Sorry - Bus out of service. Destination Nowhere.

So, there you are, sat at the Bus stop... You've checked the timetable, the automatic ETA display is updating, and every now and again when a bus does go past, the driver shouts out that your bus is going to be with you soon.
You keep checking the automatic ETA display for the bus - it says "due in 4 days", and price for a ride is 16p.

Then things start to happen. Firstly the digital ETA display goes blank. No warning. Nothing said. You get the conductor from the next bus shouting that they had been saying the next bus has been cancelled because it's empty, and that he had been saying that since November, and then you hear that the driver of the next bus has decided to get off one stop earlier because he thought he had done a good enough job of driving it for the last few years.

So, you're stood there, without a bus, and a one way ticket to ride that cost you 16p. Despite the price of a ticket having dropped by 20% in the past few days, you still sit there wondering what to do with a valid ticket but no bus to get on.
[Ed note: I originally drafted this first bit back in early 2015 but never finished it]

Then you hear that the bus has a new conductor, who once used to work on a rival bus company, but that went bust when the company ran out of money after spending all their advanced ticket sales on Gearbox design and research instead of manufacturing and selling them. Do you want to keep your ticket - or is it time to sell it on instead for whatever you can get ?

Whilst all this is happening, they tell you there's a bus going on a route in Kent. Sorry it's late, but it does accelerate very fast but the fuel efficiency isn't any different. (ahh, I hear you ask, but were the buses more punctual ? who cares - said everyone)

So we get to 2015...
In walks a new Managing Director. Genesis would have us believe Adam was the first, but it transpires that the delays to the Bus trials were too much for JD to remain with any integrity. It would seem an engineer can pull the wool over an accountants eyes, and the fallout from that was that Adam banished the KERS creator (John Hilton of Flybrid fame) from the garden of IVT with less than originally promised.

At the next AGM, JD was of course nowhere to be seen, which after the Steve Redgrave-esq request from the previous one was probably just as well, and Mr Robson set out the goals for the next 12 months.

And then, it almost happened.

The trials in Kent finished, the bus hadn't crashed, and announcements of great success and future production ensued, with confirmation of production tooling being made.

All seemed good, but lower down in the announcement it said things like "version 2" will now be on trial in early 2016. Visions of continual upgrades in technology and no actual sales rise onto the horizon again. Yet another perpetual research project I hear you say... oh not again.

And the shareprice drops. It drops to sub 4pence, and then drops some more to almost 3p. Yes that's my considerable investment reduced to 5% dust at todays rates.

But surely, if production tooling is on order, and end users and OEM's are saying they are looking forwards to further collaboration and production units in Q3 2016 this wouldn't be happening to the share price would it ?

So what is the truth and can we handle it ?

Is anyone paying for the next 20 version 2 pre-production test units for the trial buses ? well I've not seen anything that says they are.

So it's poker time. Do we have a winning hand ? Will the pre-production units prove the KERS solution, get spread to the four corners of the globe and convince them to get everything with KERS forever ? Will they be retrofitting their fleets ? and more importantly - if the pre-production version 2 units work - will the end user be paying for getting them !?!?! or is this yet another free trial give away ?

I see this time and time again in all types of business. The customer says "Can you do me a quote for designing me something and let me test it ?" and individuals and companies flock to provide the service/design/prototype for them to test. The test takes place, the potential customer (for they are not an actual paying customer yet) trials it on a proper job, makes some money, and then passes the trial unit/design/concept back to those who did all the work with a "thanks but no thanks", and either that's it (because their customer has moved on), or they take the design and give it to someone else to make - leaving the business out of pocket.

The share prices says that TRK don't have a winning hand. It also screams that there is no bankable deal (i.e. firm orders) yet to speak of, no kind of conditional offer to purchase if certain limits are met, and also that with the recent government funding for low emission bus schemes, (https://www.gov.uk/government/publications/low-emission-bus-scheme  and http://www.lowcvp.org.uk/initiatives/leb.htm ) has not yet announced (today is mid January 2016)- did the TRK technology materialise too late without the evidence to help companies apply for their grants ?
News always leaks, and if there was good news, the pessimist in me says the shareprice would have ticked up already.
Worst case scenario is they make 20 mk2 KERS, they all go out onto free trials, and then the grants come through for other technology and they get left on the side as the grant funded technology gets put in instead. I hope I didn't just tell you so.


The optimist in me looks to the V-Charge testing at Bath University, and Ford to come charging in on their Unicorns and universally adopt the technology. We have heard positive news of new Technology - which means that parasitic losses (i.e. having the Vcharge running at idling speed when it's not needed) have been overcome by a new design that allows the unit to be clutched in and out.
Again, are we up to the Mk3 - at what point will we have a production ready version that someone wants to actually buy and doesn't want to wait for the next version ?

