Natural Gas as a Transportation Fuel October 2010
Forward Looking Statements This presentation contains forward-looking statements that are based on the beliefs of Westport’s management and reflect Westport’s current expectations. Investors are cautioned that all forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in these forward-looking statements, including, without limitation, Westport’s ability to develop viable fuel systems; Westport’s ability to provide the capital required for research, product development, operations, and marketing; product development, production and commercial launch delays; changing environmental regulations; Westport’s ability to attract and retain key personal and business partners; competition from conventional diesel fueled engines; and Westport’s ability to protect its intellectual property. These factors should be considered carefully and investors should not rely on any forward- looking statements. Investors are encouraged to review Management’s Discussion and Analysis and the Risk Factors section in Westport’s most recently filed Annual Information Form and filings with securities regulators for a more complete discussion of factors that could affect Westport’s future performance. We undertake no obligation to update or revise any forward- looking statements, whether as a result of new information, future events or otherwise, except as required by law. All figures are in U.S. dollars unless otherwise stated. 2
Westport at a Glance • Headquartered in Vancouver, B.C. • Toronto Stock Exchange: “WPT” - NASDAQ: “WPRT” • Market cap ~C$692 million (~U.S.$651 million) Market Focus Position Strategy • Transformation of markets for • Global leader in medium- and • Market penetration via OEM petroleum-fueled engines to heavy-duty commercial vehicle partnerships and JVs; All alternative fuels engines operating on alternative manufacturing outsourced fuels 3
Deep and Comprehensive IP Technologies • Global patent portfolio pivotal to Westport’s market leading position HPDI CNG Direct Hydrogen Direct • Core competencies in Injection Injection alternative fuel technologies • 65 U.S. patents as of Compressors August 4, 2010 Aftertreatment Systems Cryogenic Storage / Delivery 4
Recognized Leadership 5
Investment Highlights Dominant Market Position in Medium- and Heavy-Duty Natural Gas Engine Market Natural Gas Vehicle Market Appears to be Approaching a Global Tipping Point Working with Five of Top Six Truck Producers and Three of the Top Four Engine Producers Globally Strategic Alliances with Industry Leaders Creating Highly Scalable Business Model and Significant Barriers to Entry Highly Profitable and Capital Efficient Business Model 6
Growing Policy Support for Natural Gas Globally Clean Energy Jobs Bill DOE Clean Cities Program • Proposes incentive for the adoption of • $300 million in funding for 25 projects natural gas as a transportation fuel: – Aims to deploy over 9,000 alternative fuel vehicles and 542 refueling stations – $3.8 billion rebates available for 75-90% of the incremental cost of natural gas – Funding for approximately 2,300 CNG vehicles, up to a maximum of $64,000 vehicles and 500 LNG trucks was awarded – Rebates are available for qualified • We anticipate a significant portion of vehicles put into service between 2013 these 2,800 vehicles will use Westport and 2015 engines – Rebates are not considered taxable income to a qualified owner – Grants of up to $50,000 per unit to qualified refuelers for installation of Global Initiatives natural gas infrastructure put into service • EU – Requires a portion of government between 2011 and 2015 vehicles purchased to run on alternative • Additional $2 billion loans available for fuels manufacturers to re-equip, expand or • Italy – purchase credit erases differential establish a facility to produce any new qualified alternative motor fuel vehicle or • India / China – Both have expressed their component desire to move towards less polluting fuels over the next five years 7
Market Strategy 8
Target Market Segments Light Duty Medium Duty Heavy Duty High Horsepower Segment (1 – 5 litre) (5.9 – 9 litre) (11 – 16 litre) (> 16 litres) (Engine Size) Applications Westport Business Unit Business Unit • First Revenue Q1/FY11 • LTM Revenue $116m • LTM revenue $10m Summary • Acquired OMVL for • Launched 2001 • First product 2007 $23M (July 2010) • Profitable since 2004 • Shifting to long haul in the U.S. • High volume market • CY2006-2009 CAGR ~30% • Largest potential market • OEM focus • OEM Partnerships with: – Cummins – Volvo – Weichai 9
