B

Preparing for the Road Ahead 2011 Annual Report

C

Preparing for the Road Ahead

CALSTART’s mission is to clean the air, increase the security of the nation by reducing its dependence on oil, protect the climate, and create tens of thousands of new jobs. We do this by specifically working to accelerate the growth of the clean transportation technology industry. We are the one major U.S. membership organization that supports all of the leading fuels, technologies, and vehicles. Though our brand may suggest we only focus on California, we operate nationally, and with the help of the U.S. Department of Commerce, will launch our first major export program targeted at China this year.

As we approach our 20th year of operation, we are in a good position to understand that 2011 marked a major turning point. Across the vehicle platforms, fuels, and technologies, announcements were made, and plans were finalized to bring more advanced technology vehicles to production. The game has changed. The race is now to get to scale. Broadly speaking, the industry has largely moved beyond the prototype phase.

In the light duty vehicle sector, we helped member companies provide information to the California Air Resources Board (ARB), the U.S. Environmental Protection Agency (EPA), and the National Highway Transportation Safety Administration (NHTSA) that helped establish strong new standards for fuel economy and greenhouse gas emissions for passenger cars during the 2017-2025 period. The President, with the support of almost all of the major car company CEOs, announced the new standards (equivalent to 54.5 mpg by 2025) in November. While the real world fleet average mileage number will be close to the mid-40’s, the proposed regulation is probably the most significant act taken to reduce the nation’s oil dependence in over 40 years. The rule is a direct result of the hard work and effort made by CALSTART member companies, and many others, to develop commercially viable, high efficiency automotive technology over the past 20 years. It’s a testament to the progress made by our leading automotive engineers and technicians.

2011 was also a big year for the clean medium- and heavy-duty vehicle market. With U.S. diesel prices rising, the economic proposition for natural gas trucks was greatly enhanced. Many major fleets which had been 100 percent dependent on oil began switching to natural gas to both lower costs and diversify their fuel portfolio. The California Energy Commission encouraged fuel switching by providing incentive funding for propane and natural gas trucks as well. We were very pleased that both the CEC and the ARB also elected to provide incentives for electric trucks as well as hybrids. SunLine Transit, BAE Systems, and ElDorado National, with important funding provided by the Federal Transit Administration and the South Coast Air Quality Management District, rolled out a seventh generation fuel cell bus, showing that zero emissions can be achieved with that technology, in that class of vehicles.

In total, despite rough times for the country as a whole, there were a lot of bright spots for the clean transportation technology industry nationally. In 2012, we will continue to support efforts to make the largest and earliest state market, California, a success. We will also be working with others to increase volumes and expand the growth of the industry throughout the United States. We at CALSTART remain very bullish and positive about the potential for this industry to create jobs, clean the air, increase our energy security, and protect the climate.

John Boesel President and CEO

A major milestone was achieved this year when President Obama, with the support of the CEOs of major car manufacturers, announced plans for a single national standard equivalent to 54.5 miles per gallon by 2025. Several leading CALSTART member companies were able to provide cost and performance information about future technologies that helped build the case for the new standard.

CALSTART joined the nation’s largest state effort focused on “plug-in electric vehicle readiness”: The California Plug-in Electric Vehicle Collaborative (CPEVC). The CPEVC has approximately 35 members, including most of the major car manufacturers, the state’s leading utilities, the suppliers, environmental groups, leading state agencies, and regional air districts. CALSTART’s CEO, John Boesel chairs the CPEVC’s incentive working group.

VOLT CALSTART proudly received its leased Chevy Volt in the Spring of 2011. By year’s end, staff had driven more than 6,000 electric-only miles. “We are very pleased with all aspects of performance of the Volt. It’s safe, fun, clean, and an OPEC buster,” said CALSTART President and CEO, John Boesel.

In terms of making California plug-in electric vehicle (PEV) ready, CALSTART was one of the first organizations to point out the importance of smart workplace charging. The vast majority of federal, state, and local funds have been spent on residential and public charging. Being able to charge at work is a “range extender” and will help encourage more rapid adoption of PEVs. CALSTART submitted a proposal and is working toward leading a rapid information sharing effort where employers statewide can learn from

each other on how to best implement chargers at the workplace. The findings from this project will hopefully become a resource for employers nationwide.

