Electreon Wireless Ltd. — Investor Presentation 2020

May 25, 2020

2019 Annual Update May 25, 2020

ElectReon is a prominent leader in developing and implementing wireless charging while driving with a shared platform for all types of vehicles; We assume In 2020 the company will have commerial agreements; Q4 20 - demo of city application in Tel-Aviv; target price updated to NIS 181

Stock Exchange: TASE Highlights

Symbol: TLV:ELWS

Sector: Technology

Sub-sector: Cleantech

Stock Price Target: NIS 181

As of 25 May, 2020 (source: TASE website):

Closing Price: 159 NIS

Market Cap: 1.35 billion NIS

of Shares: 8.5 million

Stock Performance (3 mos.): 35%

Average Daily Trading Volume (3 mos.): 3,963 shares

Dr. Tiran Rothman - Lead Analyst _________________________________

Email: Equity.Research@frost.com Tel.: +972-9-9502888 www.frost.com/EquityResearch

ElectReon achieved in 2019 and Q1 2020 significant milestones:

• On November 28, the Company announced that it had completed the first electric road segment in Sweden. A few weeks earlier, the Company received NIS 8.3 million.
• Announced on a completed a dynamic and static wireless charging trial of an electric truck connected to a 40-ton trailer in harsh terrain and weather.

We view 2020 as a transition year where ElectReon showed a proven technology and faced safety and regulation issues.

Electreon solution is an answer to world current and imminent problems – reduce urban pollution with zero emission and the need for low key charging infrastructure within city area. Company's go-to market strategy is to focus on cities (buses, taxis and fleet operations); and in highways (trolley trucks and users intercity buses). The company also has identified Europe as the main entry point, focusing on Sweden, Germany, France and Italy and also in the states (California) while continuing its activity with Tel Aviv municipality.

From a business model point of view, it expanded its business model – from only charging infrastructure (km of roads and vehicle units) to sell a service. The Company is focusing also on charging as a service, a part of Maas (Mobility as a Service), a growing business model using for top mobility firms. Frost and Sullivan expect the market to recover fully and use of MaaS solutions from this space expected to reach \$31 bn by 2030.

To sum up: ElectReon is in the right place, with the optimal business model (MaaS) powered by two main trends: Urbanization and Zero emission. Taking all the above into consideration we assume the Company's value at \$432M / NIS 1.53B; the average target price is NIS 181.

We will update our valuation based on upcoming potential catalysts: Completion of deployment of ERS in Sweden and Tel Aviv Projects in Q4 2020 and initial commercial agreements.

Company, Products, and Strategy

Company Overview

ElectReon Wireless is a technology company with the vision of becoming a leading enabler of shared infrastructure for "allelectric city transport", by providing a cost-effective solution for the electrification of roads and vehicles

The problems:

Pollution, no place for electric infrastructure in cities and heavy, expensive batteries

In order to mitigate global warming and avoid severe climate change, governments, NGOs and the commercial sectors have embarked on a journey to decrease the use of fossil fuels. Road transportation is a major contributor of greenhouse gases (GHG) and therefore the transition to electric vehicles is the focus of many government policies.

In the past years 14 countries, representing over 50% of total vehicle market unit sales, have declared a ban on new internal combustion engine (ICE) vehicle sales by dates ranging from 2020 to 2040. The decision of China, the largest car market in the world with about 30% market share, to ban all ICE vehicles by 2040 was an end-game call for all manufacturers and lagging countries and puts an end to the ICE era.

Country	Ban announced	Status and proposed commencement	Scope	Selectivity
China		2017 "researching a timetable"[8]	Gasoline or diesel	New car sales
France		2017 2040[12]	Gasoline or diesel	New car sales
Netherlands		2017 2030 (coalition "plan")[16]	Gasoline or diesel	All cars
Norway		2017 2025 (tax and usage incentives) [17]	Gasoline or diesel	Cars
Slovenia		2017 2030 (emission limit of 50 g/km)[19]	Gasoline or diesel	New car sales
Sri Lanka		2017 2040[20]	Gasoline or diesel	All vehicles
United Kingdom	2017	2040 – England, Wales, Northern Ireland[22] 2032 – Scotland[23]	Gasoline or diesel	New car sales
Iceland		2018 2030 (clima­te plan) [13]	Gasoline or diesel	New car sales
Ireland		2018 2030 (private members bill, not yet passed)[14]	Gasoline or diesel	New car sales
Israel		2018 2030 "natural gas or electricity" [15]	Gasoline or diesel (natural gas exempt)	New imported vehicles
Sweden		2018 2030 (coalition agreement to ban new sales)[21]	Gasoline or diesel	New car sales
Costa Rica		2019 2050[9][10]	Gasoline or diesel	New car sales
Denmark		2019 2030[11]	Gasoline or diesel	New car sales
Singapore		2020 2040 (incentives on electric vehicles) [18]	Gasoline or diesel	All vehicles
United Kingdom		2020 2035 or 2032 (proposed new dates [24])	Fossil fuel, including hybrids	New car sales

A growing number of cities around the world are not waiting for central government regulations and are rather implementing registration and zoning policies that promote clean transportation, including designating car-free city centers and major metropolitan areas. For example, in Shanghai there are annual quotas on the number of new license plates available for drivers in order to fight congestion in the city. License plates for ICE vehicles in Shanghai are sold at auction for prices of over \$14,000, more than the price of many domestically produced cars, while electric vehicle plates are free.

Electrification of the urban public transportation sector will demand numerous charging technologies and solutions, depending on the use case scenario. Federal and institutional mandates governing emissions, fuel economy, and pollution, together with green car subsidies and incentives have been the strongest drivers supporting the growth of EVs. For instance, in Europe, by 2021 ,the average CO2 emissions from an OEM vehicle fleet needs to be reduced by 27%, compared to 2015 levels. In the US, to avoid penalties, OEMs need to comply with both the EPA GHG fleet emission ceiling of 163g CO2 / mile and CAFE standards of 48.7-49.7 miles per gallon by 2025. In addition, the Zero Emission Vehicle (ZEV) program requires car manufacturers to sell electric vehicles in California and nine other states.