Global Leader: Natural Gas Bus and Truck Engines Short-Haul Trucks Transit Buses Refuse Haulers Delivery Vehicles School Buses 10
CWI Business Model • 50:50 JV established in 2001 • Minimal working capital / capital investment required • Sells mid-range alternative fuel 5.9- to 8.9- liter engines to vehicle OEM’s globally A leader in A leading gaseous fuel independent • 25,000+ natural gas engines, engine kits sold engine to date builder of technology commercial • Production in North Carolina, China and India and market diesel • 29.5% revenue CAGR from CY 2005-2009; creation engines with profitable since CY 2004 global • Market penetration: approx 20% of U.S. production transit bus; estimate similar rate in refuse and truck markets distribution 11
CWI’s Future Objectives • Continue to profitably grow revenue • Several bright spots: – Regional truck product launch 2009 (Freightliner, Mack, Peterbilt) – Bus engines in India: deliver Delhi order and expand market – US Stimulus programs (DOE Clean Cities, school bus, refuse) • FY2011: growth acceleration with economic recovery • Evaluate new products, new markets 12
Direct Injection Fuel System • Heavy-duty truck natural gas engine with diesel-equivalent performance, range and efficiency • Fuel injectors only change to engine • Proprietary and patented technology; 9 years development; >$200 million invested • Complete LNG fuel solution including proprietary tanks/fuel pumps integrated with engine 14
LNG Truck Launch Partner: Ports of Los Angeles and Long Beach • Clean Truck Program announced November 2006; implemented 2008: heavy port incentives for new trucks • Port opportunity created OEM truck availability: – Kenworth, Peterbilt (Westport HD) – Sterling, Freightliner (CWI) • Despite economic turmoil, over 700 LNG trucks on the road • Valuable feedback from fleets 15
Addressing the US Truck Market: Infrastructure 16
Addressing the Canadian Truck Market: Infrastructure • Proposed Transportation Corridors East: Quebec City, Quebec to Windsor, Ontario West: Edmonton, Alberta to Vancouver, BC • Industry Partners, Federal and Provincial Governments Source: Encana Presentation February 23, 2010 17
World Truck and Engine Production World Truck Production World Engine Production Daimler Weichai Volvo Dongfeng Volvo Tata (CWI) 6-16 tonnes FAW Daimler > 16 tonnes (CWI / Westport HD) Paccar Navistar Cummins Ford CNHTC CNHDTC MAN MAN Iveco NG Products Engine Development Hino Supplied by Partnerships / Joint Caterpillar Shanxi Auto WPRT / CWI Ventures Scania Scania All Others 0 100 200 300 400 500 600 700 800 0 50 100 150 200 250 300 World Truck Production 2007 (Thousands) World Engine Production 2007, 9-18 Liter Displacement (Thousands) Source: The World’s Truck Manufacturers, A strategic review of finance and operations, 11th Source: Power Systems Research. Edition (2008), Edited by Jonathan Storey, Data by Polk-Marketing Systems, Published by Automotive World Ltd., www.automotiveworld.com. Westport supplies natural gas products to 5 of the Westport has partnerships / joint ventures with 3 top 6 truck (& bus) manufacturers of the top 4 engine manufacturers 18
Volvo Collaboration • Commercialization of HD natural gas engines commenced November 2009 • Responsible for NG • Global scope planned • Will reimburse R&D engine development expenditures on • Westport and Volvo will approved engine • Will supply gas- mutually agree on the platforms at passage related components priority for commercial through successful launch of gaseous fuel • Will support Volvo in development gates engines and will share the developing market risks of development • Will collaborate on for natural gas supply chain and cost vehicles • Program will result in an reduction initiatives engine that will meet future • Will generate by Westport emission requirements and revenue on each new be commercialized according • Will manufacture and natural gas / biogas to a mutually agreed market the natural engine sold timeline gas vehicles 19
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