Lightning Hybrids retrofits for growth

LOVELAND – Loveland startup Lightning Hybrid Inc.’s employment projections could jump from a dozen to 300 and, with some pending partnerships, possibly many more, with a little tweaking of its original business plan.

Lightning Hybrids was incorporated in October, focused on creating a hybrid vehicle that was “something a car guy would buy,” according to co-founder Dan Johnson. The firm has been working fast and furiously to engineer and build such a hybrid, combining hydraulic motor technology with advanced body design to create an automobile capable of getting 100 miles per gallon. A prototype was on display at the Denver Auto Show in April.

As Lightning Hybrids began to garner interest, inquiries about the technology got company officials thinking. A new division, Hydraulic Hybrid Systems Inc., will take on the challenge of developing retrofit kits for vehicles already on the road.

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“As we started working on the hydraulic hybrid system for the cars, we had a lot of people come out of the woodwork needing it for fleet vehicles,´ said Bonnie Trowbridge, vice president for business development at Lightning Hybrids.

Trowbridge pointed to Environmental Protection Agency data on similar technology that shows energy efficiency gains of 40 percent to 60 percent. Lightning Hybrids is hoping to replicate or surpass those savings. Trowbridge said the average cost for a retrofit kit will be around $12,900, with a return on investment slated for year two.

That compares to the $39,000 to $59,000 price tag, depending on model and options, for the company’s own vehicles: the three-wheel LH3, set to launch in mid- to late 2010, and the LH4 in early 2012.

With its original plan just to build cars, the company anticipated creating around 50 primary jobs over the next few years, and after months of deliberation, on July 7 the Loveland city council approved a job-creation incentive worth up to $100,000. However, with the retrofit kit subsidiary Lightning Hybrids actually anticipates creating 300 jobs by 2013.

Lightning Hybrids has already landed some potential retrofit clients. A Denver International Airport truck now in the shop will act as a case study for the technology. Trowbridge said the company is also in discussions with the state of Colorado to conduct similar tests.

One issue with developing the retrofits is that each vehicle platform requires retooling. Trowbridge said that the first platform could be available commercially in 90 days, but the company will probably require at least 100 vehicle retrofit orders per platform before work can begin. She pointed out that the 100 orders will not have to come from a single customer.

Lesson of retrofit costs

Another Northern Colorado startup has already learned the lesson of retrofit costs. Czero, a Rocky Mountain Innovation Initiative incubator company, has been working on development of hydraulic hybrid retrofit kits since its founding in 2007.

Founder Guy Babbit said that during the past year, the company has focused on reworking its prototype, especially the cost of installation and manufacturing across platforms.

The new design incorporates the original hybrid hydraulic technology with some enhancements in installation and increased transmission efficiencies. Babbit puts Czero’s retrofit efficiency at 20 percent to 30 percent, conservatively, with some applications getting efficiency gains of up to 40 percent. Czero filed several patent applications this summer and will likely follow up with several more.

Czero has also reworked its initial business plan. The company intended to enter international markets with major pollution issues to retrofit vehicles that stop often, such as trash trucks and mail vehicles, because the greatest energy savings for a hydraulic hybrid are made when braking.

The company had already started laying the groundwork in India when “we realized that the business case would be very difficult,” Babbit said. Barriers to entry included displacement of well established and politically connected technologies as well as travel expenses.

Czero’s goal now is to have a demonstration vehicle up and running for the Rocky Mountain Sustainable Living Fair in Fort Collins on Sept. 19 and 20. The firm also hopes to have a small fleet of demonstration vehicles by next summer. Babbit is currently discussing potential partnerships with the city, local businesses and the Northern Colorado Clean Energy Cluster.

The company also continues its engineering consulting business to fund its hybrid development. Clients include local engine component developer VanDyne SuperTurbo, Solix Biofuels and Bombardier Recreational Products, manufacturer of Evinrude & Johnson outboard engines.

Working toward an X-Prize

Lightning Hybrids’ retrofit business also carries the potential to fund continued development.

“This will help us fund the vehicle for the XPrize,” Trowbridge said.

Lightning Hybrids plans to enter two vehicles in the Progressive Insurance Automotive X Prize, a competition for new viable, super fuel-efficient vehicles that can be available to consumers. The competition will award $10 million shared among three winners in two categories – mainstream and alternative.

The prize would go a long way to supporting the company’s growth, but officials are focused on a potentially bigger prize – expanding into electric technology.

In conjunction with a research team at Colorado State University, Lightning Hybrids has applied for a grant that could bring as much as $74 million in federal funds to develop, test and manufacture lithium-ion battery technology.

According to an information sheet distributed by the CSU Research Foundation, the technology, developed using patent-pending nanowire fabrication, is capable of rapid charging and discharging for extended battery life with low capacity loss.

“All of that money would be coming into Northern Colorado,” Trowbridge said of the grant, adding that it could mean the difference between 300 and 3,000 workers. A decision is expected in September.

Lightning Hybrids plans to open manufacturing facilities in or close to downtown Loveland. Trowbridge said the company has not started looking seriously for space yet, since it is waiting to see if the battery technology grant comes through.

“We have indications that we’re a good candidate for that grant,” she said, with Rep. Betsey Markey adding her letter of support.

The company has applied for several other grants as well, with awards ranging from $2.5 million to $20 million, which could greatly impact its trajectory of growth.