be profitable by the end of this year, according to Larry Fromm, Achates’ vice president of business and strategy development. (When I asked Johnson about achieving profitability, he was more circumspect, saying, “We feel really good about our goals and our progress, but we’ll see.”)
But Achates’ lucrative contract work also comes with a key PR disadvantage—Achates’ customers usually impose non-disclosure requirements that prevent the San Diego startup from identifying its customers or discussing its projects.
So Johnson and company were pleased to discuss a three-year contract that was awarded last month by the U.S. Army Tank Automotive Research, Development and Engineering Center (TARDEC) to AVL Powertrain Engineering and Achates Power.
“It’s the first contract we could talk about,” Fromm said. “We are working on other engines for other companies. Truck engines. Stationary power engines. But we can’t talk about that.”
TARDEC, a major Army research, development and engineering center based at the Detroit Arsenal in Warren, MI, awarded the contract for design and construction of a “next-generation combat engine.” The $4.9 million contract calls for AVL, the prime contractor, to make an engine based on Achates’ opposed-piston design, with superior fuel efficiency, high power density, and reduced heat loss through combustion and exhaust gases. The engine is intended for use in a wide range of military vehicles, and must be multi-fuel capable. When completed, Fromm estimates the engine will produce between 200 and 250 horsepower.
“Think of the fleets of vehicles our military uses,” Johnson says. “Trucks, ambulances, humvees, MRAPs [Mine-Resistant Ambush Protected]. It’s a huge logistical infrastructure, and it uses about 2 percent of all fuel used in the U.S.”
The Army allowed Achates to disclose the contract award, but Johnson said the company wouldn’t be releasing performance data and other details about the Army’s next-generation engine once it’s completed. Still, he says the Army contract is “a reflection of the work we’ve done so far. It’s actually a modest contract for us, and one that’s easy for us to deliver.”
So what can Achates disclose?
In numerous benchmark comparisons with various engines, including both production models and advanced development engines, Johnson says the Achates engine “consistently shows a 15 to 20 percent improvement in fuel efficiency over the very best engines that are out there.” This includes published data for the best-selling diesel truck engine in the U.S., the Ford 6.7 liter V-8 power-stroke engine, built for Ford’s popular SuperDuty pickup truck. Achates says its engine also can comply with the strictest emission standards, including EPA 10 and Euro6.
In an industry that typically strives for a 1 or 2 percent gain in fuel efficiency, Johnson says, “20 percent is huge. It’ll change the world. But not like the lightbulb. It’s going to take some time.”
In addition to contract work, Achates sees revenue-generating opportunities in technology licensing. “We expect to sustain ourselves doing engineering services, and once engines are in production, we’ll get royalty revenue from every engine sold,” Fromm said.
Johnson says Achates is focused initially on the U.S. and global markets for commercial engines, an estimated $51 billion market. The next target he sees is the combined market for gasoline and diesel-powered engines, which is now at more than $300 billion and accelerating to an estimated $526 billion in 2020. That should be enough to get a startup company out of first gear.