In recognition of the large number of advanced technology passenger cars coming to the market, CALSTART held a workshop that was hosted by the South Coast Air Quality Management District (SCAQMD) on the future of clean vehicle incentives. In a report issued in January of 2011, CALSTART pointed out that unless action is taken, 90% of the clean vehicle incentives in California will sunset by 2016. At the workshop a number of key leaders identified the “impending incentive crisis” as real, and urged CALSTART to take the lead in finding a solution and building a coalition. In 2007, CALSTART played a similar role relative to California Assembly Bill 118, a measure that generates about $150 million/year in funding to reduce transportation related greenhouse gas and smog forming emissions and increase energy security. Addressing the incentive crisis to enable market acceptance of the coming wave of advanced technology vehicles will be CALSTART’s number one policy priority in 2012.

Advanced Technology Passenger Cars

Coda Automotive, a start-up electric car

company, joined CALSTART in 2011.

Other passenger OEMs that are members of

CALSTART include Chrysler, Toyota, Volvo,

and General Motors.

Year

ly In

vest

men

t (m

illion

s)

■ Prop 1B Goods Movement and School Bus Programs

■ AB 118 BAR Fleet Modernization

■ AB 118 CEC ARFVTP investment plan

■ AB 118 CARB Air Quality Incentive Program

■ AB923 Moyer enhancement

■ Carl Moyer program

California will see a 90% reduction in clean vehicle incentives by 2016 unless action is taken.

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$02011 2012 2013 2014 2015 2016

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High Efficiency Advanced TrucksCALSTART’s Hybrid, Electric and Advanced Truck Users Forum (HTUF) program developed an E-Truck Task Force in 2011. Comprised of more than 125 industry leaders, the Task Force aims to grow a robust, new electric truck segment and presented findings at the national HTUF conference in Baltimore. A survey of the Task Force members identified specific applications where the business case for electric trucks is positive.

At the 2011 national HTUF Conference, co-sponsored by the US Army’s National Automotive Center, CALSTART announced that the program would expand its focus to include both electric and hybrid trucks. The 2011 conference had close to 50/50 representation from hybrid and electric truck manufacturers, suppliers, and fleets. “There is a tremendous overlap and synergy between the hybrid and plug-in truck sectors. It makes a lot of sense to formally join

forces and work together to grow the industry,” said CALSTART Senior Vice President Bill Van Amburg.

The HTUF Conference featured a number of key government officials from the U.S. EPA, the Department of Defense, the White House Council on Environmental Quality, and the National Highway Traffic Safety Administration. A number of new production vehicles were announced at the conference, too, targeted at

specific segments that could make the optimal use of hybrid electric, all electric, plug-in hybrid, and hydraulic hybrid capability. In his speech at the conference, Maryland Governor Martin O’Malley made a surprise announcement of a new state program to award vouchers to increase purchases of hybrid and electric trucks in the state.

At the HTUF conference, CALSTART also honored two leaders with its Blue Sky Awards: Coca-Cola was recognized for leadership in having the largest heavy-duty hybrid electric fleet in North America with more than 650 hybrid delivery trucks in major U.S. cities; and Paul Skalny, Director of the U.S. Army Tank Automotive Research, Development and Engineering Center (TARDEC) (Ret.), was singled out for his leadership in driving change in advanced military and commercial vehicles.

With funding providing by TARDEC, CALSTART evaluated the Caterpillar D7E hybrid electric bulldozer against conventional models for fuel economy and over-all efficiency. The tests were conducted at Port Hueneme, California in conjunction with both the Army and the Navy.

Leadership Continues In Clean Medium & Heavy-Duty Sectors

Waste Management CNG-powered refuse truck.

Navistar’s all-electric truck at work in Coca-Cola’s fleet.

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As a result of a grant provided by Region 2 of the U.S. Environmental Protection Agency’s Diesel Emission Reduction Act program, CALSTART deployed more than 50 hybrid trucks in New York and New Jersey. In a separate EPA grant CALSTART administered, Werner Enterprises’ fleet had 130 trailers installed with aerodynamic equipment from ATDynamics.

