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TransPower

TransPower

Electric Drive Systems for Class 8 TrucksCompany Overview

16 March 2010 Photo courtesy Navistar

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TransPowerContents

Overview and Product Offering Page 3Market and Competitive Position Page 9Marketing Strategy Page 21Key Personnel & Strategic Partners Page 28Conclusions Page 33

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TransPower

Overview and Product Offering

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TransPowerTransPower Overview

Mission and Strategy

TransPower’s mission is to develop and supply reliable, affordable electric transportation products that offer the greatest possible reductions in:

Global dependence on fossil fuelsAll forms of mobile source emissionsCustomer life-cycle costs

StrategyFocus on heavy-duty vehicles — primarily Class 7 and 8 trucksEmphasize grid-connected battery all-electric propulsionPursue dual business model of aftermarket vehicle conversions and selling integrated drive system “kits” to vehicle manufacturers

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TransPowerThe Ultimate Cleantech Machine

Replaces the Power System on Largest Class 8 Trucks, Weighing up to 80,000 lb.

Main propulsion — power to move the vehicleAll auxiliary power systems — power steering, braking, A/C, etc.

ResultsNo engine or transmission — replaced with single electric motorNo fuel consumption — plug-in to recharge batteriesZero emissionsReduced noiseReduced maintenanceEconomic value proposition for truck owners

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TransPowerMain Components

First Generation Drive System

Main Drive Motor

Manufactured by SiemensHigh power (250 kW cont.)Direct drive (no gearbox)Proven product line (“ELFA”®)

Remote Diagnostic SystemDeveloped by ISETracks vehicle position and

status of key components

Sends data over internet

Inverter PackageManufactured by Siemens4 identical modulesDesigned specifically to work

with Siemens ELFA® motor

Battery SubsystemManufacturer TBDISE has assembly capabilitySelection in 2010-11 based

on performance and pricing

Accessory SubsystemAssembled by ISEElectrically powers steering

and brakingImproves efficiency

Integration KitCradle assemblies and

mounting hardwareWiring harnessesControl algorithmsCustomized for each truck

vehicle modelUpdated as new

technology components are introduced into drive system architecture

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TransPowerTranspower Role

Sustainable Long-Term Business Model

Engineering and Integration ServicesDesign electric drive installations for various truck modelsPerform first-time integration and validationAfter-market conversion of trucks in low to moderate volumes

Drive System Kit SalesManage major component supply chainFabricate custom integration hardwareSell ready-to-install hardware/software “kits” to truck OEMs

Integration Hardware/Software Sales and LicensingSell or license proprietary integration products onlyAllow OEMs to source other components directlyLower revenue but higher margins – “move up value chain”

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TransPowerMotive Drive Subsystem

Typical Installation

Drive Motor

Inverter/Motor Controller Assembly

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TransPower

Market and Competitive Position

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TransPowerElectric Propulsion:

Why Now?

Diesel Era

2000-2009

Advent of Hybrids

2010-2014

Electric Adoption

2015-

ElectricCost-Effective

Immature electric drive technology

Immature control technology

No viable energy storage

technology

Mature electric drive technology

Mature control technology

Limited energy storage technology

Energy storage

technology maturing

Mature, cheaper energy storage

technologyHigher fuel costsTranspower

“EnerLease” option

Pre-2000

Electric trucks are just now becoming possible, and demand for such vehicles will increase dramatically over the next 5 years as

they become more cost-effective

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TransPower

U.S. Hybrid-Electric Vehicle Sales

0

50

100

150

200

250

300

350

400

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Thou

sand

HEV

s

Sierra/Silverado

Lexus HS 250h

Mitsubishi Milan

Ford Fusion

Dodge Durango

Chrysler Aspen

Cadillac Escalade

Chevy Malibu

GMC Yukon

Chevy Tahoe

Saturn Aura

Lexus LS600hL

Saturn Vue

Nissan Altima

Toyota Camry

Lexus GS 450h

Mercury Mariner

Toyota Highlander

Lexus RX400h

Honda Accord

Ford Escape

Honda Civic

Toyota Prius

Honda Insight

www.afdc.energy.gov/afdc/data/

A Decade of GrowthLight-Duty Hybrid Vehicles

Source: U.S. Department of Energy

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TransPowerElectric Truck

Demand Drivers

SimplerFewer parts than diesel or hybrid systemsCheaper and easier to maintain

Less Expensive to OperateEliminates fuel and oil expensesElectricity 2-3x cheaper on a cost/mile basisBrake wear reduced by 75%

