Pumped up over fresh-air cars
BY DAVID HASSALL | 27th Apr 2009
Since presenting to potential investors – the Victorian and federal governments – in November 2007, the company has raised only $1 million in Australia and has not been able to provide the French supplier of the air-powered technology with the $5 million needed to start building motors.
Nevertheless, IT-MDI Energy still intends building not only engines but complete cars in Victoria in a series of plants around Melbourne and regional areas, each capable of producing 7500 vehicles a year.
IT-MDI Energy’s Melbourne-based business development manager for Australia, Michael Walsh, told GoAuto he estimated the cost of developing a complete car, having it certified for registration and put into production would be $20 million.
Despite having already spent $1.5 million to secure a licence to produce the air-powered motors developed by Luxembourg-based company MDI – which is itself a 20 per cent stakeholder in IT-MDI Energy – the local team has set about developing its own hybrid engine in New Zealand for use in cars and for electric power generation.
This engine – developed by Andrew McGregor, a director of IT-MDI Energy’s parent company IndraNet Technologies Ltd – uses small amounts of petrol or LPG to compress the air required to drive the main part of the engine.
The company claims the fuel consumption for a vehicle using this engine would use less than 2.0L/100km.
Mr McGregor is described by Mr Walsh as an “automotive physicist”, but his profile on the company website mentions the fields of computer science and communication technology.
Mr Walsh said the engine had been developed to be retrofitted into existing cars, but admits that he did not know how this would be achieved for such a wide range of existing engines. He said the air-powered engine would cost about $3500 but that consumers would be charged per kilometre rather than an up-front fee for a retrofitted unit.
For Australia, Mr Walsh said IT-MDI Energy was also looking to employ a mobile phone-style pay-as-you-go business model for its complete vehicles, charging about $12 a day to “rent” rather than own a vehicle.
Mr Walsh said it would take three years to get the first air-powered vehicle on the road in Australia once the finance had been raised.
The first vehicle earmarked for local production is the buggy-style OneFlowAir developed by MDI (Motor Development International), which is expected to be sold in Europe from 2010 priced at between €3500 and €5300 ($A6400 and $A9700).
The company’s 2007 government submission quoted a price of about $8000.
MDI is owned by engine designer Guy Negre and his son Cyril, who have received widespread exposure for their proposed air-powered engines and vehicles, with the promise of zero emissions and ultra-low running costs. One report even likened it to “perpetual motion”.
In October last year, Dr Negre demonstrated three models in Nice in the south of France – the OneFlowAir, a two-seat van called the CityFlowAIR and the AirPod, a 180cc 4kW/15Nm three-wheeler that will be available from the end of 2009 and will be used at airports by Dutch airline KLM.
Last month, the company displayed its wares at the Geneva motor show.
Dr Negre fronted the Australian presentations in November 2007, including to the House of Representatives in Canberra, and at that time talked of a five-year $1.5 billion solar-based and fully-sustainable plan “for power generation, transport and communications for the whole of Australia”.
According to Mr Walsh, MDI has a cash shortfall because it is awaiting a second payment of €10 million ($A18.3 million) in licensing fees from Tata Motor in India, which signed a deal in 2007 to produce up to one million MDI-powered vehicles a year.
He believes the NZ-developed motor will be produced before the MDI motor in this region.
“The company that’s going to be producing them here in Australia is Yella Terra [a highly-respected Melbourne-based performance engine components manufacturer] and they’ll do the first 300 or 400 motors,” Mr Walsh told us.
“The motors will be similar size or a little bit smaller than the ones that are currently in the cars. A 50kW motor will be similar in performance to that of a Toyota Echo, which has got a 1.5-litre motor.
“(But) we’ve got to try and get more effort from MDI. That’s the motor we ideally want to work with, the main reason being that it’s very cheap to manufacture and it’s got a higher output and a very high efficiency rate.
“We’ve got 60 per cent of the designs sitting at Yella Terra without the rest, which is totally ridiculous for us because we can’t go any further until we get the balance of the designs.
“In the automotive space, ideally with the MDI motor, we are wanting to produce our own cars here in Australia to enter into a niche market. We can then expand on that model to cater for six-seaters, family vehicles to commercial vehicles, to heavy vehicles, to heavy transport and then into light aircraft.” IT-MDI Energy plans to build the CityFlowAir van as well as the OneFlowAir, which has a carbon-fibre body and weighs only 380kg.
While these are being developed, Mr Walsh said that engines would be sold as power generators, which would raise some revenue for the company.
“We would have to go through a process of getting (the vehicle) through the system for approval for registration on the road, which would probably take 18 months to two years from what we understand.
“In the meantime, we need to get some revenue in – the quickest way to get revenue for us is power generation because all we’re introducing there is motors.
“We set up relationships with a number of large national developers and VicUrban here in Melbourne to get involved in providing a technology at various sites that they’re involved in around Melbourne in domestic, commercial and industrial applications (but) all that is on hold until we can produce this motor in New Zealand, or Guy Negre from MDI agrees to give the balance of the designs to Yella Terra so they can start producing the motor.” Which requires IT-MDI Energy paying another $5 million? “Yes, and we don’t have that in the current market. We’ve paid $1.5 million to MDI already but we still need to find another $5 million to pay the balance of the license fees.” Mr Walsh – who is an investor who works for the company without pay – said that one of the major stumbling blocks to raising capital investment was that venture capitalists want to control the parent company, which has 3500 shareholders, and then sell off IT-MDI Energy after five years, which he said would be difficult.
He said that the company was hoping to access the federal government’s $1.3 billion Green Car Innovation Fund, but seems to think the fund will be directed to existing companies rather than start-up outfits like IT-MDI Energy.
“$20 million doesn’t sound like much, but it’s enough for a factory for us to produce the motor and be able to produce the first group of prototypes for the first year. We can produce about 1500 cars in the first year, a lot of those for testing and evaluation, then in the second year we expect that we’ll start producing cars that will be acceptable to the market.
“$20 million’s not hard to get – there’s a lot of money still out there, even in these financial times – but we just seem to be struggling to get there. Maybe it’s not knowing who to talk to.
“The business plan states that we need about 14 months from the time we get the designs to the time we have a car produced that meets the Australia safety standards, which then has to go through the testing processes, so overall we anticipate about a three-year process from the time we produce a car to the time we get it accepted for registration.
“We’re looking at a ‘distributed factory model’ – instead of having a factory sitting in Melbourne, for example, that might supply Victoria, parts of NSW and probably South Australia, we’ll have factories located here in Melbourne, there may be one in Bendigo, could be one in Warrnambool, might have five here in Melbourne producing cars and also power generators.
“It does (seems to defy the laws of mass production). The costs are a little bit higher, but we don’t see people having to buy these cars from a car yard so some of our costs are down.
“We don’t need as big a factory to build the same number of cars like you do today. The factory size we need to produce 7500 vehicles is 100 metres by 42 metres, so it’s not very big. By having a distributed model, we’re not having to worry about carbon credits associated with transporting these vehicles or components.” Mr Walsh said the company would offer licenses or franchises to build and promised a margin of 38 per cent, which he said was “unheard of in the automotive industry”.
As well as the three-seat car, the two-seat van and its five-seat and six-seat passenger variants, Mr Walsh said that IT-MDI Energy already has orders from holiday resorts for the funky little AirPod. “We’ve just got to be able to produce them,” he said.