Meanwhile Alison Transmissions are part way through a redesign because the original version turned out to be too good and lasted too long with the size of discs in the variator. Cue Smaller Mk2 version redesign, oh yes and a load of endurance testing (which we have heard nothing about it's progress).
When is this design and test going to be completed, and if they have the main design, are they trying to integrate it into their manufacturing plans in the future.
No news yet, it's all very very quiet.

I am still sitting at the proverbial bus stop, nothing has arrived, and shareprice "out of service, destination nowhere" has been flashed up on the interactive arrivals board. The only thing missing from the information is an ETA for the end.

Meanwhile in the rest of the world, the price of oil drops below $30 per barrel, world war is slowly breaking out in the middle east, and after 16 years since I last bought one, I reluctantly accept that I can't buy a car with any sort of TRK technology in it and get something out of necessity.
And no, I'm not going to start catching the bus instead - that's not arrived either.

16 years. Think about that for a moment. Think about what has been achieved in the world in the 16 years since the millennium bug was going to hit, whole companies have grown -

As a comparison of companies - we can look to facebook that only started in 2004. Google had only just launched in 1998. (I hear you cry that they are just software companies...)

ok then - Elon Musk (https://en.wikipedia.org/wiki/Elon_Musk) launched SpaceX in 2002

IVT technology is not rocket science, apparently, Rocket science is far easier.

I don't post that often on this blog, so don't expect anything probably from here until 2017 - unless something remarkable happens - I'll leave you to guess like everyone else what that could be, but going for 20 pre-production units without a bankable deal is the proverbial fig leaf over Adam's crown jewels. I hope he keeps it covered.

Until next time,
when that damn bus arrives....

Sat waiting at the Bus Stop - Pre AGM 2013

As I start to write this blog, the AGM will have been in progress for about 40 minutes. Having not seen any smoke signals prior to it, and working late last night, I made the tactical quality of life decision not to go, and reading the interim statement issued this morning before 11am confirms that being there won't have changed my investment decision, missed out on champagne, nor the strategic direction of the company which has - as you will no doubt know - taken on a more commercial intent in the past 12 months.

Investment wise, we are now all sitting at the proverbial bus-stop. Waiting. Others on the discussion boards have come along and waited, muttered something about them always being late, the queue has got longer, shorter, being late, is it electric, some have turned up asking if taxis stop here or if anyone knows when the next bus will arrive. The answer to all this is: nope, not really.
We had an exciting moment a few years ago when the grass around the bus stop got mown, but that soon moved on and out of sight to another place.
The one thing you do know at a bus stop though is that one day, one day, a bus might just turn up, and the longer you wait, the more probable you hope it becomes.

You see, this isn't one of those fancy bus stops with a digital display counting down the minutes to the next buses arrival, it doesn't really even say where it's going to go, just that there are some destinations on its route. It's one of those buses you would have caught in the 1980's where you only really knew what was happening when the driver of a different bus going in the wrong direction would shout out some information to you about it being broken down.
So far as we know it's not currently broken down, but the route in the future includes Japan, Italy, England, Sweden and the US. We know it's been to Germany once or twice too, but beyond that, we just sit and wait. The rain and wind sweeps around the sides, and every now and again someone comes and pins up a revised timetable. Fortunately nobody has come and pinned up an "no stopping here" sign yet, so let's have a more detailed look at the new timetable...

Main Drive Transmissions

Allison have paid for exclusivity and are batch paying down the last £6M. They have £2.6M left to pay before 31st march 2014. Testing is always a bottleneck so new test rigs have been made to get the production design and "production representative variator components from production suppliers" finally tested.
In terms of developing a manufacturing supply chain - proving out your suppliers components is a standard ISO9000 quality compliance process. You get a new supplier to make real world parts - not just one off samples, and then you test them to check they are ok. If they are ok, you sign off the supplier and their manufacturing process, one day place your order and then get it into pre-production when all the other parts are ready.
Then you build pre-production units (usually with the proven and tested first parts), test those and then test your entire design to check all is ok, and in the meantime you build a factory to put it all together, train people to make them, load your supply chain with parts, and then if everything is still ok, you start to build them... so in my estimate that's at least two years away if not three - because - well - it's huge and the test rigs don't need to be sorted until March 2014 - and that's 8 months away.

We have to remember that all this has to go together to fit into a bus, so the demand for the transmissions needs to fit into that product marketing as well. Oh, another potential delay.
It is however good that the critical path of testing has been addressed by Torotrak. It's also interesting that TRK have kept it in house, Allison have not decided to have test rigs installed at their site (or so I infer - perhaps I'm assuming that?)  It does seem that £2M of the remaining license fee is subject to this testing, so BAM!, now you know where the license fee has gone - test rigs. By March 2014
Speaking as an ex-engineer, you can never have enough test rigs, so it's good to have them funded rather than not funded !

