- Hello, Anatoli. - Good afternoon! - Thank you for agreeing to this interview with us. I have prepared a list of your followers’ favorite questions to you.
Go ahead, first question. Anatoli, you are already close to the finish line in the implementation of the first targeted projects. Is your company ready for such a leap forward? Absolutely, yes. Our parent engineering company Unitsky String Technologies Inc. was founded in 2015. Until 2021, we had a period of creating a commercial transport and infrastructure product ready to enter the global market. Also, during this time, we gathered a team — engineers, designers, and researchers of dozens of specialties, organized into more than 50 design offices, departments, and divisions. This enabled us to create, maintain, and develop a very sophisticated industry-forming product. And this is the most important thing.
Only six years for creating an industry-forming product, such as uST Transport & Infrastructure Solution, is not much at all. This is a record short period because this market product includes a string rail overpass, second-level infrastructure — stations, cargo terminals, turnouts, an automated control system, rolling stock — these are unmanned rail electric cars on steel wheels, called electric cars — as well as power supply and communications. We also set a sort of record here — even in the most industrially developed countries, with government support, similar transport and infrastructure products, such as high-speed railroads, for example, in Japan, and maglev trains, were constructed many times longer with much more significant funding.
I should also note that the entire process for the largest auto manufacturers to create, for example, a new model of an ordinary passenger car "from scratch" and bring it into a car showroom, on average, takes the same six years now. And this is while the car and its essential technologies and units were invented in the 19th century. That's more than 100 years ago. And now imagine that car manufacturers, just like us, would have to design, build, certify, and, of course, finance in parallel a fundamentally new infrastructure that road transport has — roads, bridges, overpasses, junctions, culverts, train stations, garages, as well as an automated control system, power supply and communications? The difference is apparent in the complexity of these products and in the processes by which they are created and funded.
In fact, we've done even more in a shorter time. And we are not going to stop in our development. For example, we assembled a new uPod with the most efficient configuration for today. We start specific projects with such vehicles.
In its creation, we followed the requirement of maximum energy efficiency and performance as part of uST complexes while maintaining maximum comfort for passengers. This is the main thing for us, and of course — safety. An essential feature of the vehicle is a 360-degree view (this is the first uPod with such a view). Since one of the key advantages of our systems is movement above the ground, a 360-degree panorama will allow passengers to enjoy beautiful views from a bird's-eye perspective. This is what customers want, this is what we can offer, unlike existing ground transportation systems.
Over the past six years, we have not only created all the necessary systems, subsystems, and elements of uST Transport & Infrastructure Complex, but also tested them. And much of it has been certified. We have already built five types of string rail overpasses in the EcoTechnoPark, Belarus, and we made the 6th type in Sharjah, UAE. Now we have two more overpasses on the finish line (or rather not overpasses, but more sophisticated things — two uST Transport & Infrastructure Complexes). Such a variety of engineering solutions allowed us to develop the optimal configuration, which we are now working with in commercial projects. We are confident that our product will not let down either the customer or us.
And this is really important because we can enter the market only once, we won't get a second chance. But we are not afraid — these six years allowed us to create a product and a team in which we are 100% confident. People often ask us why we take so long to get to commercial projects. Let me explain with the example of one of our projects in the UAE. We have a paid order for a feasibility study, which we did last year. It took us about 3-4 months. It took about six months for the customer to review the feasibility study. Longer than we took to do it.
He hired another expert company to study the documents thoroughly. A representative of this company visited us in Belarus, looked at the technology and human potential, and carried out a comprehensive analysis of our capabilities and readiness to implement the declared project. There's a little noise there, but it's a work in progress, so that's all right, I think. Then, the consulting company wrote a report on our feasibility study and gave it to the customer, who studied the report for several months. Based on this report, he asked us to do another part of the feasibility study for a fee, which took our engineers two more months of work.
Now they are analyzing the second part. At the same time, we are preparing the legal documents to sign the design contract. The whole process took a year and a half, and that is the case with most projects.
It can take more than a year from the start of communication with the customer to signing a contract for a targeted infrastructure project. Then it takes at least another year from signing the contract and starting the design work to reaching the construction site. This is because our product is not just any "product", even if it is very complex, such as an iPhone or a Tesla electric car with a worth of tens of thousands of dollars, but a complex product that includes at least a dozen such "products", or even hundreds of them.
The difference between a "product" and a "complex product" is obvious here. So, I want to provide some figures by comparing uST to the world's hyped Tesla. Tesla was created in 2003. Three years later, Elon Musk raised $100 million in investments. Seven years later, Tesla received a $465 million loan from the U.S. Department of Energy. We've never seen that much money. Nine years later, the Model S came on the market, and only 14 years later, in 2017, Tesla began selling the Model 3 sedan.
