July 5, 2012Stanford E145 OEP Assignment

• There is little unbiased information available to determine if an Electric Vehicle OR a CNG vehicle is the best way to proceed for a company/organization.

• There is a potential market for an unbiased advisor to provide balanced information on conversions to EVs, CNGVs, or status quo; Interviewees thought there would be a market for such advising services

• Larger fleets and companies that specialize in fleets don't need us; smaller fleets that focus on other businesses (florists, etc.) are the target audience. Also, municipalities may lack the resources to make fully-informed decisions.

For the OEP, we decided to hone further in on the potential market based on research we conducted during and before the OAP. The OEP meets the class criteria but also seeks to lay out the next steps anticipated for TriFuels Ventures.

• "Goldilocks Fleets:" o Too small: not enough money at stakeo Too large: have their own expert analysis o We expect to target fleets of 5-50 vehicles, but are still

testing the size boundaries.

• Fleets with more than one alternative option (EV and NGV) provide the best opportunity.

• Companies and owners without sophisticated analysis staff need the most assistance.

• This will be an asset-light business model, as our analysis shows that most of the work will be consulting-related.

• Once established (with several free consultings that establish our methodology), our fee system is success-based. We will charge a minimal upfront fee, but then the rest is performance-based.

• We will charge 50% of the cost savings associated from the energy savings component (each case will be negotiated individually, as some will have greater capital costs involved). This “performance-based contracting” model was created during the OAP, and during our survey process of companies since then, this was agreed upon.

1. Develop basic working models

2. Develop proposed services and deliverable package

3. Beta test services for 1-5 clients (gratis)

4. Refine models and deliverable package

5. Market research to find "live" paying clients

6. Begin offering services to live clients

• Modeling continues to be refined based on EIA, DOE and fleet association data

• Target audience may be a "long tail." o 97% of the nation’s 500,000 trucking companies own

fewer than 20 trucks

• Sensitivities based on pricing model?o per-hour consulting vs. fuel savingso Performance-based contracting vs. fuel savingso Cognizant of supporting infrastructure and capex by

company

• Market assessment modelo To help venture determine size of opportunity

• Utility realized cost modelo Sophisticated, real-world pricing dynamics for utility-

delivered electricity and natural gas for vehicle use

• Cost-basis estimate for NG fueling stationso Bottom-up analysis of delivered NG costs; o Allows comparison of retail purchasing versus

ownership of fueling equipmento Allows for understanding of retail price effects of

changes in wholesale natural gas prices

Youngstown Plant & Flower- awholesale distributor of flowers and

floral products to florists in the Youngtsown

Ohio metro area.

They currently have a fleet of 6 vehicles used for deliveries

- 2 larger cargo vans (1 half-ton, 1 full-ton)

- 2 dedicated mivivans

- 2 of the owners minivans that are used for peak

They purchase, on average, 700 gallons of fuel per month

• The ability to save on monthly fuel expenditures would give a company this size the ability to be more on offense in their sales strategy

• They can extend the geographic footprint of their range, thus enabling them to fend off larger distributors from bigger metros that dump inventory in the market

• Our first 3-5 companies will be done for free, to garner a track record. They are our initial Partners and Allies.

It’s not just a cost-saving tool, it’s a profit generator!

Other factors to consider:

3) For small/medium companies, fuel costs also possess an unwanted degree of volatility. Eliminating that volatility is key.

5) However, there is a breaking point of where the stability of a fixed monthly payment for the premium of having either a CNG or EV system in place (i.e. adding $10k to the price of a delivery van b/c it is CNG) may not warrant the switchover. Knowing what that breaking point will be is also key.

• EV vs. NGV vs. efficiency investments vs. "Stay Conventional?"

• How to evaluate efficiency investments versus going to alternative fuel options?

• Act now or delay decision and wait for technology to improve or market to develop?

• Are investments in fueling or charging infrastructure beneficial?

• How will a change affect my environmental profile? How can I extract value from that?

Economics Environment

Technology Options

Operational Impacts

• Survey of technology optionso Vehicleso Retrofitso Fueling options

• Narrow to most viable options

• Economic evaluation of optionso Compare forecasts of fuel sources (petroleum, electric, natural gas)o Breakeven analysis versus conventional options, and alternatives vs. each

other

• Environmental assessment of optionso Identify opportunites to monetize environmental benefitso Benchmark to continually-updated, state-of-the-art assessment of major

"environmental literature" and possibly NGO positions on these options.

• Identify operational adjustments or benefits that are likely

• Identify risks of optionso Fuel price volatility

• Competitive: Larger companies with more resources can quickly enter – low barriers to entry.

• Competitive: The CNG industry is supported by ‘big gas’, may not want dynamic offering of all fuel types being presented objectively.

• Financial: We will be revenue-light for the beginning, as we need to establish credibility first and foremost.

• Funding: Once the credibility factor has been established, we will need to ramp up staff, systems, etc. This will require greater funding requirements, and we may have to seek out alternative capital.

• What's the real size of the market?o Macro market analysis

• What's the willingness to pay?o Customer surveys

• Are there many fleets with true EV vs. NGV options?o Macro market analysis and technology option survey

• Do potential clients want to pay to simplify these decisions? How much?o Customer surveys

The initial team will be small, and therefore serve many roles. •Business Development – initial conversations

•Costing project capabilities – ensuring that post-beta, our team can profit long-term

•Modeling team – creating individual models based on needs for the companies

•Coordination with fleet build-out companies – ensuring the right equipment delivered successfully.

•Follow-up and monitoring. Very key to business model profitability.