Mr. David Johnson reports

VOLVO GROUP AND WESTPORT SIGN LETTER OF INTENT TO ESTABLISH JOINT VENTURE TO REDUCE CO2 EMISSIONS FROM LONG-HAUL TRANSPORT

Volvo Group and Westport Fuel Systems Inc. have signed a non-binding letter of intent to establish a joint venture to accelerate the commercialization and global adoption of Westport's HPDI fuel system technology for long-haul and off-road applications. Volvo and Westport share the vision of creating sustainable transport solutions to accelerate the decarbonization efforts of global trucking, engine and equipment manufacturers for their customers and society.

Westport's HPDI fuel system is a high performance solution supporting significant carbon reductions in hard-to-abate sectors like heavy-duty and off-road mobility. HPDI enables the world's trucking and off-road equipment manufacturers to address the challenges of meeting the regulatory requirements of Euro 7 and the U.S. Environmental Protection Agency while offering end-users affordable options that are powered by carbon-neutral fuels like biogas, zero-carbon fuels like green hydrogen and other renewable fuels. While Volvo will be a key customer of the joint venture, the joint venture's mandate will be to enhance commercialization of HPDI through the addition of new trucking and equipment manufacturers as customers.

Westport will contribute current HPDI assets and activities, including related fixed assets, intellectual property and business, into the joint venture. Volvo will acquire a 45-per-cent interest in the joint venture for the sum of approximately $28-million (U.S.) (approximately 300 million Swedish kronor) plus up to an additional $45-million (U.S.) (approximately 500 million Swedish kronor) depending on the performance of the joint venture.

Volvo's ambition is to reach net-zero greenhouse-gas-emission-enabled products, solutions and services by 2040. Volvo believes that the future will demand diverse propulsion solutions for diverse applications to meet customers' needs and environmental demands. Volvo advocates for a three-pronged approach: battery-electric, fuel-cell-electric and internal combustion engines.

"Decarbonization with internal combustion engines running on renewable fuels, especially with HPDI, plays an important part in sustainable solutions. HPDI has been on the road in Volvo trucks for over five years and is a proven technology that allows customers to significantly reduce [carbon dioxide] emissions in LBG (liquefied biogas) applications here and now, and is a potential avenue for hydrogen," said Lars Stenqvist, chief technology officer of Volvo.

"Westport is advancing fuel system solutions to help our customers affordably address the most pressing challenge of carbon reduction while continuing to utilize existing manufacturing infrastructure," said David Johnson, chief executive officer, Westport. "The joint venture with Volvo is a natural extension of both companies' commitment to accelerating global carbon reduction, and we are proud to partner with such a bold supporter of the future of the internal combustion engine. Combining our expertise strengthens HPDI's position in the market and underscores Westport's commitment to developing affordable fuel system technology that supports significant CO2 reductions in hard-to-abate sectors like heavy-duty transport and off-road applications, including a pathway to power equipment with zero-carbon fuels like hydrogen."

Completion of the joint venture is conditional on the successful negotiations and execution of a definitive investment agreement, joint venture agreement, supply agreement and development agreement. The joint venture is expected to launch in the first half of 2024.

About HPDI

HPDI is the most cost-effective way to reduce CO2 in long-haul trucking and other high-load and off-road applications. Westport's HPDI fuel system is a complete system offering original equipment manufacturers the flexibility to differentiate their biogas, natural gas, hydrogen and other fuel product lines easily while also maintaining maximum commonality with its conventional diesel fuelled products. The greenhouse-gas-emitting fuels like diesel can be replaced with carbon-neutral or zero-carbon fuels like biogas or hydrogen while maintaining the durability, affordability, efficiency and performance characteristics that have come to be associated with the diesel engine. The HPDI fuel system consists of a fully integrated tank-to-tip solution, based on diesel technology. At the heart of the engine is a revolutionary patented injector with a dual concentric needle design. A small amount of pilot fuel (which can be diesel fuel or a biodiesel renewable fuel) is injected into the cylinder prior to the gas to initiate the ignition.

Engines can achieve higher horsepower and torque by using direct injection and relying on high pressures in the combustion chamber for ignition. Thus, the characteristic of the engine using an HPDI fuel system is very similar to a diesel engine. Designed for heavy long-haul and distribution operations, as well as off-road applications like mining, rail and marine, HPDI fuel systems offers an alternative with low climate impact while meeting the highest industry standards for performance, fuel efficiency and operating range required for heavy-duty transport. A truck equipped with the HPDI system is an ideal solution for fleets wanting to reduce their fuel costs and offer decarbonized regional and long-distance road transport solutions to their customers with no compromise on vehicle performance.

About Westport Fuel Systems Inc.

At Westport, it is driving innovation to power a cleaner tomorrow. It is a leading supplier of advanced fuel delivery components and systems for clean, low-carbon fuels such as natural gas, renewable natural gas, propane and hydrogen to the global transportation industry. Its technology delivers the performance and fuel efficiency required by transportation applications and the environmental benefits that address climate change and urban air quality challenges. Headquartered in Vancouver, Canada, with operations in Europe, Asia, North America and South America, it serves its customers in more than 70 countries with leading global transportation brands. At Westport, it thinks ahead.

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