Until October of last year, ElectReon Wireless (TASE: ELWS) was a stock exchange favorite. ElectReon, which is developing and implementing wireless Electric Road Systems (ERS) - a platform that charges electric vehicles while driving using coils under the asphalt - entered the Tel Aviv Stock Exchange after merging with shell company Biomedix Incubator in October 2017. ElectReon reached a market cap of about NIS 3.1 billion last October. Since then, however, the share has fallen by about 45% and its market cap has dwindled to about NIS 1.7 billion.
ElectReon was founded in late 2013 by CEO Oren Ezer and Chief Scientist Hanan Rumbak, after both had served in various positions at Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT. ElectReon is currently controlled by Ezer and Rumbak (15.6% each), Capital Nature (11.2%), and transit service Dan Bus Company (5.4%), which is cooperating with ElectReon on charging electric buses.
ElectReon, which is currently piloting in Sweden, Italy and Germany, also began a preliminary pilot in Tel Aviv in October 2020, as part of which the first section of a 600-meter-long electric road on George Weiss Street was installed. The company also installed a wireless charging station at the bus depot on Yeruham Mashal Street.
On a recent summer day, Globes "checked out" the electric bus and interviewed Oren Ezer.
"Over the past few years, we've checked to make sure the coils don't damage the roads, to see if they can function under actual environmental conditions," says Ezer. "The coils have been operational for over six years and everything is fine. For this current project, we're demonstrating electrification of the terminal, and the electrical road. Overall, our clients are very satisfied. We operate in Israel, Europe and are now entering the US market; we've established a company based in Los Angeles, recruited two employees, and intend to grow quickly. We intend to conduct a first demonstration at the University of Utah by the end of the year - depending on flights and the coronavirus.
"The project in Italy has started - installation is expected to be done as early as this October - and the pilot project in Germany with EnBW [Energie Baden-Wurttemberg] is progressing nicely - the bus will become commercial in under a month. The next stage will be to receive the European CE Mark, which will enable us to sell the system commercially, and also to receive final approval for the bus ERS component. These two approvals will allow us to start commercial projects."
Does the electric road you installed here in Tel Aviv use the same technology as your projects in Europe, or is there a difference?
"The coils have changed dramatically over the years, mainly in shape and size. The coils in Tel Aviv are fourth generation, while the coils we’ll install in Italy will be a more advanced generation. In Sweden, we have a truck that's been on the road for almost half a year, and we're collecting very important information. It's very important to run the system in real world conditions before commencing sales. You can't sell a public transit product that hasn't been road-tested.
"By the end of this year, we'll have a product that's been operational for over a year. After this period, we'll be ready to move on to a commercial project. Right now, the Tel Aviv bus is operating but not carrying passengers, as we have to finalize ECE Regulation R10 on electromagnetic compatibility for our receiver, which should come in a few days. The minute we get that approval, we'll announce it, and from that moment on, the bus will be able to take passengers."
So you'll be starting sales in 2022? "We want to start recording revenue towards the end of the year."
Riding the electric bus is very similar to riding a regular bus, without the noise or air pollution. Traffic speed on Tel Aviv’s streets is slow during most of the working day (the average city bus speed is about 13 km/h), so charging can be accomplished relatively easily (according to Ezer, charging works very well even at high speed).
Let's talk about cost. Compared with a regular polluting bus, or even electric bus, is your bus cheaper?
"Let's take two scenarios. In the first, we use currently available systems: a bus with a large battery that can travel all day, with a standard charger for overnight charging in the parking lot. A 90 kilowatt charging station costs about $30,000 per bus. The bus must be equipped with a large battery.
"With us, costs are much lower. Right now, overnight electric costs are low but that’s going to change. Electric vehicles are game-changers because most will use electricity at night, meaning demand will rise. So, the government wants to encourage people to charge during the day. In addition, solar panels are starting to gain ground; they'll increase daytime energy availability."
"Israel wants to convert most buses to electric by 2026"
That's a bit weird, isn't it? It will take at least another two to three years until solar panels reach critical mass.
"In Israel, there are 9,000 city buses, and Israel wants to convert most of them to electric by 2026. Clearly, there's a similar trend all over the world. We need to start preparing for this. The price of a 400 kilowatt battery can reach $150,000. By using wireless charging stations, we can transfer power to a battery during the day, lower the operator's nightly consumption, and also reduce battery size. "
Is your battery a third of the size of a regular battery?
"Depending on the use-case and the infrastructure layout. The Tel Aviv electric bus is equipped with a 42 kilowatt super capacitor - about 15% the size of an electric city bus battery. In general, we'll enable savings of about $70,000 per battery. Multiplied by a thousand buses, that comes to a savings of about $70 million. Taking into account that batteries have to be replaced every few years, the savings are doubly important. And we haven't even mentioned the competition over batteries against electric cars."
Yes, but you have charging stations as well.
"The bus terminal is a shared location for a large number of buses. 20 charging stations at the terminal at Tel Aviv University could provide service to hundreds of buses."
What about radiation?
"We performed radiation tests with satisfactory results. You're allowed 6.2 microtesla and we present 0.2 microtesla. You can see that the meter shows the same radiation level when charging and at rest. In principle, charging at terminals can lower costs for the operator. Each charging station costs $25,000-40,000 per bus - we'll save him this cost; we want to finance the cost of the charging stations at the bus terminals."