Increased consumer interest in EVs due to environmental, performance, and style considerations, is starting to and will increasingly become, the key driver of growth of the battery electric vehicle (BEV) market, particularly amongst younger generations.

1

Expansion in charging infrastructure and upcoming business models that ensure a seamless charging experience are encouraging consumers to opt for EVs. For instance, there are about 5 ultra-fast charging projects already commissioned in Europe. In addition, the number of EV models will increase substantially, thereby creating a wide array of choices for customers.

By 2025, it is expected that about two out of five premium car models will be available in EV configuration. The cost of ownership of an electric vehicle will be 15% less than that of a conventional vehicle by 2025. The choice of charging solution (whether inductive or conductive) depends on what transport task will be performed.

The table below includes a list of selected cities that already have regulations in place or are in the in process of banning the use of ICEs.

City or Territory	Country	Ban announced	Ban commences	Scope	Selectivity
Athens	Greece		2016 2025[27]	Diesel	All vehicles
Madrid	Spain		2016 2025[27]	Diesel	All vehicles
Mexico City	Mexico		2016 2025[27]	Diesel	All vehicles
Paris	France		2016 2025[27]	Diesel	All vehicles
Auckland	New Zealand		2017 2030[6]	Gasoline or Diesel	All vehicles, electric buses by 2025
Barcelona	Spain		2017 2030[6]	Gasoline or Diesel	All vehicles, electric buses by 2025
Cape Town	South Africa		2017 2030[6]	Gasoline or Diesel	All vehicles, electric buses by 2025
Copenhagen	Denmark		2017 2030[6]	Gasoline or Diesel	All vehicles, electric buses by 2025
Heidelberg	Germany		2017 2030[6]	Gasoline or Diesel	All vehicles, electric buses by 2025
London	United Kingdom		2017 2030[6]	Gasoline or Diesel	All vehicles, electric buses by 2025
Los Angeles	United States		2017 2030[6]	Gasoline or Diesel	All vehicles, electric buses by 2025
Milan	Italy		2017 2030[6]	Diesel	All diesel vehicles, electric buses by 2025
Oxford	United Kingdom		2017 2020−35[6]	Gasoline or Diesel	All vehicles (initially during daytime hours on six streets)[33][34]
Quito	Ecuador		2017 2030[6]	Gasoline or Diesel	All vehicles, electric buses by 2025
Seattle	United States		2017 2030[6]	Gasoline or Diesel	All vehicles, electric buses by 2025
Vancouver	Canada		2017 2030[6]	Gasoline or Diesel	All vehicles, electric buses by 2025
Balearic Islands	Spain		2018 2025−35[28]	Gasoline or Diesel	All vehicles
British Columbia	Canada		2018 2025[30]	Gasoline or Diesel	All vehicles by 2040, 10% ZEVs by 2025
Brussels	Belgium		2018 2030[31]	Diesel	All vehicles
Hainan	China		2018 2030[32]	Gasoline or Diesel	All vehicles
Rome	Italy		2018 2024[35]	Diesel	All vehicles
Amsterdam	Netherlands		2019 2030[26]	Gasoline or Diesel	All vehicles
Bristol	United Kingdom		2019 2021[29]	Diesel	All private vehicles (city center from 7 am to 3 pm)

OEM Focus on Electric Vehicles

Already well committed to the trend, the world's leading automotive manufacturers continue to introduce new EV models to meet growing market demand. With over 160 models already on the market and expected to grow to over 400 in the next 5 years, around 2.3 million vehicles were sold globally during 2019, just under 1.7 million fully electric.

While the EV market has averaged ~50% YoY growth, it slowed in 2019 to ~8% YoY growth, due to significant slowdown in China (which makes up ~50% of the total) as a result of a combination of headwinds, from withdrawn EV incentives and weak demand as the economy weakened from both global and US-China specific trade-war effects. The start of 2020 has seen wildly different trends across the major regions, with Europe recording Q1 sales double those in 2019 and above those of China for the first time, as OEMs push sales to support CO2 fleet compliance targets; the US was marginally higher on Q1 2019 and China significantly down from 2019 levels due to COVID-19 impacts, although this is expected to recover by the end of the year to at least 2019 full-year volumes.

While COVID-19 may create some volatility in sales over the coming 6-18 months, as we move into 2021 and onwards, the underlying secular trends driving the market are expected to bring a return to higher growth rates of >50% YoY globally and consumer demand in the end, may even be boosted by the COVID-19 experience, as societies sharpen their focus on available, pragmatic solutions to address urban air quality challenges. This would benefit not just the automotive market, but buses, light commercial (last-mile deliveries) and heavy duty freight and logistics. The electric revolution looks set to continue once the immediate impacts of COVID-19 are finally out of the way.

Batteries are not an optimal solution

Widespread electrification of the transport sector faces significant challenges as it requires infrastructure adaptation that is difficult to implement. Large scale investments in increasing electricity production and charging infrastructure is required, but via a distributed shared framework whereas the current electric infrastructure layout is centralized, and has public funding. We can summarize the main challenge with electric mobility:

• Millions of commercial and private vehicles with huge batteries
• Setting individual charging infrastructure for each fleet operators doesn't make sense
• No real estate available for charging infrastructure
• The city can't have additional visual hazards

While batteries for passenger cars are evolving to meet the range anxiety of consumers at an affordable price, this problem still exists for commercial vehicles, which operate extensively and require a robust solution. Led by a team of veteran entrepreneurs, ElectReon aims to empower stakeholders and enable municipal transport authorities to achieve their goal of providing urban public transport that is clean, green, reliable, safe and quiet.

