Project Introduction

Background to the EU CO₂ Emission Standards for Passenger Cars And Light-Commercial Vehicles Regulation (EC) 443/2009

The law requires that the new cars registered in the EU do not emit more than an average of 130 grams of CO2 per kilometre (g CO2/km) by 2015. This means a fuel consumption of around 5.6 litres per 100 km (l/100 km) of petrol or 4.9 l/100 km of diesel.

The average emissions of a new car sold in 2014 was claimed to be 123.4g CO2/km, well below the 2015 target. However, in 2014 and 2015 it started to become clear that the car industry was not actually beating the targets, or even meeting them. Rather it was either misinforming the car buying public, or in the case of Volkswagen, actually CHEATING!

In November 2014, the US Environmental Protection Agency, EPA fined Hyundai and Kia $100 million for emissions violations on 1m cars imported into the US that emitted more Green House Gases, GHGs than the levels claimed by the manufacturers. They were also stripped of $200 million worth of GHG emissions certificates.

A further $50 million was levied for audit and testing costs on ensuring future vehicles sold in the US reach the manufacturers claimed, and legislated emissions levels. No fines have been levied yet by Europe or rest of the world for these transgressions.

On 28th June 2016, the US EPA and the Federal Trade Commission, FTC fined Volkswagen $14.7 billion in order to settle allegations of cheating emissions tests and deceiving customers. The affected vehicles include 2009 through 2015 Volkswagen TDI diesel models of Jetta, Passat, Golf and Beetle as well as the TDI Audi A3. No fines have been levied yet by Europe or the rest of the world for these transgressions.

The automotive Industry was given plenty of warning on the introduction of emissions legislation on vehicles as the article below demonstrates, but this appears to have little effect, and now Europe is threatening fines of up to €30,000 per car for vehicles not meeting emissions standards. Below are links to articles articulating the warnings that were given and when.

https://www.theguardian.com/sustainable-business/2015/sep/24/vw-volkswagen-were-warned-about-risk-of-1bn-emission-fines

https://www.ft.com/content/b4215678-c4e6-11e5-b3b1-7b2481276e45

By 2021, phased in from 2020, the fleet average to be achieved by all new cars is 95 grams of CO2 per kilometre. This means a fuel consumption of around 4.1 l/100 km of petrol or 3.6 l/100 km of diesel.

The 2015 and 2021 targets represent reductions of 18% and 40% respectively compared with the 2007 fleet average of 158.7g/km.

 In Summary, the Global Internal Combustion Engine, Automotive and Static Plant industries need a ‘new’ engine efficiency solution that can integrate with existing ICE technology, meet legislation relating to the 2020 reductions in CO emissions and beyond, or they will cease to exist in their current form, so what next?

Industry Strategy

Engine right-sizing is a key trend in the automotive industry, both in the Light and Heavy duty sectors, this will see the majority of road cars fitted with new engine solutions in Europe and other key regions by 2020.

What is engine right-sizing?

This is the transition from existing vehicle designs to cars that are smaller, more efficient, and with more space, but ideally with no less performance. Since the industry is under increasing pressure to deliver on hitting the targets for emissions legislation, as demonstrated in the previous section, this is now one of the key trends in the automotive industry, and boosted engines are part of the solution.

However, maintaining acceptable engine performance requires compound boosting which is highly expensive, or Variable Geometry Turbocharging (VGT) which is also expensive, and only suited to turbo-diesel engines. Unfortunately, in this application it also creates excessive exhaust back pressures which automatically incurs a fuel consumption penalty.

Using twin turbos is an alternative but expensive and more complex solution. This cannot always provide the required engine performance whilst still creating excessive exhaust back-pressure. Supercharged/turbocharged solutions avoid elevated back pressure but lead to a significant real world fuel consumption penalty as the supercharger is mechanically driven by the engine for example the VW “TwinCharger” and here even the manufacturer is unhappy at the application costs involved.

(see-https://www.carthrottle.com/post/volkswagens-superb-twincharger-engine-meets-its-maker)

Of the many E-boosting systems proposed for light duty applications, many require 42 Volt architecture creating further expense and complexity for the manufacturer and eventually for the customer.

Heavy duty applications all involve turbo compounding and/or Variable Geometry Turbo (VGT) systems, which result in elevated exhaust back pressures and thus incur fuel consumption penalties.

The VN KERB Turbo Solution (VN-KERB-TS)

VN-KERB-TS uses existing technologies to recover vehicle braking energy, and then utilises this energy to spin-up the turbocharger ready for the next acceleration event, thereby eliminating turbocharger lag in a clean and efficient way.

This delivers high performance or enables further engine down-sizing to improve fuel economy and reduce vehicle emissions.

Compared to modern turbo diesels, this solution offers the performance equivalent to a modern turbo diesel, without the turbo lag, increasing the engines efficiency and potentially reducing the number of turbochargers and complexity, (and therefore the cost) of today’s mass market diesel turbos. Furthermore, it is also a solution for petrol engine turbos.

Compared to modern downsized turbocharged gasoline engines, the system offers improved in-vehicle acceleration without the need for complex compound boosting systems involving two or more boosting solutions, e.g. supercharger or turbocharger.

The system is highly compatible with hydraulic hybrid vehicle platforms being proposed as alternatives to the electric hybrid, as the bulk of the additional components already exist. Hydraulic hybrids are only attractive for medium to heavy duty (as the hydraulic components are heavy) but can recover a much higher proportion of vehicle braking energy (up to 70% c.f. 30% in an electric hybrid).