Why fund that for them?
"We want to provide service at the terminal to several operators at the same time, so there's a need for a third party to manage the charging system."
Is your business model to sell the bus with your receiver installed in it?
"We don't sell the bus, we install the receiver and users pay for the service."
Do you buy electricity from the electric company and sell it to customers, basically like a kind of agent?
"We provide a service, we have added value. Our application provides additional information such as the bus's location, battery status, driver profile, alerts about travel time - is there a problem with the Number 5 bus line? Is it about to get stuck? - and other aspects of the service."
Why did you start with buses?
"We started with buses because they are the main urban polluters and they travel regular routes. But, every driver is different. Some are more aggressive, others are less. Every driver has their own profile: some can drain a battery in ten hours before even finishing their shift, other take sixteen hours."
What's the rate at which it can charge?
"The charging rate is 50 kilowatts an hour. The bus has a 42 kilowatt hours super capacitor, so 50 minutes allows for full charging."
If it comes in at 20% charge, how long does it take to reach 80%?
"Today, it takes half an hour for a bus. Later on, we'll increase the charging rate to 90 kilowatts, which means we'll cut the time by about half.
"In the future, there will be no more charging cables. They're a catastrophe. We've been operating in wireless charging for eight years. The world is heading towards wireless charging."
"Our goal is to multiply production capacity ten times next year"
As mentioned, those who invested in ElectReon stock in late 2017 and early 2018 made a phenomenal profit, up until October last year. Even after the decline of the past few months, it still shows nice profit on paper. In contrast to the share's high volatility, the company continues moving towards achieving the goals it has set for itself, with strong encouragement from regulators in Israel, Europe and the US. Ezer says that ElectReon has no problem with cash. "We have about $60 million in reserve, and annual expenses of about $7-8 million. We're a very thin company. "
If you're planning to make the big jump in status really soon, do you have enough money?
"Right now, there’s enough money to increase production a little and penetrate target markets. Also, we don't need to finance all projects directly, our numbers are very attractive to outside investors. We're currently focused on buses and last mile delivery trucks. That's a big market that is transitioning to electric transportation. We help those fleets convert to electric. "Wireless charging in the loading/unloading zones at distribution centers can be done in two ways: electrification of the waiting area at warehouse entrances, and electrification of the loading/unloading zone. Why is wireless charging preferable? Because, in a city, charging stations and cables are an environmental hazard, and advanced cities won't agree to it. Imagine a city like Tel Aviv with cables running along the streets. Plus, if you've parked badly, you'll get in the way of someone who wants to charge."
You have quite a few competitors around the world.
"Yes, but they work mainly with charging cables. I don't see a problem with competition. On the contrary, it strengthens our industry. Our competitors usually use static charging. We offer dynamic charging, as well. I think our product is more attractive in terms of both installation and price. The proof is that we win lots of tenders in Europe."
How much does it cost to deploy a mile of smart electric road?
"Our goal is to reach about $650,000 per kilometer. Electrification of the main streets in Tel Aviv will cost about $100 million. A dramatic impact at a low cost. The whole world is now pushing for wireless charging, and fortunately, we're already equipped. In the last two years, we've deployed four kilometers. Our goal is to increase production capacity ten-fold in the next year. We work with local and Chinese manufacturers. Our goal at the production level is 50 kilometers a year.
And what's your target for Tel Aviv?
"Two channels: electrification of terminals, and electrification of main roads for public transport."
All this assumes that electricity prices will stay as they are. Bear in mind that taxes on fuel and vehicle purchases generate very significant revenue for the state.
"True. But if you take a country like Sweden, you can see that the way they’re working is very, very clear. Their goal is to covert heavy transport to electric power, the state is investing in infrastructure and will demand payment for the use of that infrastructure, and the delivery companies will make the move to electric transport - electric vehicle operation is cheaper. We’re proud of our collaborations with leading car manufacturers. Today, you can buy an electric bus from Chinese manufacturer Hager that has our technology."
Is the your receiver expensive?
"Our receiver costs in the hundreds of dollars. We're preparing for mass production to bring down the price."
Will all production be outside Israel?
"No, why? We believe in working in Israel and we have very good partners that we're working with to develop manufacturing capacity in Israel, too."
How much do you manufacture in Israel right now?
"We produce almost everything in Israel. In addition, we also have production facilities abroad for larger quantities… production right now is in China, France, Ukraine, and we're currently examining the possibility of production in India, too. We have all options. Depending on where the project is, we'll adjust the supply chain. "
And there's no problem in terms of temperature and speed?
"The average bus speed in the city today is 13 km/h. If the temperature is too high or too low, a battery doesn’t function optimally. Our proposition reduces the problem and the dependence. Wireless charging isn't affected by cold or heat… water or snow has no effect on performance."
Once you receive the European standard, does it also apply to Israel?
"Yes. The projects in Germany, Sweden and Tel Aviv are waiting for approval. Once we receive approval, the pilot will become commercial. As we see it, that will be in the very near future, but there could be an unexpected surprise, of course."
Published by Globes, Israel business news - en.globes.co.il - on August 5, 2021
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