Challenges

Whilst recent improvements have increased battery range and decreased charging time of passenger cars, main barriers to the wide adoption of buses, commercial vehicles, and passenger vehicles include:

• Charging stations require planning, approval, as well as infrastructure investments by public and private entities
• Increasing grid capacity (sub stations, lines, etc.) as well as real time management of the electricity grid by utilities
• Long charging time causes operational complicity
• The price of the battery and charging infrastructure

In appendix B we present a short intro to Electric Road Systems (ERS)

The solution: company's technology

The company offers:

• 1. Cost-effective and time efficient operations - No need to stop for charging
• 2. Minimal battery size and weight.
• 3. No visual impact on the vehicle with shared infrastructure and no moving parts

The technology is composed of three main elements:

1. Receiver

The Receiver enables the reception of energy during the drive without changing driver habits. The receiver is installed on the floor of every bus or vehicle, and transmits the energy directly to the engine in the same format as a battery. It will be easy to adapt to any electric vehicle. The receiver weight is 25 kg and its dimensions are Height: 30 mm Width: 560 mm and Depth: 785 mm Source: ElectReon

2. Stripe (Coils)

A unique rubber covered stripe is optimally shaped to improve efficiency and reduce radiation. Embedded within, copper wires reduce the need for maintenance and increases reliability. The stripe is stationary and composed of 1-meter long segments. When a bus rides over the stripe, only the segment located directly under the bus is activated and transmits energy to the receiver.

3. Smart Inverter (Management unit) - Communication

The Smart Inverter transfers the energy from the electricity grid to the stripe, which communicates in real-time with all the vehicles within the system.

System architecture:

Source: ElectReon

Key Business Benefits

ElectReon's ERS technology offers significant cost advantages compared with existing solutions servicing such as trolleys, battery-operated electric buses, and trams. Implementing the system results in lower CAPEX (less expensive battery-less buses) and OPEX (less electricity required for the much lighter buses).

Basically, the company turns the road to an asset for road owners and fleet operators by deploying shared electric road platform for commercial fleets.

The key benefits of ElectReon 's solution in general and in comparison, to alternatives and competitors are:

• Quick to deploy with minimal interruptions ElectReon aims to have dedicated equipment that can achieve laying 1 km per day. It does not require opening the road completely, rather only a small section in the middle that can be paved immediately after installation.
• Safe meets all standards and does not have environmental impact
• Unique Dynamic Wireless Power Transfer (DWPT) technology that transmits energy on demand only i.e. when a vehicle's receiver is over it
• Minimum energy required due to minimum vehicle weight and high efficiency
• Low cost in terms of vehicle, operation per km, and infrastructure
• Minimum maintenance required
• An energy-sharing infrastructure that is used by multiple types of vehicles can offer countries and cities a mechanism to bill road traffic

Key Business Risks

• ElectReon 's system readiness level of 8-9, and has another 1 year before it can be deployed in a fully commercial, scalable manner.
• In each location a significant number of entities, which are not always incentivized or have a positive attitude and interest, such as municipalities, transport authorities, and operators must work together in order to succeed in implementing the system.
• Many countries and cities lack the experience and knowledge required to promote advanced business models such as Build Operate Transfer (BOT), etc.

Strategy

ElectReon is a company with the vision of becoming a leading enabler of shared infrastructure for "all-electric city transport". The Company's mission is to provide a cost-saving solution for the electrification of roads and vehicles.

Main goal is to implement and operate the "Smart Road" – an electrified road that is based on wireless energy transfer, which powers and charges vehicles while driving. With today's over-crowded urban centers, and urban transport accounting for approximately 40% of transport sector emissions, ElectReon's first aim is to enable mass electric bus and trucks adoption that will utilize its unique on-the move wireless electrification system. By removing the energy source from vehicles, ElectReon will enable the next generation of public transportation: dramatically reduced weight (existing batteries account for approximately 33% of bus weight), low cost (existing batteries account for approximately 25-30% of vehicle cost), no visual overhead infrastructure (easy to deploy under asphalt paths), no charging burden or range anxiety (no gas or charging stations required), safe (meets all standards, no chemical batteries) and generic for all electric vehicles.

Go to market

ElectReon turns the road from an expense to an asset for road owners and fleet operators by deploying shared electric road platform for commercial fleets. In most cases, the company will apply for bids for projects on public roads. Private entities such a ports, airports and campuses can implement the solution without bid.

Cities:

• Base user buses
• Additional users fleets of delivery trucks, shuttles, taxies, municipality service

Highways/Toll roads/ Ports:

• Base user long haul/drayage trucks
• Additional users inter city buses, future range extending for passenger EV

ElectReon has identified Europe and the states as primary entry points with the EU as the leader:

• Sweden is planning a pilot for about 30 KM ERS for long haul electric trucks on the way to commercial implementation on about 2,000KM¹
• Germany's transportation ministry issued a call for wireless ERS demo project
• Israel's energy ministry issued its plan for accelerating infrastructure projects to encourage economic growth which included 10KM of ERS in total investment of 50M ILS²
• ENBW, one of Germany's biggest energy companies signed a MOU with Electreon for the test of wireless ERS with ElectReon
• Denmark A research by a Danish university determined that the most cost effective way to electrify all transportation in Denmark and other countries is by wireless ERS
• Italy is planning to deploy ERS on the A35 toll road³
• France joined an ERS research effort with Sweden and Germany and is planning two wireless ERS demo projects
• California the state seeks new ways to reduce emissions⁴ .

We can summarize the company's go-to-market as follows:

¹ https://www.trafikverket.se/contentassets/445611d179bf44938793269fe58376b6/dokument/national\_roadmap\_for\_electric\_road\_systems\_2017 1129\_eng.pdf

² https://www.gov.il/he/departments/news/economic\_growth\_news

³ https://www.abcmagazine.eu/news/electric-road-system-will-be-tested-on-a35-brebemi-highway

⁴ https://afdc.energy.gov/laws/4249

Market Opportunity

ElectReon is aiming at three main markets:

• Buses
• Fleet operators and Taxis
• Long haulage trucks

Electrification of Buses

The continuing trend of growing urban populations, the need for better urban air quality and the reduction in dependence of oil imports is driving many countries to consider electric buses in their fleets as part of a longer term, 10-20 year transition towards fully electrified bus fleets. Over the next 5 years total transit, school and intercity bus market is expected to grow by ~3% CAGR although the shares of each bus variety will vary substantially depending on geography and urban characteristics e.g. US is a stronger market for school buses than Europe. Emerging market growth (LATAM & India) and China will be the main drivers of growth from new deployments and fleet renewals, while Europe is expected to be a driver of growth from 2024 for Electric buses in particular, especially as technology costs reduce further and public authorities gain both confidence from initial pilot deployments.