Environmental Benefits (Zero Emissions and Less Noise)Enable access to large government subsidies and tax breaksImproved public image and customer acceptance

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TransPower

“Electric drive medium- and heavy-duty trucks, buses, and non-road vehicles can saturate market niches earlier than electric drive passenger vehicles at a much lower level of production (3,000 to 5,000 vehicles per year). With these production volumes, the vehicles battery costs will be reduced significantly. Additionally, with the higher fuel savings of these vehicles they will achieve cost competitiveness with diesel vehicles sooner than in the light duty market.”

Trucks will be Electrified Before Cars

- California Energy Commission, “2010-2011 Investment Plan for the Alternative and Renewable Fuel and Vehicle Technology Program,” February 2010

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TransPowerCost-Effectiveness

The “Battery-Fuel Crossover”

Net Energy Cost/ Savings as a Function of Battery and Fuel Costs

(30,000)

(20,000)

(10,000)

-

10,000

20,000

30,000

$1,00

0/kWh

$900

/kWh

$800

/kWh

$700

/kWh

$600

/kWh

$500

/kWh

$400

/kWh

Battery Pack Cost

Net

Ann

ual C

ost/

(Sav

ings

)

= Fuel Pricegallon/$3.00= Fuel Pricegallon/$4.00= Fuel Pricegallon/$5.00= Fuel Pricegallon/$6.00

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TransPower

“CEC recommends manufacturing incentives of $7.5 million to $10 million…this funding will likely result in 20,000 to 30,000 electric vehicles sold per year within 5 years...At these levels it is expected that battery cost will drop by up to 50% from current market rates.”

Battery Costs are Key

- California Energy Commission, “2010-2011 Investment Plan for the Alternative and Renewable Fuel and Vehicle Technology Program,” February 2010

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TransPower

Fundamental Change in Electric Truck Economics Now: large electric trucks require subsidies to offset higher cost of operating ($20-30K/year relative to diesel trucks)Future: within three years, declining battery costs and rising fuel costs will make electric trucks more cost-effective

TransPower StrategyLeverage public subsidies and tax breaks to build a near term market for its electric drive products and servicesHave a mature, reliable drive system and rapid scale-up capability in place when the battery-fuel crossover occursProvide financing to enable truck owners to pay for higher truck cost out of fuel savings (“Solar City model”)

“Battery-Fuel Crossover”Capitalizing on the Opportunity

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TransPowerCompetition Matrix

Heavy-Duty Vehicle ElectrificationClass 3-6 Trucks(Up to 26,000 lb.)

Class 7-8 Trucks(Over 26,000 lb.)

Hybrid-Electric Drive

Allison TransmissionAzure DynamicsEatonEnova Systems

Allison TransmissionBAE SystemsEatonISEOshkoshUS HybridVision Industries

Battery All-Electric Drive

NavistarSmith Electric Vehicles

Balqon

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TransPowerCompetitive Assessment

Strongest potential competitors are focused elsewhereAllison, BAE, Eaton, and Oshkosh — hybrid focus; too large to adjust quickly to battery all-electricNavistar, Smith Electric — focused on smaller trucks; components are not scalable to most Class 7 or 8 trucks

Competitors with most similar business modelsBalqon and Vision IndustriesBoth have acquired support from LA-area portsNeither has delivered reliable Class 8 vehicles commercially

TransPower strategyAvoid head-to-head competition with big hybrid suppliersFocus on battery-electric propulsion for larger trucksLeapfrog smaller competitors by leveraging experience and proven components of ISE and Siemens

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TransPowerCompetitive Edge

Adapting a Proven Product

TransPower core components are proven in Class 8 useSiemens — motor and inverter components used in thousands of buses and rail vehicles worldwideISE — its transit bus drive systems (using Siemens components and ISE accessories) have accumulated 13 million+ miles

Long Beach TransitGasoline Hybrid Bus

•64 buses in service in Long Beach•More than 250 hybrid buses in service

or on order using same technology

•TransPower trucks to use same core components, greatly reducing risk•ISE and Siemens to provide technical support

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TransPowerSimplicity = Logic

(= Market Acceptance)

Typical Series Hybrid Drive System

Electric Drive System“Simple Simon™”

Drive Motor

Inverters

Motor

Auxiliary

Battery Pack

Accessory Subsystem

Drive Motor

Inverters

Generator

Motor

Auxiliary

Battery Pack

Braking Resistors

Electric Generator

Diesel Engine

Fuel System

Engine Cooling, Exhaust, etc.

