Monday, 18 March 2013
Torotrak cashes in on Flybrid
Jon Hilton and Doug Cross could be about to realise every entrepreneur’s dream: to sell on the business they established to develop a unique fuel economy technology.
Torotrak plc, buoyed by a cash injection from Allison Transmissions Inc. of the US, has forked out £3 million to acquire a 20 per cent stake in Flybrid Automotive Systems Ltd of Silverstone. Torotrak has the exclusive option to acquire the remaining 80 per cent by 20 December 2013.
The two firms have worked together on various projects to develop technology that can be applied to obtain both performance and fuel economy benefits for commercial vehicle and passenger car applications.
For Torotrak, Flybrid has brought flywheel technology to an advanced stage of technology readiness for both applications. It also enables immediate commitment to low-volume production for flywheel hybrid products for commercial vehicles. In the first stage this is most likely to be applied to the mid-sized bus market.
At the same time, for the first time in public, Flybrid’s name and its technology have been linked with Allison Transmissions Inc.
Flybrid’s technology has also been demonstrated in both Jaguar and Volvo passenger cars yielding a 22.4 per cent fuel economy gain, albeit in conjunction with a stop-start system. Ricardo plc predicts this technology can reduce CO2 emissions by up to 30g/km at a cost of £20/g. This compares with £20-£45/g for enhanced internal combustion engine technologies and up to £30/g for electric hybrids.
Torotrak’s stake in Flybrid coincided with Allison Transmission Inc. subscribing for an additional 8,248,434 new ordinary Torotrak shares, raising approximately £2.5 million.
At the same time, Allison agreed to pay £6 million for continued exclusivity to manufacture and sell Torotrak main drive transmissions ‘in commercial vehicle segments’; the exclusivity excluding Torotrak’s other commercial vehicle licensees, namely Tata Motors and the European Truck and Bus manufacturer (ETBM).
Of the cash inflow of £8.5 million assisting Torotrak’s part-purchase of Flybrid Automotive, some £4.5 million is payable prior to 31 march 2013 and the balance before 31 March 2014.
A discount has been negotiated to the original Licence and Exclusivity Agreement of £2.1 million in return for a 35 per cent increase in royalties payable on the first 10,000 units of production per annum.
Even so slowly, Torotrak appears to be edging to a conclusive deal with Allison which will see its infinitely variable transmission (IVT) technology arrive in production vehicles.
Lawrence Dewey, chairman, president and chief executive officer of Allison said: “Allison is committed to introducing fuel-efficient, emissions-reducing technologies and our licencing decision today with Torotrak reflects our determination to be a global leader in this field.”
Significantly, he added: “A purely mechanical energy recovery system is in many ways an engineer’s dream but with the anticipated technology advancement and closer working relationship between Torotrak and Flybrid, we see the investment as having all the potential ingredients to make this a reality.’
For the first time, Flybrid’s flywheel-based technology has been linked to that of Allison and Torotrak. This, together with Flybrid’s leverage through Volvo makes this small, 18-person company, suddenly a very attractive business.
Flybrid was founded by Jon Hilton and Doug Cross. Both worked at Renault F1. The move is opportune for Flybrid. It had reached the point where it needed to invest to grow further, and to be ready to manufacture components. ∎