Electrification of Buses 2018 - 2025

Policies - With growing impetus to reduce global GHG emissions and improve urban air quality, national and city governments have already begun enforcing strict emissions regulations and access restrictions to city centers, which will support the growth of electric and other alternative fuel transit buses. Strong growth is expected as the total cost of ownership (TCO) benefits become more widely understood, as technology costs for batteries come down further and as new business models such as battery as a service are deployed to reduce up-front costs for bus operators.

Incentives - The increasing numbers of progressive cities actively seeking to move faster than national governments on sustainable transportation is borne out by the popularity of networks like C40 megacities that seek to collaborate, share knowledge, best practices and drive meaningful action on climate change. As a result, policies like emission zones and ambitious targets for replacing diesel powered buses in urban centers, are expected to continue to drive the market over the next 5-years. Additionally, incentives like road tax credits and purchase incentives for electric bus fleets in most countries are expected to encourage the shift out of fossil fuels. In C40 cities, over the last 10 years more than 66,000 electric buses have come into operation, compared to fewer than 100 in 2010. The next decade is thus expected to bring an exponential increase in the numbers of electric buses, even as the overall bus market grows marginally in most regions.

Competitiveness - With Europe being home to leading global bus manufacturers, technological advancement in electric and lowemission buses are more prominent. Keeping pace with the need, major OEMs already have already introduced alternative fuel buses. Established OEMs are also facing stiff competition from new players who offer hybrid and electric buses, thus furthering the growth of this market.

Technology - Lithium-ion Battery prices have already decreased on average by ~71% since 2010, and are expected to continue by another 50% in the next 5-8 due to increase in scale of production for electric passenger cars. This is expected to benefit the electric buses market as well even though the battery chemistries can be quite different to support the unique use case of buses

The intimate nature of bus market means that operators are already working closely with manufacturers and electricity providers to understand their EV range and Charging requirements, and to design appropriate charging capabilities at depots. However, this is not without challenge, due to the necessary upgrades typically required to the local grid, as a result of the large batteries currently required for useful EV bus ranges. A recent study (2019) conducted by a German institute (IFO) calculated that making an electric vehicle and a conventional combustion engine car creates more or less the same amount of CO2 and that the battery is the cause for that.⁵

A lot of activity exists around other technologies competing for customer interest, such as static wireless charging for en-route charging at bus stops, pantographic overhead connections for dynamic conductive charging and dynamic wireless charging with systems embedded in the road surface. CharIN, the charging standards body, already intends to support 350 kW fast charging and 1MW pantograph connections, as soon as 2022, however the high technology costs of the latter, versus other options, may result in a shift in interest and direction, from the public authorities who ultimate control a large part of the market with tenders and road infrastructure responsibility.

We could not discuss heavy transport applications without mentioning Hydrogen and the increasing level of interest being shown by industry players, including various Oil and Gas companies as well as national energy system policy makers. A number of associations and consortiums in Europe are working towards building a robust hydrogen refueling station roadmap, across major European countries, in a bid to support the long-term development of fuel cell vehicles but the market is still immature and technology costs still high.

Taxis and fleet operators - eHailing Market Trends

eHailing has penetrated many regions of the world in the past 10 years. It has managed to disrupt existing taxi markets, bypassing local regulations and driving fierce price competition. Although governmental backlash and increased regulation has slowed the progress of ehailing companies in some regions, the market is continuously adapting and provides a service that many consumers now feel is essential. Ehailing operators differ from existing taxi operators in that they only provide an online platform to connect passengers and local drivers using their personal or leased vehicles.

The global ehailing market is expected to grow at CAGR of ~10% between 2022 and 2028 term and revenues expected to exceed \$1800 bn by 2030.

⁵ https://www.dw.com/en/ifo-study-casts-doubt-on-electric-vehicles-climate-saving-credentials/a-48460328

R E S E A R C H & C O N S U L T I N G L T D.

eHailing Market GMV, Global, 2019 - 2030

Electrification of taxi fleets will be a key trend in the ehailing market in the short to midterm. In UK for example, London has already mandated that all Personal Hire Vehicles (PHVs) licensed for the first time are zero emission capable and by 2023 that all PHVs on the road must be zero emissions capable. As with many EU countries, the UK continues to offer vehicle purchase grants for new EV purchases. Similarly, Norway has mandated an emission-free taxi fleet by 2022 while EV purchases/leases are also exempt from 25% VAT. With a strong focus on climate change, air quality policy actions and stringent automotive CO2 fleet targets for OEMs, the European region is expected to be a leader in electrification of transport over the next 5 years and to support a number of city hubs with strong incentives for the electrification of taxi/e-hailing services. Partnerships with EV manufacturers who are keen to sell these vehicles could be a key opportunity to developing new ehailing business models with the unique USP of a full electric fleet.

Key markets to look out for in Europe will be UK, France, Germany, Spain, and Italy. The UK market is considerably bigger than the rest of the European markets (valued at \$18 billion) – the UK taxi market being 3x of the French taxi market and almost 4x those of the German and Spanish markets. However, in London there has been a degree of reticence in working with ehailing operators such as Uber, with licenses-to-operate being temporarily suspended more than once, as various disputes are worked out. Despite operators like Uber trying to position themselves as digital companies, regulators in Europe have repeatedly rejected the definition and have passed judgements against peer-to-peer ehailing services, so bumps along the way are expected.

The regulatory pressure felt by the leading players in Western Europe means that the future market potential is expected to shift to Eastern and Central Europe in countries such as Poland, Czech Republic, Croatia, Portugal, and Russia. In the traditional taxi markets of Western Europe, key market opportunities lie in improving fleet utilization and efficient vehicle routing systems. In the markets of Eastern and Central Europe, opportunities exist in growing market share due to overall potential for growth remaining in taxi markets and the more hands-off approach by regulators.

