Hydraulic Hybrids Continue to Shine for 2010

Posted on January 25, 2010

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Hydraulic Hybrid Systems refocuses on core technology

By Tom Hacker
Loveland Reporter-Herald

Denver International Airport’s fleet of 200-plus light-duty trucks, used for everything from plowing snow to maintaining runway lights, burned through about $1.3 million worth of gasoline and diesel fuel last year.

Everybody connected with the airport, from the guy who manages the fleet to Mayor John Hickenlooper, would like to see that number come down. So, they’ve turned to Loveland company Hydraulic Hybrid Systems for a solution that eventually could cut fuel use by as much as 40 percent.

A forerunner in the “other” hybrid vehicle technology — hydraulic, instead of electric as exemplified by the Toyota Prius — HHS is angling for a slice of the market made up of 6 million light-duty trucks in the United States alone.

What they offer is a hydraulic propulsion system that, when paired with a standard diesel or gasoline engine, can reduce fuel use by 40 percent and emissions by half.

“It’s something that everybody’s been waiting for, and nobody’s done it,” DIA fleet manager Bernie Maez said. “They’re really going to shine when they get done with their product.”

HHS is the relatively new subsidiary of Lightning Hybrids Inc., the company that burst upon Loveland’s business scene in 2008 with plans to produce a 100-mile-per-gallon, high-performance sports car.

The new company is focused not on building a sexy new car, but on developing the technology that powers it for use in more mundane fleet vehicles.

That technology is at once elegantly simple and infinitely complex.

First, the simplicity: The system stores energy used in braking in high-pressure tanks, built to contain 5,000 pounds per square inch, then releases that power to a hydraulic motor that propels the vehicle during acceleration.

The second key ingredient that HHS engineers are perfecting is more complicated. It’s the computerized controller that senses the most efficient way to balance power between the hydraulic and conventional engines.

HHS and Lightning Hybrids founders Dan Johnson and Tim Reeser last fall decided to shelve the sports car plan in favor of perfecting the hydraulic hybrid technology, a business decision driven by harsh reality.

“The crux of it was that it was going to cost $4 million to produce the car,” Reeser said. “We couldn’t raise that. But it’s not just us. NASCAR’s not getting their sponsors, either,” he added, referring to the nation’s premier stock-car racing organization.

Eyes Off the Prize
Abandoning the Lightning project, at least for now, also meant dropping out of the quest for the Progressive Insurance “X Prize,” a goal that the founders announced when Lightning Hybrid first emerged.

The insurance company’s global competition to produce the most efficient and highest-performance 100-mile-per-gallon vehicle will award $10 million to the winner.

A 23-page business plan that HHS revised this month serves as a road map to profitability, with some lofty goals set for the next two years that would eclipse the X-Prize target.

For the current year, HHS projects sales of 1,050 systems — priced at $12,900 each — but will still post an operating loss of just over $800,000.

But by 2011, according to the plan, unit sales will climb to 7,500, resulting in cash flow of nearly $16.4 million.

Simultaneously, the company will redevelop a building at 319 N. Cleveland Ave. in downtown Loveland to serve as its new, 8,000-square-foot home.

Profitability will also drive employment upward from the current 12 workers, including six interns paid by the Larimer County Workforce Center, to 36 full-time employees by the end of this year, the plan says.

Crucial Door Opens
A market gateway opened for HHS when Denver-based consultant Richard LeFrancois made a trip to the company last fall.

LeFrancois’ firm, Equipment Maintenance Innovators LLC, is one of the nation’s pre-eminent providers of advice on energy-efficiency technologies for the trucking industry. Clients include Conoco-Phillips, British Petroleum, and, yes, DIA.

“I think HHS has a tremendous future,” LeFrancois said. “We’re at the threshold of getting adoption of this technology into our industry, and they are perfectly positioned to take advantage of that.”

The key to HHS’ potential success is as much a matter of people as it is product, he said.

Company chief executive Johnson is the former founder and principal of SA Robotics Inc., a Loveland company that produces remotely controlled machines used to clean up deadly waste at nuclear plants.

Johnson and his wife, co-owner of SA Robotics, sold the company in 2008 after building its annual revenue to $20 million.

“It’s Dan’s entrepreneurial spirit,” LeFrancois said. “If you look internally at HHS, and Dan Johnson in particular, you have something very special. You have this guy who came out of the nuclear industry, and transferred everything he learned and perfected to an entirely new industry.”

Johnson’s new focus on the light-duty truck market doesn’t mean he has permanently abandoned his wish to build the perfect car, he said.

“The car is sexy. This isn’t so much,” he said. “But we’ve got to develop the technology in any case. When the time is right, it will be ready to go.”

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