to 73,000 pounds at 58 to 64 mph.
  • Gradeability performance, 1% grade - 62 mph @ 55,000 lb GVW on a 1% grade meets applicable standards.
  • Gradeability performance, 2% grade - 62 mph @ 55,000 lb GVW with a 5 to 8 mph speed loss. This is modestly sub-standard.
  • Gradeability performance, 3% grade - 62 mph @ 55,000 lb GVW with an 8 to 10 mph speed loss. Again, modestly sub-standard.
  • Gradeability performance, 4% grade - 62 mph @ 55,000 lb GVW with a 10 to 12 mph speed loss that meets applicable standards.

Gradeability standards for line haul trucks generally require a tractor to maintain a constant speed on a 2% grade with a one or two gear downshift. Since we use a five speed automatic transmission that was designed for low speed vehicles and urban duty cycles, we don't have enough gearing options to maintain highway speeds on steeper grades because our transmission shifts into fifth gear at 50 mph and from there on it's a brute force battle between gravity and the drive motor. We are confident that our planned integration of a 10 speed long-haul truck transmission resolve our gradeability issues.

Durability:

Most of the components used in our drivetrain meet or exceed line haul truck specifications for durability. That being said, the durability of our integrated system is considered unproven. The batteries are the only truly unproven component in the system. We are currently working with Axion Power to determine a reasonable warranty period for the PbC batteries in our application.

While our drivetrain can operate with GVWs up to 73,000 pounds at speeds of 55 mph to 58 mph, we believe the truck runs best and comes closest to standard line haul truck performance at GVWs of 55,000 pounds or less. Our primary limiting factor is gradeabilty. Our current performance profile is a good fit for companies like FedEx, UPS and many other haulers who cube out before approaching our weight limitations.

Development Status:

Our goal with the Sleeper truck was to meet a set of specifications for line haul sleepers that we received from a major fleet operator. I knew we would probably fall short of meeting all the requirements; but I also knew that any changes we made to the sleeper truck would carry over the day cab since the drivetrains are identical except for component placement. This is why we stopped work on the day cab until we finished tweaking the sleeper truck; I still think this was the correct approach.

Testing is finished on the sleeper truck and our limitations have been documented. We have a drivetrain that should satisfy a very large segment of the day cab market, which includes over a million tractors that rarely exceed a laden weight of 55,000 pounds and get 6 to 7 mpg. Now we are working full time to finish the day cab. We are making good progress and with Cummins' help we now have a 2014 emission compliant engine integrated with our generator, no small accomplishment.

Our plan is to have the day cab finished, tested and ready to show in Detroit in mid September. We have been invited to speak at The Battery Show on September 16th through 18th and will showcasing our tractor in Booth E1150 at the Electric and Hybrid Vehicle Technology Expo. John Petersen will be presenting our technology on the morning of September 17th during the "Business Models and Tecnologies for Transport, Commercial Vehicles, Trucks and Heavy Hybrids" session.

After the show we will begin demonstration and marketing efforts with local freight haulers that operate in our region and can be supported from our base in Florence. I am focusing on several independent FedEx contractors as first customers.

This is the first time we've had a truck that was capable of doing the work fleet operators require. I am excited about this as are Andrew and Mario. We have confirmed this with Charlie our test driver, he agrees that the type of applications I mentioned above, our truck will be a good alternative. He was impressed with the programming changes that we made over the last two weeks on his latest test run. While our tractor can't satisfy the needs of the entire trucking industry, we have a truck that can operate conventionally in a segment of that market while offering comparable performance with better fuel economy, lower emissions and a more enjoyable driver experience. We also have clear paths forward to system enhancements that will lead to heavier hauling capacities as we mature.

Our US patent was issued on July 22, 2014 granting patent protection for the United States, Patent number (US 8,783,396 B2). Due to the issuance time period the United States Patent office granted an additional 553 days of Patent protection. We also have been granted Patent protection in Mexico under Titulo De Patente No. 316373. Our European, Canadian, China and Hong Kong patent applications are still under review.

We are working our way through an engineering application review at Cummins to evaluate the potential advantages of their permanent magnet generator in our application. We have collected and sent drive cycle data for them to review from several trips. Our use of their 2017 EPA compliant engine seems to have generated interest and their support has been steady and available to us. On Friday they asked us to send a complete picture package of their engine and emission system install as well as full truck view pictures for upcoming meetings associated with the engineering review.

Disclosure: The author is long AXPW.

Stocks: AXPW