As the ehailing market matures, the growth avenues for market participants remain positive. Along with market consolidation and increasing vehicle numbers connected to their platforms, ehailing players are partnering with different industries in order to diversify their offerings.

Delivery services, partnerships with the aviation sector, e-scooters, hospitality sector, healthcare, car sharing and car rental operators, are the value added services that are re-defining the e-hailing market into a much broader category, more accurately described as Mobility-as-a-Service (MaaS) propositions. Bolt (formely Taxify) has diversified into food delivery and e-scooter markets, building their own modular and durable e-scooters and more recently, has shifted its focus towards the grocery and essential goods delivery markets, as revenues from taxi services have been impacted by Covid-19.

Uber has been the leader in the ehailing market with respect to developing new business models – pooled rides, bus (in Cairo, Egypt), delivery services (food and logistics), on demand freight services, investment in new mobility services such as scooter sharing & electric bikes (invested in Lime, acquired Jump), and healthcare. Through Uber Health, the company is tapping into the healthcare market by providing scheduled patient rides – missed medical appoints cost healthcare providers \$150 billion/ year. Uber is seeking to become the Amazon of Transportation – an aggregator for all mobility services and has even partnered with Masabi in London, a mobile ticketing services company to offer public transportation services.

As the e-hailing market develops there is an emerging need for greater collaboration between stakeholders. Conventional ehailing service providers are evolving in multiple directions while keeping customer experience at the core – extending the suite of mobility services across the full value chain. Lines continue to blur in the frantic world of mobility. It's becoming increasingly difficult to label or segment companies as OEM, Tier1, e-hailing, or autonomous vehicle companies. The e-hailing market is therefore, at a critical stage in its growth as the range of innovations combined with structural transformations create an environment ripe for value-adding start-ups with unique IP, as well as larger consolidation as the dominant players look to protect their market positions further through M&A in the short to mid-term.

Who pays? Business Models

Multiple models are available for the Company, typically depending on customer's preferences, including:

• PPP private public partnerships in which a public entity awards ElectReon with the design, build, and operation of a public service in a BOT model or similar over 20-25 years.
• Operational JV develop local JVs that sell projects and provide services (public transport, electricity, etc.) Local partners have embedded advantages in multiple domains such as business culture, regulations, legal, taxation, marketing, sales, product/market fit adaptation, to name a few.
• Selling projects revenues from selling their Smart Road system. This includes the dedicated equipment as well as services such as project management and maintenance.
• Planned future models may include elements of consumer billing, traffic management, and the infrastructure for autonomous cars.

New business model – Mobility as a service (MaaS) global market trends

Seamless travel across different modes of transportation based on user preference is the future of urban mobility. This will take customer travel experience and flexibility in transport services to the next level. MaaS is a data-driven, user-centered paradigm, powered by the growth of smartphones and fast connectivity. It promises to offer solutions for cities to reduce congestion and pollution while lowering investment costs. In the short term, growth might be dented by decreasing ridership for shared mobility and public transport due to the impact of Covid pandemic, however MaaS technology providers are already adding new features like social distancing filters, real-time sanitization updates and other features that will support demand in the mid-long term. We expect the market to recover fully and use of MaaS solutions is expected continue its growth trajectory with the overall opportunity from this space expected to reach \$31 bn by 2030.

R E S E A R C H & C O N S U L T I N G L T D.

To work effectively, MaaS needs a number of conditions to be met: 1) widespread penetration of smartphones on 3G/4G/5G networks; 2) high levels of connectivity; 3) secure and open data, 4) dynamic, up-to date information on travel options, schedules, and updates; and 5) cashless payment systems. We also consider Open Data policies and supporting regulations from cities as key success factors to enable current and future MaaS initiatives.

Maas Market GMV, Global, 2019 - 2030

Figure: Key MaaS participants and geographical offering.

With successful pilots being carried out in more than 15 cities across the world, we expect at least 10 other cities in the developed world such as London, New York, Tokyo, Singapore, Hong Kong to adopt a clear MaaS strategy by 2021 with a vision to fully integrate the transport systems as early as 2022, as these already have advanced fare collection systems such as online/ contactless payments operating on well-developed digital platforms.

Europe is currently a hotbed of MaaS activity with operations in countries like UK, Germany, Finland, Sweden, Norway Spain, Austria, and Netherlands. Well-developed public transport networks and a preference for non-car modes of travel, make MaaS solutions easier to deploy in Europe successfully. We see MaaS solution providers taking the PPP route by partnering with the local transport authorities to launch in Europe, with the most recent example of this being the Renfe as a Service (Raas) app, piloted between Madrid and Barcelona, Whim in Vienna and Jelbi app in Germany, launched by Trafi in partnership with BVG and MVG. Cities and transport operators are expected to remain ambitious and proactive regarding solutions development for their transport and mobility-related challenges.

Another trend observed is the number of new stakeholders entering the MaaS market from a technology background. These businesses are partnering with MaaS providers to further innovate MaaS capabilities with a few to gaining access to valuable data and supporting improvements in the customer experience –exemplified in collaborations between SkedGo and Fluidtime as well as the recent acquisition of Moovit by Intel. A key reason for Intel's acquisition of Moovit was to accelerate Mobileye's Mobility-as-a-Service offering. While Mobileye's ADAS technology is focused on improving the safety vehicles on the road, Moovit can accelerate their ability to develop a comprehensive mobility offering for people.

Despite a vast number of exciting new start-up mobility solutions and technology breakthroughs, improving the quality of urban life and responding to climate change challenges, will continue to drive megacity agendas. Interest in collaborating with white label technology providers and public transport operators are therefore also emerging as critical pieces in the MaaS puzzle. Successful Public-private-partnerships will be instrumental in getting new initiatives started, implemented quickly and driving widespread adoption of new MaaS services.

To summarize, we see ElectReon as a vital part of MaaS with its charging as a service model.

Financial Valuation

ElectReon publishes its financial reports on a bi-annual basis. Analyzing ElectReon 's financial report does not provide a clear understanding of its financial position other than its current cash and cash equivalents, which as of December 31.12.2019 total \$3.6 million. The company has no loans.