CALSTART also finalized testing of hybrid yard hostlers at the port of Long Beach and started assessments at the Port of New York with partners New York Container Terminal, NYPA, NYC DOT and others. CALSTART staff has purchased and installed its own data collection equipment on the vehicles deployed in New York. This is one of several new data collection and analysis projects launched by CALSTART in 2011. The information provided by these projects is proving useful to fleet managers, suppliers, and manufacturers.

California Builds Electric and Hybrid Truck and Bus MarketCALSTART won a second award from the California Air Resources Board (ARB) to manage the second year of the state’s groundbreaking program that provides funding for fleets to purchase hybrid and electric trucks and buses. This program has made California the leading deployment state for electric and hybrid trucks by an order of magnitude.

In late 2011, CALSTART distributed the program’s 1,000th voucher, growing the state’s hybrid and electric truck segment by nearly one-third in the two years since the program launched. Other agencies are seeing value in the efficient CALSTART-managed “voucher model.” The California Energy Commission provided $4 million in funding for 160 electric trucks through the program. UPS used that funding to deploy 100 all-electric trucks built

by EVI. The SCAQMD provided an additional $1.5 million that Coca-Cola used to buy and deploy 150 hybrid electric beverage trucks in the greater Los Angeles metropolitan area.

CALSTART’s Reach is Global

In 2011, the U.S. Department of Commerce made an award to CALSTART to launch an effort called the US-China Clean Truck and Bus Technology Forum. This new project, CALSTART’s first significant one overseas, is aimed at helping U.S. manufacturers and suppliers of clean truck technology to grow their business in China and increase U.S. exports. This effort is an opportunity for hydrogen, natural gas, propane, electric, and hybrid tech firms to collaborate and grow together in China.

PEPSICO Frito-Lay electric vehicle by Smith.

Daimler Trucks North America identifies new application for hybrid technology (HTUF Exhibit Floor).

Through the CALSTART-managed program, ARB has provided funding for more than

1,000 electric and hybrid trucks in California.

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Researching a Clean Truck FutureUnder the auspices of the California High Efficient and Advanced Truck (CalHEAT) Research Center, the nation’s leading clean truck research center, CALSTART organized the state’s first-ever zero emission truck workshop. The event, held near the Port of Los Angeles, provided key information on technology reality and market needs to support zero emission goods movement, with a focus on the needs of the Interstate-710 corridor serving major Southern California’s two major ports. The California Energy Commission provides funding for the CalHEAT Center.

Major progress was made on the CalHEAT market transformation roadmap, an analysis of the most likely options for cleaner and lower carbon trucks through 2020 and beyond. Two strong advisory committees including key public and private sector leaders have provided input on the roadmap’s research and assumptions.

CALSTART completed an Interstate-710 zero emissions corridor feasibility analysis in 2011, funded by the Los Angeles County Metropolitan Transportation Authority (Metro). Findings indicate that there are viable technical pathways for trucks to operate on zero emissions if truck-only

lanes were added to the 18 mile stretch of heavily congested and polluted highway leading from ports of Los Angeles and Long Beach to rail yards in East Los Angeles. Work in 2012 will focus on strategies to make those technologies commercially viable.

Advanced Bus TechnologyIn November 2011, in a program managed by CALSTART, SunLine Transit unveiled one of the first production fuel cell buses to meet the federal government’s strict rules for U.S. content. Meeting this requirement will enable future federal funding for this production-ready bus. Private and public funds for the development of the

American Fuel Cell Bus were provided by BAE Systems, the Federal Transit Administration (FTA), the California Air Resources Board (ARB), the South Coast Air Quality Management District (SCAQMD), ElDorado National-California and SunLine Transit Agency. In large part due to this program and its

future potential, Ballard Power Systems established a manufacturing facility in Massachusetts.

To further advance fuel cell bus technology, the Federal Transit Administration (FTA) awarded CALSTART more than $10 million to oversee two projects that will lead to lower cost and longer propulsion system life-times. The funding will primarily be used to help leading fuel cell manufacturers, UTC Power and Ballard, improve the performance of and lower the costs of their fuel cells. One bus will be tested in the harsh operating environment of one of the nation’s largest cities, Chicago.

