Libralato Holdings Ltd. Business Plan
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Libralato Holdings Ltd. Business Plan June 2009 1 2 3 4 Copyright This Business Plan is copyright protected. Neither the business plan itself nor information contained in it may be reproduced or passed to third parties without the permission of Libralato Holdings Ltd. Table of Contents 1) Executive Summary 3 2) Background and Rationale 7 3) Global Engine Industry 10 4) Product 16 5) Market Opportunities 37 6) Operations 47 7) Management 49 8) Implementation Plan 50 9) Financial Plan 54 10) Risks 57 11) Appendices 58 2 1) Executive Summary The Libralato rotary engine is a breakthrough technology – an eco‐engine for the 21st century. It has a completely new thermodynamic cycle which is predicted to achieve over 40% efficiency using gasoline and over 50% using diesel (higher compression) because of its asymmetrical expansion and compression volumes and because it does not need to convert linear motion into rotary motion. It has a unique exhaust gas recirculation integral to the design, a power stage in every revolution, high and constant levels of torque, very low vibration, no need for valves, pistons, con‐rods, crankshafts, cam shafts etc. and very low exhaust gas noise and temperature. A proof of concept engine mechanism was built in 2005. See www.libralato.co.uk. Work is underway to produce a basic test bed demonstration of the engine. The engine design is exceptionally compact and robust, approximately half the size and weight of a conventional reciprocating engine. It is ideally suited to a wide range of applications 1kW ‐ 150kW, particularly where space, weight, emissions, noise and vibration restrictions apply; constant speeds are required and the engine is able to operate in its peak efficiency zone. The Libralato engine is predicted to deliver a 25% efficiency gain compared to equivalent reciprocating diesel engines for a cost reduction of about 30%. This efficiency gain would include a corressponding increase in fuel economy (BSFC~ 165g/kWh) and a decrease in CO2 emissions. The engine is predicted to cost about 30% less due to its mechanical simplicity and compactness. The predicted high RPM (~ 5,000 rpm) and low BMEP (~7.6 Bar) of the engine mean that manufacturing tolerances should be much higher, again lowering costs. Invented by Ruggero Libralato; a teacher of electrical engineering by trade, Mr. Libralato’s keen interest in combustion engines from a young age led him to design a new combustion engine at the age of 27. Over 20 years, through various design iterations, the profound study of thermodynamics and theory of machines, Ruggero Libralato has invented a completely new design and a new thermodynamic cycle which deserves to rank alongside the names of Otto, Diesel and Wankel. It is very difficult to substantiate these claims in advance of proper test results; however reasonable estimates can be drawn from the fundamental mechanical and thermodynamic advantages of the engine design compared against industry benchmarks. The average gasoline reciprocating engine is widely acknowledged to be about 30% efficient. One of the most efficient gasoline engine’s in the world, the Toyota Prius engine, has been tested to be 36% efficient. This is largely due to it’s Atkinson/ Miller cycle which utilizes a greater expansion ratio (1:13.5) compared to its compression ratio (9.5:1). The Libralato engine also has an asymmetrical expansion ratio (1:~14.2) and compression ratio (~10:1). Secondly, the currently claimed ‘most efficient gasoline engine in the world’, the REVETEC engine achieves 38.5% efficiency mainly because it uses a novel tri‐lobular cam and roller instead of connecting rods and crankshafts. The mechanical advantage of a rotary engine is even greater than a cam and roller assembly because the force from the exapnsion phase is transferred directly to the output shaft. The third efficiency advantage is due to the way the engine cycle partially recirculates exhaust gases. Industry studies show efficiency improvements of about 3% from this technique and emissions reductions of up to 3 50% of NOx and particulate matter. The three aspects highlighted provide a sound basis for predictions of at least a 10% absolute efficiency improvement and a 33% improvement relative to average gasoline engines. The Libralato engine has not already been commercially exploited because the inventor Ruggero Libralato does not have the necessary entrepreneurial skills. Fiat‐GM offered to buy the engine patent but withdrew the offer in the course of the break up of their alliance in 2005. In response to a recent submission to an SAE conference on powertrains, Thomas Wallner of the Argonne National Lab (USA) scored the paper 10 out of 10 for innovation. He wrote, "The paper describes an innovative concept which really aims at being a breakthrough technology. Nevertheless I suggest the authors to provide further data (more than "theoretical gains" over conventional engines) on performance, emissions and costs". Seed funding is required to produce the data necessary