V-Charge variable drive supercharger exploded view. By accurately and rapidly varying boost pressure independently of engine speed, V-Charge ensures that the engine responds instantly to any driver demand. The optimum mass of air can be delivered to the cylinders at any engine speed without the lag often associated with turbochargers. This remains true even at very low engine speeds. Click to enlarge.

While the potential customers confirmed that V-Charge works and delivers attractive fuel savings/emissions reduction benefits, during the discussions Torotrak became aware that the priorities for new product spend for many players in the European passenger car market have profoundly changed in recent months with:

• An accelerating focus on electrification projects, in particular driven by the mass market adoption of 48V hybrid electric vehicles; and

• Increased regulatory attention on eliminating noxious emissions, including banning diesel vehicles in some major cities, looks likely to result in a substantial reduction in the demand for, and investment in, diesel engines.

Torotrak has concluded that both of these industry trends look set to materially reduce the mass market opportunity for V-Charge in passenger cars, particularly in Europe. The Torotrak Board still believes that there will remain important opportunities for V-Charge to be adopted in segments such as commercial vehicles, performance cars and markets where consumers will not pay for the increased costs of 48V hybrid electric vehicles, or where tax incentives promote the use of small highly efficient engines. These markets could offer significant volume potential.

However, Torotrak has concluded that it will take longer to engage with potential alternative Tier 1 partners. Further, the licence value of V-Charge is likely to be lower than previously expected.

While Torotrak will continue its efforts to license V-Charge, it will now focus its engineering and financial resources exclusively on the continued development and commercialization of its KERS (kinetic energy recovery system) technology. (Earlier post.)

Torotrak said that KERS is making good progress, particularly in the off-highway markets, with the first product, a hydraulically connected flywheel-based energy recovery system (ERS) for excavators and wheel loading shovels, having achieved the cost reduction targets the Group set.

Torotrak says that the ERS product is on track to launch on excavators in 2H 2018 and will give operators attractive fuel savings and a payback typically of 18 months or less

Torotrak is also in discussions with on-highway commercial vehicle OEMs about the potential to adopt the KERS technology in an innovative new configuration that could materially reduce the installed cost, and improve operator payback times to less than three years.

Flybrid passenger car KERS for Volvo prototype. (Earlier post.) Click to enlarge.

In order to pursue these growing opportunities for KERS in off-highway and commercial vehicle markets and the licensing opportunities for V-Charge efficiently, the Torotrak board has decided upon the following actions:

• Continue the commercialization process with current and new potential buyers for V-Charge but suspend further engineering development activity, given the successful in-vehicle demonstrations and technical validation of the product;

• Focus engineering and cash resources on generating the higher value, nearer-term opportunities for the KERS products and technology;

• Actively seek buyers/licensees for the Group’s IVT/CVT intellectual property and tangible assets, with a view to realizing value wherever possible;

• To commence an employee consultation process with a proposal to consolidate engineering resources. If this proposal is implemented, any changes will happen progressively so that the ongoing commitments to customers and funding partners are respected and the value of the assets/technologies is maintained.

The clear shift towards electrification and the move away from diesel engines that has occurred across the industry over the last few months has forced mainstream passenger car Tier 1s and OEMs to refocus their investment on electrification projects. We will take the appropriate actions to prudently manage our resources. We will focus our efforts on delivering shareholder value from KERS which is addressing the off and on-highway markets in which mechanical solutions remain attractive, and we will continue to work to unlock value from V-Charge. We remain determined to realize the value from our extensive intellectual property and attractive commercial opportunities.

—Adam Robson, Chief Executive of Torotrak