More Clean Vehicle Events Draw Record CrowdsIn 2011, the Green Truck Summit, jointly organized by CALSTART and the National Truck Equipment Association, provided practical, real-world information on green technologies and fuels to 683 professionals, through six general sessions and 18 breakout sessions. The event, held in Indianapolis, garnered a 20% increase in attendance over 2010. 2011’s keynote speaker was National Highway Traffic and Safety Administration (NHSTA) Administrator David Strickland, who spoke on the future of truck efficiency and greenhouse gas standards.

The CALSTART Clean Technologies and Fuels Pavilion at the Work Truck Show featured dozens of companies, many of

Bringing Zero Emission Future Closer To Reality

The CALSTART Clean Technologies and Fuels Pavilion at the Work Truck Show featured dozens of companies, many of them leading CALSTART members, and was completely sold-out.

The American Fuel Cell Bus was developed under a program managed by CALSTART.

them leading CALSTART members, and was completely sold-out. 2012’s event, also in Indy, promises to be bigger and better than ever, and will be keynoted by U.S. Energy Secretary Steven Chu.

Policy Initiatives Driving ChangeEnergy security is often perceived as a responsibility of solely the federal government. In a report by the CALSTART-managed California Secure Transportation Energy Partnership (CalSTEP) a recommendation was made that the state should set its own petroleum reduction goal and take action to secure its own future, and not wait for federal action. Among other experts, CalSTEP partners include former Secretary of State, George Schulz, Vice Admiral Dennis McGinn (ret.), and executives from Tesla, Chrysler, and Volvo. As a direct result of this report, CALSTART sponsored a bill in the California legislature calling for petroleum reduction and clean fuel usage targets. Former Secretary of Defense William Perry, wrote a letter urging the legislature to approve the measure. The bill did not pass in 2011, but CALSTART intends to try again in 2012. Funding for the report was provided by the William and Flora Hewlett Foundation.

In 2011, CALSTART also released a major report with Energy Foundation funding on the best policies, incentives and investments to speed high efficiency truck adoption. The report calls for strong incentives, grants to

expand domestic manufacturing, and more research and development on efficient technologies to meet strict new regulations on the horizon.

On another important policy front, CALSTART initiated discussions with the White House Council on Environmental Quality on expanding the President’s Executive Order directing advanced car purchases by federal fleets to include advanced trucks.

Innovative MobilityCleaner vehicles and fuels are part of the solution. Tackling congestion and providing options to driving are other key objectives. The Los Angeles County Metropolitan Transportation Authority (LACMTA) and CALSTART published an implementation plan for the development of a folding bike subsidy program. The program will provide price discounts for the purchase of a collapsible bike to use in conjunction with transit. Folding bike technology has improved immensely in the last 5 years. Products available today are lightweight, and allow passengers to easily store them under seats on rail and buses. A major goal of the program is to motivate commuters to use a bike-train combination in lieu of driving alone in a car.

Growing Membership = Expanded Network30+ new members joined CALSTART, as our diverse membership base continued to grow to more than 145.

Among the more recognizable names, Wal-Mart, and truck maker Kenworth joined, as did electric sedan maker Coda Automotive. Learn more about our members at our web site, www.calstart.org.

Environmental, industry and finance leaders also joined the CALSTART Board of Directors, including Doug Kim, Director of Advanced Technology in the Transmission & Distribution Business Unit, Southern California Edison, Jane Warner, President & CEO, American Lung Association California, Dipender Saluja, Managing Director, Capricorn Investments LLC, and Puon Penn, Senior Vice President, Head of National Cleantech and Emerging Tech Markets, Wells Fargo.

Walk the TalkCALSTART prides itself on helping keep the industry on the leading edge of change and opportunities. One way we do that is “walking the talk.” To help address the day-time power needs resulting from a growing number of plug-in vehicles in the employee parking lot, in late 2011 CALSTART began construction of a U.S.-made 72 kW photovoltaic solar system power at its headquarters. The system should meet 90 percent of the organization’s daily electricity demand. Research is being done to ensure power for the vehicles is supplied directly from the system to enable carbon-free charging! We’ll report out our progress in 2012 and invite you to stay plugged in.

