Formula One cooling technology hot stuff for electric cars
Sep 29 2017 at 4:00 PM
Updated Sep 29 2017 at 4:00 PM
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Red Bull is one of the many Formula One racing car teams which ASX-listed PWR Holdings supplies with cooling systems to keep technology temperatures down.Antonio Calanni
The cooling technology made by ASX-listed PWR Holdings, which is used by all but one of the Formula One racing car teams to keep their complex computer systems running smoothly as engine temperatures rise to 100 degrees, is increasingly being pursued by electric car makers.
Kees Weel, the managing director of the Queensland-based firm which listed on the ASX in late 2015, says while the cooling technology for motorsport customers – which also includes the NASCAR series in the United States – still represents about 66 per cent of total sales for the group, it's increasingly obvious there is substantial upside in the hybrid and electric vehicle market.
"All the high-end luxury car makers have extensive computer systems and electronics that have to be cooled down," Mr Weel said.
"Certainly a big part of our R&D development is on this side of things."
PWR had an issue price of $1.50 per share and rocketed as high as $3.30 by October, 2016 but is back hovering around $2.40 after it was handicapped by a plummeting British pound in the wake of the Brexit vote. Its market capitalisation sits at $250 million.
A large number of the Formula One teams have operations based in the United Kingdom.
"We got a bit of a whack on the backside with the pound," Mr Weel said. "It is what it is."
But Mr Keel said underlying growth in the company's European operations has averaged between 25 to 30 per cent over the past four years and the momentum is strong for 2017-18.
"We don't see that stopping," he said.
A proposed expansion of Formula One races from 20 to 21 in 2018 by new owner Liberty Media and the likelihood of extra teams provides a longer-term engine room for the business. The company provides cooling systems for all of the Formula One teams except for Mercedes-Benz, with its customer base including the high-profile teams of Ferrari and Red Bull.
PWR's annual revenues from its biggest division, Motorsports, increased by 14.6 per cent to $36 million in 2016-17 but its sales in the automotive aftermarket business slipped back by 2.9 per cent, even though there was strong growth in the US and Europe. One of the strands of that business is providing cooling systems for limited edition "supercars" owned by wealthy customers.
But the smaller emerging technologies business accelerated by almost 50 per cent to $2.5 million as the appetite from the broader industry for "cold plate" and battery cooling technology for use in electric vehicles jumped.
"A lot of the technology is coming from the work we're doing with the Formula Ones," he said.
Mr Weel, who was the original founder of PWR, says it's inevitable that a version of the cooling technology used in the Formula One cars will make its way into everyday vehicles.
A string of global car makers including Volvo and VW have been progressively making announcements about their own ambitious transition timetables to hybrid and electric vehicles.
"The first step is to a hybrid car," he said.
Mr Weel said car makers everywhere are using more sophisticated computer technology in their vehicles which generate more heat.
"They're getting hotter and hotter because everyone's trying to get more out of them," he says. The company is also getting busier when it comes to the manufacturing of cooling plates. In simple terms, high-end car makers "bolt the electronics onto the plates", with the base itself providing a cooling mechanism so the sophisticated electronics don't overheat.
Mr Weel has been in the vehicle industry for decades, after initially starting out as an apprentice motor mechanic for Holden in the 1970s.
He started the business in 1996 and was also the principal of PWR Racing in the V8 Supercars competition in Australia, with the team competing in the series from 1998 to 2007 with a best finish of third place in the Adelaide round in 2003. Kees' son Paul Weel was the main driver for the team.
PWR's main operations are at Ormeau in south-east Queensland where it employs about 150 people. It also has a substantial presence in the United States where it has a workforce of about 60 people.
While the octane world of Formula One is the core business of PWR, Mr Weel also has his sights set on other high-powered industries such as aerospace.
The company has been working hard behind the scenes on products for that industry and is in the final stages of development before taking the wraps off in the next three months.
"We're ready to go," Mr Weel said. He was reluctant to provide further details but said similar trends were operating in that hi-tech industry where computing power and electronics had advanced enormously, but keeping those units cool was also a major issue.
"There's a lot of interest out there for it," he said.