A Dedicated Model

As described, ElectReon may adopt several business models including selling projects, operational JVs and more.

Since the roads are public resource company's management assumes that the most common models will be PPP (public privet partnership) which will be financed as BOT (Build–operate–transfer) or as a national project which will be fully financed from government funds.

We assume financial model will be based on selling ERS by Km to operators or municipalities and revenue streams such as maintenance, billing and selling electricity (similar to revenues models of EV charging station operators).

Limiting Factors

• ERS is a new domain that is not yet commercial. There are no systems that are commercially installed and can be viewed for benchmarking prices, costs, etc.
• Potential customers did not publish commercial tenders that can be used to extrapolate scale, prices, business models, etc.
• ElectReon has not signed or published commercial agreements with customers or partners that can be used for drawing assumptions.

Assumptions

• A typical route (line) is 12.6 km long and is serviced by using 15 dedicated buses that require dedicated receivers.
• As per literature, current ERS solutions range \$0.5m \$5m per km. As a conservative measure, due to the fact that there are no existing systems in place, in order to be accessible for mass adoption and considering reducing costs as per mass production volumes, we estimated the below selling price and costs per installed km and for the receivers on the vehicles.
• We assume \$0.5m cost per Km and cost+ of 25% in revenues per Km; on an average year revenues recognition is assumed to be 50%.

Territory	2020	2021	2022	2023	2024	2025	2026	2027
IL	-	10	15	80	60	100	120	150
EU	2	1	44	84	514	1,084	1,560	2,780
N America	-	-	10	120	200	200	200	600
Asia	-	-	-	-	-	-	50	120
Row	-	-	-	-	-	40	300	800
Total	2	11	69	284	774	1,424	2,230	4,450

According to company's management the following is the assumed Km rate per new territories:

Below are our main updated assumptions for the model:

Assumptions

Revenues & COGS
Selling price	666,400 Per Km
Cost	500,000 Per Km
Margin	166,400 Per Km
Typical Line		15 buses
Typical truck route	143
Typical delivery	120
Typical private taxi route	150

Revenue Forecast

We assume revenues from the Sweden project in 2020 and several projects also in Israel in 2021. Below is a detailed forecast for the number of lines, buses and trucks that will use ElectReon 's system:

In USD 000
Revenues Assumptions	2020	2021	2022	2023	2024	2025	2026	2027
No. of customers	-	2	3	4	9	11	12	14
New Bus	-	2	30	120	750	1,500	3,150	9,000
New Truck				10	30	100	400	2,000
New Delivery vihecle				10	50	150	400	1,500
New private Taxi							100	600
Total vehicls	-	2	32	172	1,002	2,752	6,802	19,902
New km	2	11	69	284	774	1,424	2,230	4,450
Total km	2	13	82	366	1,140	2,564	4,794	9,244
Revenue Bus unit	-	-	5	97	389	2,430	4,860	10,206
Revenue Truck unit	-	-	-	-	54	162	540	2,160
Revenue delivery	-	-	-	-	22	108	324	864
Revenue private	-	-	-	-	-	-	-	108
Revenue Km Installed	666	4,332	26,656	117,486	352,392	732,374	1,217,513	2,225,776
Total	666	4,332	26,661	117,584	352,857	735,074	1,223,237	2,239,114

P&L forecasting

We assume cost structure based on similar companies, analyst assessment and our research as we elaborate on our initiation report on Jan 1st, 2019.

Below is our forecast for 2020 – 2027 (in USD, 000):

	2020	2021	2022	2023	2024	2025	2026	2027
Revenues - sales	666	4,332	26,661	117,584	352,857	735,074	1,223,237	2,239,114
Direct Costs (production)	500	3,250	20,004	88,231	264,787	551,750	918,270	1,681,115
Revenues - Project managament	-	400	600	800	1,800	2,200	2,400	2,800
Operation		13	3	55	263	1,537	3,271	7,681
maintenance			100	633	2,985	10,042	24,743	49,208
Direct Costs (mamaning projects- per customer) -		200	300	400	900	1,100	1,200	1,400
Gross Profits	166	1,295	7,059	30,440	92,218	196,002	334,182	616,288
Marketing & Sales	136	272	544	1,088	7,944	16,553	27,548	50,433
R&D (and Pilot Trials)	2,571	3,086	3,703	4,443	21,171	44,104	73,394	134,347
G&A	1,791	2,059	2,368	2,723	15,879	33,078	55,046	100,760
	4,498	5,417	6,615	8,255	44,994	93,735	155,988	285,540
Operational Profits	(4,332)	(4,122)	444	22,185	47,224	102,267	178,194	330,747

Main parameters

• As of 31.12.19 ElectReon holds, cash and cash equivalent of \$3.6 million. The company has no loans.
• Working capital needs are will be minor as based on the business model presented above
• For a detailed OPEX elaboration see our initiation report.
• We update our CAPM model to 19% and maintain growth rate (g) at 2%.

Taking all the above into consideration we assume the Company's value at \$432M / NIS 1.53B; average target price is NIS 181.

Analysis of company progress

Upcoming Potential Catalysts

Type	Event	Significance	Timeline	Status
Market validation for highway	Initiating a pilot in Sweden for bus and long-haul truck	High	Q4 2019	Achieved
Market validation for City bus	Initiating a pilot in Tel Aviv for bus	High	Q4 2019	Achieved
Regulatory validation	approval from Swedish authorities for the deployment of ERS system	High		Achieved
Technology capability	Present a static and dynamic charging of long-haul truck	High	Q1 2020	Achieved
Technology validation	Completion of deployment of ERS in Sweden and Tel Aviv Projects	High	Q4 2020	In Progress
Commercial project	Sign an agreement for commercial project	Medium	Q4 2020	In Progress

Appendix A:

2019 Financials

The Company's financial statements in years previous to 2018 are not relevant for comparison due to the merger. (All amounts in thousands of NIS)