Key Information Summary

Following 2 years of R&D by Professor Alasdair Cairns, the project is focused on delivering an automotive-ready solution, in line with the industry established Automotive Technology Readiness Levels, (Complete guide in Schedule 4). This aligns R&D project deliverables to industry accepted parameters for technology acceptance into manufacturing. In particular, it lays out the required level the technology must achieve and the parameters it must deliver on prior to industry adoption, and therefore commercialisation. Should the solution deliver on all of its targets, this process facilitates a straightforward and industry accepted route for integration into manufacturing, and therefore monetisation of the technology.

The Company proposes to raise an initial £150,000 via a single SEIS raise by issuing 150 Ordinary Shares at £1000 per share. This will fund Phase 1 Rig testing to Technology Readiness Level 4 (TRL4) at a budgeted cost of £125k and cover the period April 2017- April 2019.  This is a ‘Go – No Go’ break point. If the trial is successful it will deliver sufficient results to move the project onto Phase 2 and a further EIS round of funding by the end of 2018.

HMRC Advanced Assurance for inclusion in the Seed Enterprise Investment Scheme (SEIS) has been confirmed. (See page 33 of the IM)

Phase 2 on-engine demonstration will deliver the technology solution integrated into an engine, energy recovery system and turbo to demonstrate the solutions effectiveness, efficiency and emissions on a transient rig, which means as close to road-going conditions as can be achieved in a test facility. This will take 2 years and the solution will target Technology Readiness Level 6, TRL6 and is budgeted at £900K.

Once TRL 6 is reached there are two options, namely:

  1. Obtain Advanced Propulsion Centre (APC) funding to take the technology to full production, with OEM and suppliers onboard with a £10-20m total project cost including partners, and a 2-3 year project duration. If the Directors take this option the actual cost to VN KERB-TS will be significantly less, as much of the work will be performed and paid for by consortium participants
  1. Commercialise the technology at TRL6 / 7 stage i.e. A trade sale.

Examples of similar technology trade sales, at this stage of development, TRL6/7 can be found here:

Tier 1 Manufacturer ‘Valeo’ purchased CPT VTES.

(See-http://www.valeo.com/medias/upload/2012/10/2632/valeo-acquires-electric-supercharger-technology.pdf)

UK consultancy Integral Powertrain Ltd formed a joint venture with Tier 1 manufacturer ‘Magna’ on SuperGen.

(See – http://www.integralp.com/technologies/supergen)

A ‘rights of use’ & ‘development of’ Licence (deriving from the UK Patent Application numbers: GB 1620316.8 & GB 1620314.3 utilising the Kinetic Energy Recovery Boosting Solution in a Turbo application within the Global Automotive Industry, has been negotiated with the beneficial owner of the IP, Viridis Navitas AC-IP Ltd (VN-AC-IP) This will allow VN KERB Turbo Solutions Ltd (VN-KERB-TS) to complete a technology application development programme.

The programme will be conducted in conjunction with industry partners, third party OEM technical suppliers and led by Professor Alasdair Cairns. All additional IP created by this development will be owned jointly by VN-KERB-TS and VN-AC IP for their mutual benefit, on a royalty free basis. All stages of the programme will be developed with clear ‘Go’ – ‘No Go’ break points.

Stage 1 On Offer:  Round 1 New Founder Shareholder (“NFSH”) offer is for £150,000 via the issue of 150 shares @ £1000 per share, delivering Phase 1 Rig testing to Testing Readiness Level 4 (TRL4) at a budgeted cost of £126k and covers the period April 2017-April 2019.

Stage 2 initiated upon successful completion of Stage 1: Financed by a 2nd Round EIS raise of  £900,000 via the issue of 450 further shares @ £2,000 per share, to deliver on-engine demonstration with TRL6 achieved two years after initiation.

Once Stage 2 is in progress, the VN-KERB-TS Sales & Marketing team will commence communication with Global Automotive industry players to demonstrate and promote the solution, whilst also communicating with the necessary regulatory bodies to ensure compliance issues are covered.

It is the industry accepted norm that after this stage an established automotive OEM will either licence the technology for distribution through their existing channels or buy the technology outright, as indicated in the description of a similar trade sale on the previous page.

Commercialisation, Timings and Costs

Stage 1 of the programme will be completed within 24 months of fundraise closing.  Costs are estimated at £126,000 including a 10% payment (£25,000, being 10% of the full cost of £250,000) of the negotiated development licence fee. Note: All Legal, Accountancy and 3rd Party costs as indicated on Page 22 of the IM and (estimated at £24,000) will be made before project commencement. Project expenditure at £126,000 including a 10% overrun / contingency fee.

Stage 2 will take place over a 24-month period from funding close and costs are estimated at £810,000 including a minimum second payment (£50,000 being 20% of the full cost of £250,000) of the negotiated development licence fee. Note: All Legal, Accountancy and 3rd Party costs (estimated at £90,000) will be made before project commencement. Project expenditure estimates include a 10% overrun / contingency fee.

A Business Development Plan describing the science and technology background, the market drivers, size and target sectors, competition, key objectives and high-level deliverables, organisation and structure, commercialisation, timings and costs, business model, market development, risks and risk mitigation and partner relationships has been developed and can be found in the executive summary. All other relevant supporting documents are included in the Schedules.

The successful development of VN-KERB-TS technology in this multi-billion £pa market has the potential to generate profits at VN-KERB-TS worth millions of £s every year. In turn, this has the potential to produce returns for subscribers in VN-KERB-TS worth significant multiples of their original investment.

VN-KERB-TS Brochure
VN-KERB Turbo Solutions IM