-Volvo Group and Westport sign a letter of intent to establish a joint venture to reduce CO2 emissions from long-distance transport
Using HPDI technology to accelerate decarbonization efforts of global OEM customers
VANCOUVER, BC, July 19, 2023 /PRNewswire/ -- Volvo Group (VOLVb.ST) and Westport Fuel Systems Inc. (TSX: WPRT) (NASDAQ: WPRT), a leading provider of advanced fuel delivery systems and components alternative for the global transportation industry, have signed a non-binding letter of intent to establish a joint venture to accelerate the commercialization and global adoption of Westport's HPDI™ fuel system technology for long-haul travel and off-road applications. Volvo and Westport share a vision of creating sustainable transportation solutions to accelerate the decarbonisation efforts of global truck, engine and equipment manufacturers for their customers and society.
Westport's HPDI fuel system is a high-performance solution that supports significant carbon reductions in hard-to-reduce sectors such as heavy-duty and off-road mobility. HPDI enables the world's truck and off-road equipment manufacturers to address the challenges of meeting US EPA and Euro 7 regulatory requirements while providing end-users with affordable options that run on carbon-neutral fuels such as biogas, carbon-free fuels like green hydrogen and other renewable fuels. While Volvo will be a key customer of the joint venture, the mandate of the joint venture will be to enhance HPDI's marketing by bringing on new truck and equipment manufacturers as customers.
Westport will contribute HPDI's current assets and activities, including related fixed assets, intellectual property and businesses in the joint venture. Volvo will acquire a 45% interest in the joint venture for the amount of approximately USD 28 million (approximately SEK 300 million) plus up to an additional USD 45 million (approximately SEK 500 million) depending on the performance of the joint venture.
Volvo's ambition is to achieve net-zero greenhouse gas emissions-enabled products, solutions and services by 2040. Volvo believes that the future will demand diverse powertrain solutions for various applications to meet customer needs and environmental demands. Volvo advocates a three-pronged approach: battery electric, fuel cell electric and internal combustion engines.
"Decarbonization with internal combustion engines running on renewable fuels, especially with HPDI, plays an important role in sustainable solutions. HPDI has been on the road in Volvo trucks for more than five years and is a proven technology that enables customers to significantly reduce CO emissions in LBG (liquefied biogas) applications in the here and now and is a potential avenue for hydrogen," said Lars Stenqvist, Volvo's chief technology officer.
"Westport is advancing fuel system solutions to help our customers affordably address the most pressing challenge of carbon reduction, while continuing to use existing manufacturing infrastructure," said David Johnson, Westport CEO. "The joint venture with Volvo is a natural extension of both companies' commitment to accelerating global carbon reduction and we are proud to partner with such a bold supporter of the future of the internal combustion engine. The combination of our experience strengthens Volvo's position HPDI into the market and underscores Westport's commitment to developing affordable fuel system technology that supports significant CO reductions in hard-to-reduce sectors such as heavy trucking and off-highway applications, including a pathway to fuel-based power equipment without carbon like hydrogen".
Completion of the joint venture is conditional on successful negotiations and execution of a definitive investment agreement, a joint venture agreement, a supply agreement and a development agreement. The joint venture is expected to launch in the first half of 2024.
HPDI is the most cost-effective way to reduce CO in long-haul trucking and other heavy-duty and off-road applications. Westport's HPDI fuel system is a complete system that offers OEMs the flexibility to easily differentiate their product lines of biogas, natural gas, hydrogen and other fuels, while maintaining the closest similarity to their conventional diesel fueled products. diesel. Fuels that emit greenhouse gases, such as diesel, can be replaced with carbon-neutral or zero-carbon fuels, such as biogas or hydrogen, while maintaining the characteristics of durability, affordability, efficiency, and performance that have been associated with the diesel engine. . The HPDI fuel system is a fully integrated "tank to the top" solution, based on diesel technology. At the heart of the engine is a revolutionary patented injector with a concentric twin needle design. A small amount of pilot fuel (which can be diesel fuel or renewable biodiesel) is injected into the cylinder before the gas to start the ignition.
Engines can achieve higher horsepower and torque by using direct injection and relying on high combustion chamber pressures for ignition. Thus, the characteristic of the engine using an HPDI fuel system is very similar to that of a diesel engine. Designed for heavy-duty long-distance and distribution operations, as well as off-highway applications such as mining, rail, and marine, HPDI fuel systems offer a low climate impact alternative while meeting the highest industry standards for fuel efficiency. to performance, fuel efficiency and operating range required for heavy transport. A truck equipped with the HPDI system is an ideal solution for fleets that want to reduce their fuel costs and offer their customers decarbonized long-distance and regional trucking solutions without compromising vehicle performance. For more information, visit our HPDI website at https://wfsinc.com/technology/hpdi.
At Westport we drive innovation to drive a cleaner tomorrow. We are a leading provider of advanced fuel delivery systems and components for clean, low-carbon fuels such as natural gas, renewable natural gas, propane and hydrogen to the global transportation industry. Our technology offers the performance and fuel efficiency required by transportation applications, as well as the environmental benefits to address climate change and urban air quality challenges. Headquartered in Vancouver, Canada, with operations in Europe, Asia, North and South America, we serve our customers in more than 70 countries with leading brands in the global transportation industry. At Westport, we think ahead. For more information, visit www.wfsinc.com.
This press release contains "forward-looking information" within the meaning of applicable securities law ("forward-looking statements"). Forward-looking statements are frequently characterized by words such as "expects", "intends", "may", "will", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or " may" occur. Forward-looking statements in this press release include statements regarding the timing and completion of the aforementioned joint ventures and definitive agreements with respect thereto. These forward-looking statements are not promises or guarantees, but involve known and unknown risks and uncertainties and are based both on management's opinions and on assumptions that may cause Westport's actual results, activity levels, performance or achievements to be materially different from any future results, activity level, performance or achievement expressed or implied by these forward-looking statements. These risks, uncertainties, and assumptions include those related to the success and completion of the engine development program, the price and availability of hydrogen as a transportation fuel, our ability to meet technological challenges, the general economics, the solvency, government policies and regulations, exchange rate fluctuations, as well as other risk factors and assumptions that may affect our actual results, performance, achievements or financial condition and that are described in the ongoing disclosure files of Westport available on Westport's SEDAR profile at www.sedar.com and on Westport's EDGAR profile at www.sec.gov. In addition, the effects and impact of the COVID-19 outbreak and supply chain disruptions are difficult to predict at this time and could cause actual results to differ materially from the forward-looking statements contained herein. Readers should not place undue reliance on any of these forward-looking statements, which are valid only as of the date made. Westport disclaims any obligation to publicly update or revise such statements to reflect any changes in its expectations or in the events, conditions or circumstances on which such statements may be based, or which may affect the likelihood that actual results will differ from those set forth in these forward-looking statements, except as required by law.
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