Leveraging .05g NOx Certification & Volkswagen Status Update

Building on a Strong Foundation

What Does .05g NOx Mean to You and Your Customers?

Leveraging Federal and State Incentive Programs

Federal Tax Credit Update

Volkswagen EMT Status Update

What Do I Do Next?

2018

Q&A

AGENDA

Improve Air Quality Increase Energy Security Reduce Petroleum Use

GNA supports ROUSH track, evaluate, and apply for 500+ US and Canadian funding programs that:

Certified to a .05 g/bhp-hr NOx

Reliable Technology & Robust Service Program

Committed Industry leading partners

700 plus Customers & 300 Million Miles of Data

A motivated dealer channel

A Strong Foundation…..

OVER

SCHOOL BUSES

700OVER

SCHOOL DISTRICTS

10,000

A Growing Trend

Propane School Bus Deployments

What is NOx and what does it mean?

Diesel & Asthma Case Study

Asthma diagnoses

Respiratory system

Doctor visits & meds

Development of allergies

Lung function

Public Health Institutehttp://www.phi.org/uploads/application/files/xq1rssien18tmqtavs3k97m6ojpp6reyhgmy3ajnh9jhcjy93r.pdf

Standard Changes for NOx

June 7th 2017 ROUSH CleanTech announces achievement of very low NOx with the 6.8L V10 Engine.

For the 2017 MY RCT LPG Blue Bird Buses are now certified to 0.05 g/bhp-hr NOx.

This is achieved with no extra hardware or increased variable cost.

The low NOx levels were achieved through careful, significant calibration changes and a CSSR (cold start spark retard) approach.

RCT Status of Low NOx

Many programs by state focused on PM and NOx reduction

EPA’s DERA program is a perfect target for our solution

Most states have funding or incentives in place; some are discretionary

Leveraging Incentive Programs

H.R. 3264 Introduced in House

Includes 5-Year Extension of Alternative Fuel Tax Credit

Effort Led By: – Rep. Diane Black (R-TN)– Rep. Ron Kind (D-WI)– Rep. David Valadao (R-CA)– Rep. Jim Costa (D-CA)

Under this bill, the credit would be $0.50/gasoline gallon equivalent (gge) of propane for 2017 and 2018. This is the same amount for the credit as 2016. In 2019, the alternative fuel tax credit would reduce to $0.375/gge, which is 75 percent of the original credit. In 2020 and 2021, the credit would again reduce, this time to 50 percent of the original credit, to $0.25/gge.

Federal Tax Credit Update

EPA: Volkswagen used illegal software to modify the performance of the emissions control system during emission testing– Investigation revealed that in-use NOx emissions were 10-40 times

greater than the standard

Volkswagen was found guilty and agreed to spend up to $14.925 billion to settle allegations of cheating emissions

Settlement funds will be used to buy back and / or modify vehicles, and to support national- and state-level projects to reduce NOx emissions.

Volkswagen Emissions Settlement

Volkswagen must contribute $2.925 billion to the Environmental Mitigation Trust (EMT)– The purpose of this trust is to fund actions that reduce NOx emissions

Each state receives a set amount based on number of affected vehicles sold in the state

Eligible projects include:– Class 4-8 school bus, shuttle bus or transit bus replacement– Class 4-7 medium duty truck replacement– Class 8 freight and drayage (port) trucks– Airport ground service equipment (electric only)– Forklifts (electric only)

Environmental Mitigation Trust

Apportionment of Funds

$-

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

$350,000,000

$400,000,000

$450,000,000C

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Top 5 States by Funding:California - $414 millionTexas - $208 millionFlorida - $165 millionNew York - $128 millionPennsylvania - $120 million

10.25.16

Settlement Effective Date

3.15.17

Wilmington Appointed

Trustee

8.31.17

Trustee Effective Date

(potentially)

10.30.17

State Beneficiary

Named

1.8.18

State Files Mitigation

Plans(must be public

for 30 days)

2.7.18

Trustee Approval

EMT Funding Timeline

60 days 90 days 30 days

Concrete Dates Tentative Dates

Clean School Bus Program Assumptions TOTALTotal Buses Operating in Example State (# Units) 50,000

Est. Pre-2009 Buses in Operation (# Units) 17,500Est. Cost of 2018 Model Year Diesel Bus ($) $90,000

Est. Cost of 2018 Model Year Propane Bus ($) $98,000Est. Cost of 2018 Model Year CNG Bus ($) $125,000 Clean School Bus Incentive (% of bus cost) 25%

Total Example State EMT Allocation ($) $100,000,000School Bus, One-Quarter Funding Allocation Scenario ($) $25,000,000

Propane Bus Incentive ($), Based on 25% of Total Bus Cost $24,500CNG Bus Incentive ($), Based on 25% of Total Bus Cost $31,250

Number of Estimated Bus Replacements, Propane Scenario 1,020Number of Estimated Bus Replacements, CNG Scenario 800

Clean School Bus Program Example

Diesel DisplacementMiles Per Year 12,600MPG 7Gallons Per Year 1,800Petroleum Displacement Impact Per Year, 1,020 Buses (Gallons of Diesel Displaced) 1,836,000

Total Program Petroleum Displacement Impact, 1,020 Buses over 15 Year Service Life (Gallons of Diesel Displaced) 27,540,000

Cost Effectiveness Comparison

Customer/Prospect engagement

Leveraging .05 NOx in bid specs

Meetings with State Beneficiaries

Leveraging local and state political connections

Communication on progress with RCT and Blue Bird teams

Call To Action

Focus on incremental sales

Great target for conquest opportunities

Most likely 2018 before funding arrives so don’t slow down an existing sale

Use other existing funding sources to close sales now

Volkswagen EMT Funding

Regulatory environment to our advantage with HD-OBD

Push for even lower NOx levels

Diesel projected to increase from $2.59 to $2.82 by end of 2018, gasoline will stay flat and propane to stay flat

Thomas will continue to promote DD5 engine since they have no viable propane solution

A look ahead into 2018….

$2.00

$2.25

$2.50

$2.75

$3.00

Jan-

16

Feb-

16

Mar

-16

Apr

-16

May

-16

Jun-

16

Jul-1

6

Aug

-16

Sep

-16

Oct

-16

Nov

-16

Dec

-16

Jan-

17

Feb-

17

Mar

-17

Apr

-17

May

-17

Jun-

17

Jul-1

7

Aug

-17

Sep

-17

Oct

-17

Nov

-17

Dec

-17

Jan-

18

Feb-

18

Mar

-18

Apr

-18

May

-18

Jun-

18

Jul-1

8

Aug

-18

Sep

-18

Oct

-18

Nov

-18

Dec

-18

Diesel Fuel Retail Prices(EIA Projection, https://www.eia.gov/outlooks/steo/)

Q & A

THANK YOU

800.59.ROUSH

ROUSHcleantech.com

Todd Mouw734.466.6522

Todd.Mouw@roush.com

Chelsea Jenkins734.812.1965

Chelsea.Jenkins@roush.com