בר 31 בדצמ
2018	2019	ביאור
000 NIS
				נכסים
				טפים: נכסים שו	Current assets
9,416	12,592		5א'	ם שווי מזומני מזומנים ו	Cash and cash equivalents
1,329	2,034		6	רות חובה חייבים וית	Other debtors
10,745	14,626
				ם: נם שוטפי נכסים שאי	Non current- assets
158		45	5ב'	עבד פקדון משו	withheld deposit
83		67		רוך אש לזמן א הוצאות מר	Prepaid expenses
3,258	4,586		7	רכוש קבוע	Fixed assets
­		495	8	ש זכות שימו נכסים בגין	Right use-of assets
3,499	5,193
14,244	19,819			סך נכסים	Total assets
				יכוי גרעון ת והון )בנ התחייבויו
				בהון(
				: ת שוטפות התחייבויו	Current liabilities
44	1,058			שירותים ונותני ספקים	Trade and other payables
1,391 ­	8,356	202	10	רות זכות זכאים וית	Other liabilities Current maturities of lease liabilities
1,435	9,616		8	חכירה בגין התחייבות
				בויות ת והתחיי התקשרויו
			12	תלויות
				: שוטפות שאינן ת התחייבויו	Current maturities of lease liabilities
­		512	8	חכירות בגין ת התחייבויו	Long-term lease liabilities
1,435	10,128			בויות סך התחיי	Total liabilities
			13	הון:	Equity
­ ­		­ ­		ות מניות רגיל ה סדרה א' מניות בכור	Ordinary shares
				בי אופציה, פרמיה, כת	Share premium account
82,758	92,713			רות וקרנות אח
				ות תרגום דוח התאמות מ
		(7)		כספים
(69,949)	(83,015)			ד יתרת הפס	Accumulated deficit
12,809	9,691			סך ההון	Total equity
14,244	19,819			והון ת התחייבויו סך	Total equity and liabilities

* מייצג סכום הנמוך מאלף ש"ח.

הביאורים המצורפים מהווים חלק בלתי נפרד מדוחות כספיים אלה. לשנה שהסתיימה ביום 31 בדצמבר

2017*	2018	2019		ביאור
	NIS 000
			14	ח: חקר ופיתו הוצאות מ	Research and development
1,145	16,146	14,518		ח חקר ופיתו הוצאות מ וצאות תתפות בה בניכוי הש	expenses
(409)	(4,892)	(6,751)		וח מחקר ופית
736	11,254	7,767		ח, נטו חקר ופיתו הוצאות מ	D&R Net
874	4,280	5,011	15	ות הלה וכללי הוצאות הנ	General and administrative expenses
­	51,770		1ב' ­	חר שום למס הוצאות רי
1,610	67,304	12,778		עולות הפסד מפ	Operating loss
(99)	­	­		חרות הכנסות א	Other income
5	(33)	256		ת( מימון ת )הכנסו (הוצאו	Finance expenses (income
1,516	67,271	13,034		ל ההכנסה י מיסים ע הפסד לפנ	Loss before taxes
­	­	32	9	מס הוצאות	Income tax expense
1,516	67,271	13,066		נה הפסד לש	Loss
				להיות שר עשויים סעיפים א ח או חדש לרוו מסווגים מ להפסד:
­	­	7		וחות מתרגום ד הפרשים טבע חוץ ערוכים במ כספיים ה	Exchange differences on translating foreign operations
1,516	67,271	13,073		לשנה כולל הפסד	Loss for the year
0.36	9.34	1.60	16	למניה סי ומדולל הפסד בסי )בש"ח(	per Loss share

* לאחר יישום למפרע של שיטת הרכישה במהופך, ראה ביאור 1ב'.

Appendix B:

Introduction to Electric Road Systems (ERS)

Electric road systems (ERS) are defined as systems that provide dynamic electric vehicle charging through either conductive or inductive (wireless) means for various types of vehicles on roads and highways, i.e. enable dynamic power transfer to electric vehicles whilst they are driving.⁶

By integrating power transfer technology into existing road infrastructure, an electrified road will be accessible to vehicles that use all types of power transmission.

The system as a whole consists of four main parts:

• 1. Existing power grid infrastructure current power grids, connection points and power grids alongside the road
• 1. The ERS power transfer technology, including utilization measurement systems
• 1. Related services payment service, information management and access control
• 1. Responsibilities maintenance, operation, financing and ownership

Key types of ERS are [a] Conductive Overhead, [b] Conductive Rail (Side Rail), [c] Conductive Rail (Ground Rail), [d] Inductive (Wireless In-Road).

Overhead Charging

This charging method has been used by trolleybuses and trams since the early 20th century.

Trolley poles, located on top of a bus, transfer a current flow directly to the engine or use it to charge the electric energy storage system/battery.

Due to the large infrastructure investments that are required, the embedded safety and risks in having live wires in the open, and the aesthetic constraints of visible overhead wires, only a few new projects use the constant overhead current flow.

Recent approaches include fast-charging systems that recharge a bus at every third or fourth stop with a short and intense current, as well as a longer charge at the end of the route via a retractable pole. These alternatives are able to bypass the constraints of current battery systems to make pure electric battery vehicles suitable for the daily demands of public transport.

⁶ https://www.trafikverket.se/contentassets/15e3e7fbea05447c8c61bf905d779cd1/eng-summary-ers-business-models.pdf

Conductive Rail

Conductive in-road rail ERS also rely on direct contact between the power source and vehicle to transfer energy but unlike the overhead ERS, they uses segmented electrified rails embedded in or on top of the road surface.

Its components generally fall into three groups: in-road, on-vehicle, and on-roadside.

• In-road ERS consist of a rail that is sunk in the road. They require power cables and dedicated drainage systems.
• On-vehicle ERS use an arm to connect the vehicle with the road continuously.
• On-roadside ERS, operate in the following way: a vehicle is detected moving along the rail track and once the vehicle is aligned with the track a mechanical arm automatically extends from the vehicles rear/underside to connect with the rail. Power is then transferred to the battery or directly to the propulsion system.