Accessory Subsystem

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TransPower

Marketing Strategy

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TransPowerOverview of TransPower

Marketing Strategy

Near Term (2010-2012) Deploy demonstration vehicles, focusing on heavily-subsidized markets (e.g., port trucks) to drive early revenuesMost sales through after-market retrofitsProvide “EnerLease” financing option

Intermediate Term (2013-2015)Branch into other high-end vehicle markets (e.g., refuse collection)Begin selling drive systems to OEMs in the form of “kits”

Longer Term (2016-)For cost-driven OEMs, supply integration IP and let the OEMs drive costs down by sourcing major components themselves

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TransPowerTarget Entry Market

Port DrayageElectric trucks for regional transportation of port containers

Ideal, short-range for electric propulsionLarge enough market to jump-start electric drive businessMarket aggressively seeking cleaner alternatives to diesel trucks

Initial focus on Ports of Los Angeles and Long Beach

Ideal location for initial demonstrationMotivated customers (e.g., TTSI, California Cartage)Numerous regional incentives

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TransPower

Trip Distance(miles each way)

2006 Throughput(Million TEU)

2006 Throughput(Truck Trips)

Near-dock intermodal 5 1.27 710,000

Off-dock intermodal 25-85 1.67 930,000

Transloaded truck to rail 4-25 1.50 840,000

Transloaded truck to truck – short 4-25 1.50 840,000

Transloaded truck to truck – long 25-110 1.50 840,000

Regional shipment by truck Up to 500 miles 4.52 2,500,000

TOTAL 11.96 6,660,000

More than 6 million truck trips/year support LA ports2.4 million trips/year under 50 miles (round trip)3.3 million trips/year under 100 miles

Addressable local population of ~16,000 port trucks

Ports of LA/Long BeachDrayage Market Characteristics

TEU = twenty foot-equivalent unit

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TransPower

Phase 1: Prototype Demonstration (2010-11)Demonstrate two electric drayage trucks in service in 2011Secure ~$2 million in grant funding to augment private investment

Phase 2: Commercialization (2012-)Use successful demonstration to stimulate demand in ports and other marketsTransition from after-market retrofits to selling kits to OEMs as demand increases

Team MembersNavistar: supply truck vehicles, provide initial path to marketSiemens/ISE: supply proven components, integration expertise required for rapid prototyping and perfection of productTTSI: leading drayage firm will operate demonstration trucks, has indicated interest in large subsequent purchases

Ports of LA/Long BeachMarketing Plan

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TransPowerPurchase Analysis

Port Drayage Trucks

Up Front Cost of Electric Trucks Can be Reduced to ~ $150,000Minus charger, comparable to cost of standard diesel trucksLess than cost of equivalent natural gas trucks

Key AssumptionsEnerLease finances 60% of truck capital cost50% subsidy (various sources) through 2014, 35% subsidy 2015-2019In long term, trucks purchased direct from OEM

Cost of Truck & Drive System (excluding batteries)Cost of BatteriesCost of ChargerTotal Truck CostFinanced Portion (60% of truck)Net Cost of Truck and Charger, Pre-SubsidySubsidy (50%-35%-0%)Net Cost of Truck and Charger, Post-Subsidy

(2011-2014) (2015-2020) (After 2020)$265,750.00

$315,700.00($157,850.00)$157,850.00

$334,250.00$330,000.00

$50,000.00$714,250.00

($398,550.00)$150,000.00

$0.00

$247,500.00$30,000.00

$543,250.00($307,950.00)

$150,000.00$20,000.00

$345,000.00($195,000.00)

Cost Component

$150,000.00

Cost of Purchasing Electric TruckNear Term Intermediate Term Long Term

$235,300.00($82,355.00)$152,945.00

$175,000.00

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TransPower

Vehicle TypeAnnual Estimates

Addressable Unit Sales

Potential Revenue – Drive System Kits*

Potential Revenue – TransPower

Integration IP Only†

Port trucks 2,000 $500 million $40 million

Refuse and recycling trucks 10,000 $2.5 billion $200 million

Local delivery trucks 10,000 $2.5 billion $200 million

Tactical military trucks 2,000 $500 million $40 million

Construction and other vehicles 1,000 $250 million $20 million

TOTAL 25,000 $6.25 billion $500 million

Target MarketsU.S. Class 8 Trucking Only

* Assumes long-term average sale price of $250,000 per vehicle† Assumes long-term average sale price of $20,000 per vehicle