So, no clear ETA for Allison, but guess at Q4 2016 (remember the legislation kicks in 2017)

No mention of the European Truck and Bus Manufacturer (ETBM) was made in the statement, so unless something comes out of the AGM, we refer to the last statement which said they were going to make a decision as they had found that even long distance trucking benefited from the transmission, which was a nice surprise apparently.
No ETA possible

MKERS / Flybrid
1. Cars
The amount of press and publicity noise around the VolvoS60 demo with the Kers unit fitted suggests this is getting serious. Companies don't put out that much marketing and PR of a prototype unless they are at the "seriously considering" stage of consumer reaction. The noise seems to have been generated by straight cut gears instead of helically cut ones -

Now that Flybrid is 20% owned by TRK and have options to go to 100% it would seem that OEMs are more interested in dealing with a single product supplier to put the whole Kers package together - so getting a T1 supplier sorted out should be more interesting times ahead.
ETA guess Q1 2016 given the new platform schedule from Volvo

2. Buses
Arriva trials remain on track for March 2014, with flybrid installed in a Wrightbus vehicle.
Flybrid are also making test rigs so they can get production going (see a common theme?)
2015 is current target for full commercial production capability with proven equipment.
ETA for first Buses on trial - Q2 2014
No ETA for Bus Production

V-Charge
Version 2 is on the test rig - once completed it will go into demonstrator vehicles.
ETA for V-Charge mk2 demonstrators is Q4 2013
Given the interest being shown from T1 and T2 partners, ETA Production ? guess at Q4 2016

Market forces
12 years ago I passed an academic analysis of the Market forces affecting Torotrak to the then finance director Rebecca. Even then it was clear (as it is with many products in the world) that demand for the product was going to be driven by legislation more than customer demand. If the CAFE regulations proposed in 2001 had been implemented as originally prescribed then it's likely that we would already have full IVT SUV's trucking about the USA. however they didn't and as with all things Government and legislative - it is getting there, just a bit slower.

We are now faced with the 2017 legislation deadlines in Europe and the USA that will start to drive financially based investment decisions by the OEMs

The legislation ultimately is driving the need for lower fuel economy. Bus operators quite like the idea of 20% lower fuel bills, but an OEM as long as they have the most fuel efficient vehicle in relative terms don't care how efficient it is - it just needs to be good relative to the competition.
It is only with the legislation pushing a performance value and a number onto the manufactures that the OEMs see it as a financial business decision to implement the technology. With the IVT, V-Charge and M-Kers offering the step change in performance that they need - Torotraks products and IP will become more and more interesting to them.

Mission Creep ?
I noticed a change to Torotraks mission statement the other day, slipped under the radar a bit, but of huge significance -
It now goes blah blah blah.."technologies that reduce vehicle emissions and improve transport efficiency"
This is a very very broad remit. It's so broad it's almost impossible to know where to start when asking "so what do you do?" if you met someone from Torotrak at a party

What was it before you ask ?
In 2008 the Annual report said "Torotrak is the world leader in full-toroidal traction-drive transmission technology, focused on the development of IVT (Infinitely Variable Transmission) and TCVT (Toroidal
Continuously Variable Transmission) systems which deliver outstanding levels of performance, functionality and commercial advantage in automotive, truck, bus, outdoor power equipment, agricultural and off highway
applications."

So now the new mission doesn't explicitly say anything about Toroidal transmissions, (that would put Flybrids CFT out), and nothing about IVT (that would put MKERS and V-CHarge out).
But at least we now know that they have ruled out any applications on static systems that might need a variable output (compressors, generators etc) because they refer specifically to vehicles.

Summary
So what's the updated timetable ? in possible time order

V-Charge
ETA for V-Charge mk2 demonstrators is Q4 2013
No ETA for V-Charge production

MKERS 

Buses ETA for first Buses on trial - Q2 2014
No Bus production ETA
Cars Production ETA guess Q1 2016 given the new platform schedule from Volvo - some preproduction demos before
Main IVT (large vehicles)
No clear ETA for Allison, but guess at Q4 2016 
No ETA for ETBM

If we're lucky, perhaps a few buses will turn up at the same time ? but don't hold your breath if they do we don't currently know their colour, speed or size. At least we know they might have a Torotrak Variator in them somewhere...

In the meantime, you and I will have to continue to sit at the bus-stop with Buzz Lightyear. to indefinite and beyond... (image removed unfortunately because it was just a jpg from a website, but the website address apparently red-flagged a few browsers)

I hope everyone enjoyed the AGM and the tech talk, and hope we haven't voted to dilute the share value down to zero quite yet.

2010 Half year results and New Brokers

Since the last post on this blog there has been considerable progress in the business partners projects with Torotrak.

