TriFuels - better for the earth, less fuel-burning girth.

1. TriFuel Ventures:
Further Steps
(a production of CNGVentures)
July 5, 2012
Stanford E145 OEP Assignment

2. The Fundamental Problem:
As seen in our Summary of OAP Results
• There is little unbiased information available to determine if an Electric
Vehicle OR a CNG vehicle is the best way to proceed for a
company/organization.
• There is a potential market for an unbiased advisor to provide balanced
information on conversions to EVs, CNGVs, or status quo; Interviewees
thought there would be a market for such advising services
• Larger fleets and companies that specialize in fleets don't need us; smaller
fleets that focus on other businesses (florists, etc.) are the target audience.
Also, municipalities may lack the resources to make fully-informed decisions.
For the OEP, we decided to hone further in on the potential
market based on research we conducted during and before
the OAP. The OEP meets the class criteria but also seeks to
lay out the next steps anticipated for TriFuels Ventures.

3. The Business Model
We must know who our Target Audience is
• "Goldilocks Fleets:"
o Too small: not enough money at stake
o Too large: have their own expert analysis
o We expect to target fleets of 5-50 vehicles, but are still
testing the size boundaries.
• Fleets with more than one alternative option
(EV and NGV) provide the best opportunity.
• Companies and owners without sophisticated
analysis staff need the most assistance.

4. The Business Model (cont’d)
• This will be an asset-light business model, as our analysis shows
that most of the work will be consulting-related.
• Once established (with several free consultings that establish our
methodology), our fee system is success-based. We will charge a
minimal upfront fee, but then the rest is performance-based.
• We will charge 50% of the cost savings associated from the energy
savings component (each case will be negotiated individually, as
some will have greater capital costs involved). This “performance-
based contracting” model was created during the OAP, and during
our survey process of companies since then, this was agreed upon.

5. Next Steps: Initial Sales and
Marketing Strategy
1. Develop basic working models
2. Develop proposed services and deliverable
package
3. Beta test services for 1-5 clients (gratis)
4. Refine models and deliverable package
5. Market research to find "live" paying clients
6. Begin offering services to live clients

6. Market Assessment Analysis
• Modeling continues to be refined based on
EIA, DOE and fleet association data
• Target audience may be a "long tail."
o 97% of the nation’s 500,000 trucking companies own
fewer than 20 trucks
• Sensitivities based on pricing model?
o per-hour consulting vs. fuel savings
o Performance-based contracting vs. fuel savings
o Cognizant of supporting infrastructure and capex by
company

7. Analytic Tools and Models Required
• Market assessment model
o To help venture determine size of opportunity
• Utility realized cost model
o Sophisticated, real-world pricing dynamics for utility-
delivered electricity and natural gas for vehicle use
• Cost-basis estimate for NG fueling stations
o Bottom-up analysis of delivered NG costs;
o Allows comparison of retail purchasing versus
ownership of fueling equipment
o Allows for understanding of retail price effects of
changes in wholesale natural gas prices

8. Beta Test Project: Ohio Florist Van Fleet
Youngstown Plant & Flower- a
wholesale distributor of flowers and
floral products to florists in the Youngtsown
Ohio metro area.
They currently have a fleet of 6 vehicles used for deliveries
- 2 larger cargo vans (1 half-ton, 1 full-ton)
- 2 dedicated mivivans
- 2 of the owners minivans that are used for peak
They purchase, on average, 700 gallons of fuel per month

9. Our Beta: Youngstown Plant & Flower
• The ability to save on monthly fuel expenditures would give a
company this size the ability to be more on offense in their sales
strategy
• They can extend the geographic footprint of their range, thus
enabling them to fend off larger distributors from bigger metros that
dump inventory in the market
• Our first 3-5 companies will be done for free, to garner a track
record. They are our initial Partners and Allies.
It’s not just a cost-saving tool, it’s a profit
generator!

10. Our Beta: Youngstown Plant & Flower
Other factors to consider:
3) For small/medium companies, fuel costs also possess
an unwanted degree of volatility. Eliminating that volatility
is key.
5) However, there is a breaking point of where the stability
of a fixed monthly payment for the premium of having
either a CNG or EV system in place (i.e. adding $10k to
the price of a delivery van b/c it is CNG) may not warrant
the switchover. Knowing what that breaking point will be
is also key.

11. Where's the Value?
Examples of Decisions We Can Help Clients Make
Economics Environment
• EV vs. NGV vs. efficiency investments vs. "Stay Conventional?"
• How to evaluate efficiency investments versus going to alternative
fuel options?
• Act now or delay decision and wait for technology to improve or
market to develop?
• Are investments in fueling or charging infrastructure beneficial?
• How will a change affect my environmental profile? How can I extract
value from that?
Technology Operational
Options Impacts

12. Proposed Deliverables to Clients
• Survey of technology options
o Vehicles
o Retrofits
o Fueling options
• Narrow to most viable options
• Economic evaluation of options
o Compare forecasts of fuel sources (petroleum, electric, natural gas)
o Breakeven analysis versus conventional options, and alternatives vs. each
other
• Environmental assessment of options
o Identify opportunites to monetize environmental benefits
o Benchmark to continually-updated, state-of-the-art assessment of major
"environmental literature" and possibly NGO positions on these options.
• Identify operational adjustments or benefits that are likely
• Identify risks of options
o Fuel price volatility

13. Risks
• Competitive: Larger companies with more resources can
quickly enter – low barriers to entry.
• Competitive: The CNG industry is supported by ‘big gas’,
may not want dynamic offering of all fuel types being
presented objectively.
• Financial: We will be revenue-light for the beginning, as
we need to establish credibility first and foremost.
• Funding: Once the credibility factor has been
established, we will need to ramp up staff, systems, etc.
This will require greater funding requirements, and we
may have to seek out alternative capital.

14. Key Questions to Determine
Venture Viability: What to Test First?
• What's the real size of the market?
o Macro market analysis
• What's the willingness to pay?
o Customer surveys
• Are there many fleets with true EV vs. NGV options?
o Macro market analysis and technology option survey
• Do potential clients want to pay to simplify these decisions? How
much?
o Customer surveys

15. The Team
The initial team will be small, and therefore
serve many roles.
•Business Development – initial conversations
•Costing project capabilities – ensuring that post-beta, our team
can profit long-term
• Modeling team – creating individual models based on needs for
the companies
• Coordination with fleet build-out companies – ensuring the right
equipment delivered successfully.
• Follow-up and monitoring. Very key to business model
profitability.