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TransPower

Key Personnel & Strategic Partners

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TransPowerTransPower Team

Unique Products and Capabilities

TransPowerCEO Mike Simon built similar company, ISE, from 1995-2005Has focused on electric vehicles since 2005 and development of battery-electric truck strategy since 2007

Key Partner: ISESingle source for major components of first generation systemWill provide engineering supportResults: reduced integration risk, faster time to market in a larger variety of vehicle models

Other PartnersNavistar - major OEM provides credibility and path to marketTTSI - major drayage firm will demonstrate and buy first product

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TransPowerKey Personnel

TransPower Core StaffMike Simon, CEO

Co-founder and Co-CEO of ISE from 1995-2005 (other co-founder was David Mazaika, currently COO of Quantum Technologies)Stanford engineering graduate (M.S.), also worked for 11 years at General Dynamics, 4 years at General AtomicsProduct development visionary - principal catalyst for ISE gasoline hybrid and fuel cell hybrid products

Other Key PersonnelJim Burns, CTO - former Director, Facility for Applied Manufacturing Enterprise (nationally recognized electric vehicle program), San Diego State University;25 years engineering experience Tom Bartley, Manager, Strategic Development - Stanford MSEE, 40 years experience including 8 yrs at ISEChristine Murray, Manager, Software Development - MS in Computer Science, 12 yrs experience including 10 yrs at Hewlett-PackardCuong Huynh, Manager, Marketing/Communications - BS in Aerospace Engineering, 25 yrs experience including 10 yrs at ISE

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TransPowerKey Personnel

TransPower AdvisorsMcKinley Addy – former Project/Program Manager, Advanced Transportation Technologies and Life Cycle Analysis. Principal Author of CA State Alternative Fuels Plan and contributor to the Investment Plan for the State's $1.6 billion Alternative and Renewable Fuel and Vehicle Technology Funding Program

Jayson Cannon – former project manager, ISE; helped lead design and productionization of several hybrid drive and fuel cell vehicle products from 2002-2010; pursuing MBA at UC Berkeley

Joseph Olbermann – former engineering manager, Unique Mobility; extensive background in both electric vehicles and renewable energy; 34 years engineering experience

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TransPowerKey Personnel

Team Members

ISE (personnel actively supporting TransPower)Dr. Paul Scott - Chief Scientific Officer of ISE, 40 yrs experience including 10 years at ISE; leading expert on batteries, hydrogen combustion, fuel cells, and hybrid vehicle integrationDr. Frederick Flett, VP of Engineering at ISE, 30 years experience including 10 years at Siemens VDOAlex Bernasconi – Senior VP of Sales and Marketing at ISE, 30 years experience including 12 years at Freightliner

Other Team MembersVic LaRosa, President, TTSIBob Drabecki, Director, Product Integration and Navistar Electronics Sales Teams, Navistar

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TransPower

Conclusions

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TransPowerTransPower Strategic Plan

Key Features

Partnership Between Government and Private Sector Seeking $5 million in venture capital (signed engagement letter with Bay Capital Partners, CA investment bank, in Feb 2010)Match with $5 million in early customer orders and public grants from 2010 through 2012 (focus on California-based entities)

Perfect and Promote Technology thru Demo VehiclesBuild 5 customer-funded and 2 company funded trucks thru 2012Total of 20 demonstration trucks through 2015Progression: port drayage → refuse collection → local delivery

Dual Business ModelConvert trucks to electric drive on after-market basisSell electric drive kits to truck manufacturers (starting in 2014)

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TransPowerNear Term Focus

Raise $5M in private capital Investor contacts initiated in March 2010Goal is to close on a deal within 6 months (by Sept 30, 2010)

Secure public funding for “ElecTruck” project at ports2 demonstration drayage trucks to be deployed in 2011Will validate first-generation electric drive system and enable commercial orders to followSeeking $2 million in public grants to augment private investment

Continue to build teamInternal engineering, product development, marketing capabilitiesStrengthen relationships with key partners ISE, Navistar, TTSI