Commercial Milestones and Market Opportunity

In February 2003 a leading Original Equipment Manufacturer (“OEM”) signed a Development Agreement. We have liaised with them regularly during the program. They have a non-exclusive option on the technology which lapses if a licence is not signed within 12 weeks of completing the demonstration car. Our head of R&D commented:

At a recent project meeting in April we were introduced to a graduate engineer who had just been recruited specifically to be involved in our project. The OEM is requesting that we provides the latest design models so that their engineers can review the impact on their new engine designs.

We understand that the OEM has seen a number of Variable Compression Ratio (“VCR”) concepts but the EE-technology is the only one they have ever decided is worth developing for potential adoption. This is primarily due to the Environmental Engine’s elegant capability to vary both engine compression and capacity, into mass production.

Several other leading OEMs have indicated interest to evaluate the technology once it is in a driveable car. An OEM specialising in diesel engines is currently working on designs for a single cylinder prototype diesel engine to establish a development program.

Homogeneous Charged Compressed Ignition (“HCCI”) is an emerging technology to improve fuel efficiency and emissions which requires a VCR engine. Another OEM that is working on HCCI has indicated interest in EE as they consider EE is the only available VCR system that is viable.

Market opportunity

passender and light commercial vehicles heavy haulage small equipment engines boating engines agricultural, mining and roadwork machinery small vehicle engines

There are around 130 million fossil fuel engines made in the world every year. The EE engine technology can be applied to all reciprocating internal combustion and compression ignition engines, whatever their cylinder configuration, capacity or fuel, from our everyday cars to garden machinery and tools, from low-cost personal transportation to bulk haulage.

There are about 43 million petrol engines and 17 million diesels manufactured every year for cars and trucks [Source: Autoanalysis]. There are also about 70 million engines made for lawnmowers, other agricultural equipment, outboards, snowmobiles, small aero, ships, etc. Although these other markets are an even larger volume than automotive, likely licence royalties will not be as high, so we have to date concentrated on automotive engines.