Firstly I suggest you go and have a read of the Torotrak Half Year report here: http://www.torotrak.com/pdfs/rns/2010/Half-year-results_final_23.11.10.pdf



There are several bits of good news contained in the report, some strategic, some to do with progress and others to do with publicity. You might also want to read the new broker report from new brokers Charles Stanley. They have put an initial share value target of 40p up as their first shot.

Firstly the long awaited MTD license curtailment is now underway and their rights to use the Infinitrak IP being restricted. Sources inside MTD have long said they can't manufacture the TTT or STT (or would that be some of the employees don't want to create competition for their incumbent hydraulic solution ?) - and we have known for over 6 months about the problems. After the missed design freeze in June it was never going to hit production this autumn. Strategically this now frees Torotrak to persue other customers for the STT and it's unique capabilities - which presents a great opportunity for new business development. It's almost a reverse Toyota situation, the customer couldn't get the design to work but this time TRK pulled the plug, not the customer. This alone indicates an improved confidence in the designs by Torotrak.

There is a huge list of partners getting nearer the point of convincing themselves that there can be no turning back to fixed gear ratios. It is truly getting to an exciting part in Torotraks history with large well respected companies investing significant amounts of their own time and money to make IVT technology become a reality.

Again I will remind you to read the half year report - I'm not going to replicate it here, as a long time follower I can see that slowly the technology is being fitted into the practical capabilities it has.

A long time ago I wrote a strategic assignment for a postgraduate degree - using Torotrak as a case study. The conclusion of it was twofold. 1. The need for IVT technology will be driven by legislation - and finally now the Euro Emmission regulations are looming on the horizons and the fines looking more like a reality - the vehicle manufacturers are getting their acts together rapidly. 2. Non-powertrain solutions have been found to get round the "not invented here" and incumbent technology investment (i.e. 6AT gearboxes in saloon cars).

The long term strategy has to be "surround the enemy" (in the words of Sun-Tsu) to develop so many solutions being used so widely that it becomes a no-brainer for passenger cars to adopt the technology. Passenger cars being the volume business that would deliver true TRK value.

This Strategic solution is finally being realised with several derivations of IVT technology making it into reality across different sizes, applications and concepts.

1. Main transmissions

1. European Bus and Truck - three regime IVT powertrain installed
2. Allison - Technology transfer complete for full IVT powertrain production ready design
3. Carraro continue to exhibit and accellerate their IVT family of VARY-T transmissions

2. KERS (Flywheel)

1. Flybus - Retrofit KERS (kinetic energy recovery solution) using an auxilliary power take off on the normal transmission. Cheaper than electric hybrid and more efficient. And more environmental !
2. Flybrid - new install - Test transmission installed in Jaguar saloon car for on road testing

3. Engine speed de-coupling devices.

1. Rotrak - Variable drive supercharging. This allows the effectiveness of the boost to be felt properly at all engine revs, not just at a certain rev-range. This means smaller engines can have a much higher power output and better driveability. Along with the obvious emmissions reduction.

Retrofit.
The exciting market prospect of  being able to retrofit a KERS unit into a commercial vehicle is mouthwatering. Instead of the delay of awaiting for the new vehicle production programme to come to fruition (three to 5 years at least just to get to market launch), once a viable economic solution has been developed - it can be installed. Will it be installed ? - in the hard economics of the haulage industry anything with a 1 year payback will be snapped up. If you have an Allison transmission with a PTO languishing about - here's your chance to save some money and be more competitive.

Taking the retrofit route as a faster one to market penetration, one has to look at the possibilities of retrofit not just for KERS units but for Main Transmissions and Rotrak Superchargers. My personal conclusion is that Rotrak may have some possibilities,, main transmissions almost none, but a Retrofit KERS unit into a passenger car remains a much larger goal to be targetting.

Outlook for 2011
With prototype work starting to bear tangible real world results (not just mathematical model results), and a real ride experience that can be felt, the decision makers at Torotrak Licensee companies will soon be putting down hard money for real new vehicle production projects. With their experiences of TRK technology I fully expect that those projects will have a view to the inclusion of TRK technology. I just hope that TRK are ensuring that the decision makers are going to get that experience and make them advocates of the technology.

2011 is going to be the year that critical decisions will be made by the large licensee companies. Until those decisions are made, Torotrak is just another UK technology company. After those decisions are made Torotrak and IVT technology could be one of the most disruptive technologies we have seen since the invention of the car gearbox in the 20th century.

If you invest in Torotrak for dividends, you have about 4-5 more years at least to wait (if not longer depending on the future R&D investments), but if you are investing because of perceived future value - then you'll probably want to be in before those big decisions are made. We watch and wait with patience.

(p.s. all of this report is conjecture and has no value or robustness associated with it in any way and may not be taken as advice. Always do your own research and responsibility for your own financial matters)