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CALSTART Cohosts Airport Event

CALSTART co-hosted an event at Ontario International Airport, convening regional airport leaders in an effort to transition ground operations to greener fleet technologies. The workshop was supported by the Southern California airports (Burbank, Long Beach, LAX, Ontario, Orange County, and San Diego) and was attended by airport staff and key stakeholders. The event showcased more than two dozen clean vehicles, including natural gas, hybrid and electric shuttle buses, taxis and airport security vehicles.

A-1 Alternative Fuel SystemsA123 Systems AC Transit Achates POWER Air Products and Chemicals, Inc. Allison Transmission Altairnano, Inc. Altec Industries American Lung Association in California*Amyris Biotechnologies Artisan Vehicle Systems AT&T Fleet Operations Automotive Research & Testing Center Automotive Resources International AVL CA Technical Center Azure DynamicsBAE Systems, Inc.*Ballard Power Systems Baltimore Gas and Electric Bay Area Air Quality Management District Bluways Bosch Rexroth CorporationCalifornia Natural Gas Vehicle CoalitionCapacity of Texas Capricorn Investment Group, LLC*Capstone Turbine CorporationChrysler Group, LLC Clipper Creek Coca-Cola Refreshments CODA Automotive Colorado Cleantech Industry Association Concentric Coulomb Technologies Cummins CrosspointCummins IncorporatedDaimler Trucks North America Delphi Corporation Dow Kokam* DynaparEaton Corporation EEtrex/Hybrids Plus, Inc. Electric Vehicles InternationalEnterprise Holdings

Environmental Solutions Group eZE Hybrid DrivesFedEx Ground FEV Engine Technology Fred Hansen (Ret. TriMet)*Fiamm FZ Sonick Fleet Energy Florida Power & Light Company* Frito-LayGeneral Motors Corporation GV Energy Inc.Hino Trucks Hydrogenics CorporationIBMIMPCO Automotive Index Sensors & Controls, Inc. Industrial Technology Research InstituteKenworth Kollmorgen Lightning Hybrids Inc. Linde, Inc.Lon Bell (Ret. BSST LLC)*Los Angeles Metropolitan

Transportation AuthorityMeritor Incorporated Meritor WabcoMichelin Motiv Power Systems Motor Coach IndustriesNew Flyer Industries*NRG eV2gNilar NRG EnergyOberon Fuels Odyne Systems, LLC Oshkosh CorporationParker-Hannifin Corporation Phoenix International Port of Long Beach Port of Oakland Prestolite Electric Propel Fuels Protean Electric

Proterra Purolator Courier Ltd.Quallion Quantum Technologies Worldwide*Remy, Inc. Ricardo, Inc. Roush CleanTechSacramento Municipal Utility District San Francisco International Airport Sandia National Laboratories Sempra Utilities* Siemens Industry, Inc. Simbol Materials Smith Electric Vehicles Southern California Edison Company*South Coast Air Quality Management District* Southern Company Services Starline Tours of HollywoodSturman Industries SunLine Transit AgencyTelogis Terex Corporation Total Transportation Services, Inc. Toyota Motor Sales, Inc. Transfer Flow Inc. Transportation Power Inc. Trillium USA*Tula TechnologyUnited Parcel Service UQM Technologies US Hybrid UTC PowerVerizon Communications Vision Motor Corp Voith Turbo Volvo GroupWal-Mart Stores, Inc. Waste ManagementWells Fargo Bank*Westport Innovations Inc.*WrightspeedZero Emission Systems ZF Industries

Members

Southern California Headquarters48 S Chester AvePasadena, California 91106626/744-5600 (phone)626/744-5610 (fax)

Northern California Office1160 Brickyard Cove, Suite 101Richmond, California 94801510/307-8700 (phone)510/307-8706 (fax)

Colorado Office14062 Denver West Pkwy, Suite 300Lakewood, CO 80401303/825-7550 (phone)626/744-5610 (fax)

*CALSTART Board Member