to assess/validate the engine's fundamental thermodynamic cycle and geometry. Company Background Libralato Holdings Ltd. is a start up company, registered 30 May 2008. Based in Hulme, Manchester, UK, the Libralato Holdings Ltd management team consists of: Share distribution Ruggero Libralato (IT) ‐ the sole inventor of the Libralato Engine 51% Dan Aris – (UK) – Social entrepreneur and Managing Director 5% Fred Chapman (USA) – former Vice President and Treasurer of Lucas Varity plc 1% Francois Badoux (CH) – former CEO of Mistral Engines SA 2% John Travis (UK) ‐ Director of A1GP Technology 1% Karl Niklass (AT) – Motorsport Consultant Engineer 2% Anthony Brown (UK) – Urban regeneration and business consultant 1% Ingrid Scholtheis (AT) – Languages, business administration 1% Unallocated 36% The management of Libralato Holdings Ltd. has broad experience of: project and business development, EU funding, Auto OEM finance, venture capital and rotary engine manufacturing. Intellectual Property Rights The Libralato Engine is currently protected by three Italian patents, a broader international patent pending, covering all of Europe and a recent patent application for the engine’s thermodynamic cycle. WIPO Reference Number Date of Issue Patent 1 IT1234406 23/01/1989 Patent 2 IT1234679 01/06/1989 Patent 3 IT1234671 05/09/1989 Patent 4 WO2004020791 A1 11/03/2004 Patent 5 # Pending 06/10/2008 Market Opportunity Over the past year, Libralato Holdings has been in diaologue with a number of engine manufacturers including: BMW, Perkins (Caterpillar), Cummins, Rolls Royce, Argentum (India), Deutz and JCB. These OEMs have declined to be associated with the engine until further data validating claims is produced, although none of them has pointed out any serious flaws in the design. Helmut Riedl, Director of Engineering and Gunter Eckhardt General Manager of Powertrains at BMW wrote in May 2008, describing the engine as "a promising project". We consider this very serious recognition. JCB in particular are keeping a watching brief of the project. 4 The global engine market is worth approx $166 Bn per year. Annual automotive engine sales of 70m per year are worth approx $126 Bn. Global automotive sales have slumped due to the current recession (down 10% in 2008, ACEA), but this crisis is only increasing the demand for more fuel‐efficient vehicles. Other market segments include: Portable (Chainsaws, Brush Cutters, Leaf Blowers, Hedge Trimmers) Stationary (Power Generators, Compressors) Mobile (Lawn Mowers, Cultivators, Snow Throwers) Industrial (Pumps, Mobile Generators) Light Boats (Outboard motors) Light vehicles (Scooters, Motorcycles, Snowmobiles) Light trucks and light airplanes. The greatest market opportunity for the engine is in the application as a range extender/ generator in plug in hybrid electric vehicles (PHEV). Due to the size and weight savings of the Libralato engine and a reduced battery size (5kWh = EU daily driving distance, 27km), all the hybrid components can be fitted into conventional engine cavities – enabling any vehicle model to be fitted or retrofitted as a PHEV. Studies show that a vehicle of this nature will tend to be driven 2/3rds of the time as an electric vehicle, with zero urban emissions, 75% fuel cost savings and 50% W‐T‐W CO2 savings. Business Model The combustion engine industry is composed of relatively few key industrial players and has a very elaborate supply chain network. Libralato Holdings Ltd. will focus on R&D and commercialization of the Libralato engine within the portable, mobile, automotive and industrial engine sectors. Revenues will be generated by license fees, production royalties and consultant engineering for specific applications. Libralato Holdings ltd. subsidiary company Libralato Engines ltd. will hold an exclusive license to manufacture and sell the Libralato engine within the UK. Libralato Engines Ltd. Libralato Engines Ltd. will establish an assembly plant in Manchester in partnership with an OEM licensee and will utilize a global supply chain for parts. This arrangement will fulfill social objectives to revive the legacy of Rolls Royce in Manchester, to create powertrains fit for the 21st Century and to create knowledge economy sustainable jobs in a UK urban regeneration area experiencing severe disadvantage. Financing A staged approach to the development of the Libralato engine provides a managed risk approach to the engine design and development. Small, low cost steps will be taken to validate and simulate the engine’s performance before more significant investment is required to produce a full working prototype. Costs are based on quotation by Ricardo UK Ltd. Cost (£) Duration (weeks) Phase 1 – Validation Study 42,600 4 Phase 2 – Thermodynamic & 77,800 6 Kinematic Simulation Phase 3 – CAD Design 550,000 – 650,000 22 Phase 4 – Prototype Build & Test 200,000 – 300,000 12 A combination of equity and Government grants is being sought for Phases 1 – 4. Phases 1 represents the highest risk, because the engine is not yet independently validated. Libralato Holdings Ltd. and Libralato Engines Ltd.