Inductive charging

Inductive charging, also known as wireless charging, enables the powering or charging of electric vehicles as they drive without the use of cables and connectors. Importantly, ambiguity around EV charging (in place of conventional fueling) is a barrier to adoption and inductive charging is the most convenient way to make the EV charging experience smooth. Inductive charging technology for EVs has been under development for over a decade, with a limited number of companies researching various solutions. Inductive charging uses resonant magnetic induction power transfer and can be classified as stationery or dynamic charging. Inductive charging systems are comprised of an underground pad and a receiving system embedded into the EV that connects to the motor and battery systems. The system also has a stationary control unit in proximity to the ground pad which manages the power transfer between the road and the EV. There are two types of inductive charging applications:

Static Charging - energy is transferred from the transmitting coil/pad that is placed on/underground, and is converted into an electrical current by the receiving coil/pad on a stationary vehicle.

BMW and Mercedes have announced that inductive charging will be offered for select plug-in vehicles from 2018 and other manufacturers will follow. Over 70% of the EV manufacturers are aiming for 11 kW and 22 kW charging capacity.

Two stationary charging solutions are utilized: 1) long period charging, typically 4-5 hours, at a parking lot, bus, or taxi terminal etc. 2) fast charging, which takes less than one hour to charge 70% of the battery pack.

Charging on the move - the process of transferring energy from embedded power transmitters placed in the road, to a vehicle while it is in motion, is known as dynamic charging. The primary coil is placed on or below the road, which is connected to the power grid, and a pick-up coil is fitted on the vehicle. There are two dynamic charging solutions utilized:

• 1) The first solution is called stationary charging. It is when an EV takes (predicted) stops for less than a minute of time at the traffic light, taxi rank, bus station/ bus stop etc. The charging time varies from seconds to minutes and high power is transferred from the infrastructure to the EV. All the companies involved in this technology are facing common challenges of high costs (installation and maintenance) as well as issues with safety, grid capacity availability, management and more.
• 2) The second type of solution, which is what ElectReon is developing, is on-the-move charging. This solution is installed in public urban road infrastructure where there are speed limitations. EVs can be charged continuously while in motion, theoretically solving the EV battery problem by providing unlimited driving range. The vehicle may travel at constant or variable speed in a special lane that hosts the charging infrastructure. This technology allows EVs to pass over the charging strip to charge to their battery pack. Therefore, a longer charging strip results in a smaller battery pack, reduced weight and most importantly reduced cost.

Testing of ERS Technologies

All the main types of ERS have been tested in the past few years. Here are a few examples:

Overhead:

• Siemens + Scania have been testing a truck ERS on a 2 km long section on the E16 outside Sandviken (Sweden) since 2016. A similar section was constructed in 2017 near the port of Los Angeles, USA, using Mack trucks.
• Three projects, each around 5 km long, are planned in Germany.

Conductive:

• Rosersbergs Utveckling is demonstrating Elways' technology on a 2 km long section on road 893 outside Stockholm Arlanda airport. 7
• ElonRoad has built a test facility a few hundred meters long outside Lund (Sweden) and is planning to carry out tests in Mariestad (Sweden).
• Alstom has developed its tram technology and tested it together with Volvo on a section 300 meters long on the test track in Hällered (Sweden).
• Germany's Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB) has issued an invitation to fund the demonstration of electric road systems based on overhead lines.

Inductive:

• Has been tested by Bombardier on a closed track in Germany.
• In Korea, KAIST University has demonstrated a technology for urban buses on a route in the town of Gumi.
• In the US, five universities involved in the SELECT project are working on inductive technology.
• The Swedish Energy Agency funded a demonstration in road ERS (rail on the road).
• An EU project headed by Spanish company Endesa, involving an electric bus route in Málaga using an autonomous bus, began in 2016. This route is based on inductive power transmission developed by CIRCE. Eight 80 cm-long 50 kW coils are installed along the road, which is 100 meters long. The autonomous bus is supplied by Gulliver.
• The Norwegian Public Roads Administration is funding the Norwegian research organization SINTEF for implementation of the ELINGO study, which is studying a wireless ERS solution on the E39 coastal road. This project is being coordinated with Swedish research projects.
• The extensive EU project FABRIC demonstrated dynamic inductive power transmission on two test tracks in 2016.
• Inductive technology developed by the SAET Group has been tested on a test track near Turin, Italy, using a Fiat van.

Competitive Landscape

Comparing ERS Technologies

	Conductive Charging	Inductive Charging	Electreon Solution	ElectRoad Notes
Efficiency	★★★☆	★★★★☆	★★★★☆	Efficiency is planned to be over 90% of standard due to misalignment tolerance
Equipment handling	★★★☆☆	★★★★☆	★★★★★	Stripe is made of stand alone 1m modules that are linked to 15-25kW inverter every 100-500 meters
No risk of electric shock	*	★★★★☆	★★★★★★	Power is off as soon as the bus passes over the electrified pathway
Protected connections	★★★☆	★★★★★	*	Inverters are installed every 100-500 meters
Secured/protected (Vandalism, weather, accidents)	*	★★★★☆	*	The stripe is berried under the road and is secured and protected
CAPAEX/ Installation Cost	*	★★★☆	★★★★☆	The lifetime cost is significantly lower than that of competitors
Maintenance	*	*	★★★★	Remote monitoring, easy inspection and approach to replace components

ERS inductive key players

A recent report by the World Road Association⁸ listed 11 companies across the globe (see table below) that are involved in the development of inductive technologies and another 6 that are developing conductive solutions. Some of the names on the list

⁷ https://eroadarlanda.com/globally-unique-electrified-road-enables-fossil-free-road-transport/

⁸ "ELECTRIC ROAD SYSTEMS: A SOLUTION FOR THE FUTURE?", Sep 2018

are large multinationals such as Alstom, Bombardier, Qualcomm and Siemens while others are small companies / research organizations.

Since its first demonstration in 2010 in South Korea the Dongwon OLEV system appeared to be almost market ready. However, although claiming to have multiple installations in South Korea it is not visible in conferences, or new publications and tenders. Bombardier (PRIMOVE) and ElectReon are still in the process of developing and testing their systems. Bombardier's system has high power transfer but has yet to demonstrate this potential in on-road conditions and is very expensive.

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