We started manufacturing unmanned rail electric cars on steel wheels, which are technically much more complex than Tesla, in 2017, when our first uBike was launched. States didn't help us — neither our own, nor anyone else's — none. At the same time, in 2017, our "from scratch" production of uBikes started. That was also two years later. It was also then that our first two transport and infrastructure complexes with a string rail overpass of trestle and semi-rigid types were built as well. Compare what Tesla did in its first two years. By now, we have already designed, manufactured, and tested 14 models of our electric passenger and cargo vehicles, including a high-speed model, and five of them have already been certified. We have also made a high-speed model which can accelerate up to 500 km/h.
Two more models are under production today. Feel the difference, as they say. The difficulties with the sale of uST are not really about that. They are not simply related to the technology, its unpreparedness, or the level of elaboration. We have to organize not just the sale of rail electric cars, that Elon Musk did, but we have to form a new transport and infrastructure global market — a second-level transport based on string technology.
And this is a much more complicated task than the one set by Elon Musk in 2003 — the production and sale of a new electric car model, and by the way, the first model went on the roads of the world 150 years before that — as far back as the middle of the 19th century. Anatoli, thank you very much for your answer to the first question, and let's move on to the next one. How do you estimate the current market value of Unitsky String Technologies Inc.? That's a good one, and by the way, a frequently asked question.
I cannot answer it briefly, so I need some time. We can only estimate the market value of a company when it enters the securities market. Now we can give our estimates based on what assets the company has. We can refer to the authorized fund of Unitsky String Technologies Inc., which amounts today to more than $70 million.
It is very important to remember that the authorized fund is paid in money and in a foreign currency. This is a huge amount, more than many Belarusian industrial leaders have. At the same time, we have other assets. They are cars, cranes, buildings, structures, land, computer, and office equipment.
If we add all that to the authorized fund, it will be well over $100 million. Of course, the value of a company is primarily determined by how much profit it can bring in a given period of time. We have an intellectual property valuation for string technology, conducted not by us, as many people think, but by an independent company accredited for such activities.
It estimated the value of our technology (and in essence, the company that carries this technology, which involves knowledge and a professional team) at $400 billion. I repeat: $400 billion. But this is rather an undervaluation, because the market demand grows every year. By the way, the capitalization of Tesla, which started out in 2003 with a less breakthrough and in-demand transportation technology than uST, exceeded, mind you, $1 trillion in 2021. Estimates suggest that by 2030, the global smart transportation market alone will reach $300 billion, while electric cars will reach about $360 billion and zero-emission vehicles will exceed $1,300 billion. Due to increasing traffic congestion, demand for transportation on-demand services will also grow to more than $700 billion by 2030.
Given the demand for all of the above industries, the estimated value of our company will be even higher, because we offer transport complexes, not simply transport, with an automated control system and with steel-wheeled electric cars, which produce minimal environmental impact, have an unprecedented safety due to the movement above the ground, and can decongest the existing roads on the first level. In the next ten years, our plan is to expand to 10% of the entire transportation market. Today this market is developing rapidly, and transportation problems are more relevant than ever.
We actively work in Indonesia, India, Russia, the Middle East, many African countries, Latin America, and other regions of the world, so we know from practice and communication with our customers that these problems affect various countries and all large cities without exception. And we are ready to solve them. For example, our data shows that today's demand in Russia only for cable cars is estimated at 700 billion rubles. This is more than $10 billion.
And that is just one country and one segment of the transport market. So, if we are talking about $400 billion, the market value of our company will likely be even higher. Okay, I see your point. Tell me, is the company making a profit now and does the income exceed the expenses? That's also a good and frequently asked question. Yes, of course, the company is already making a considerable profit. Our production facility SW Plant, which we started two years after the establishment of Unitsky String Technologies Inc.,
executes not only orders related to the development of String Technologies, but also large third-party orders, and they are many. The technological facilities we have created and our world-class machine park enable us to perform the most complex operations. Our manufacturing facility is competitive not only in Belarus but also in the CIS countries — Russia, Kazakhstan, Uzbekistan — and we also work with a number of other countries. For example, the Kama electric car ordered by the Russian concern KamAZ, which, incidentally, was demonstrated to Russian President Putin last year, was made at our production facilities. We produced it, not anyone else. And there are dozens of such projects, all of which bring us profit. In addition, the design organization also profits.
First and foremost, contracts for the development of design documents for our uST Transport & Infrastructure Solutions. We received payment for feasibility studies for targeted projects in several countries in different parts of the world. And these are quite large amounts — about 1$ million each. We are moving on to design and survey activities. And we have already received our first payments there. Our Design Engineering Department, which has essentially grown to a large design institute, handles a number of third-party orders that allow us to engage our specialists and simultaneously train our staff in the process of designing a variety of buildings and structures, not only related to string transport, and then switch these specialists to work on uST Transport & Infrastructure Solutions, which also include a lot of construction projects: stations, terminals... This also generates profits.
Last year we published a report on the audit statement, from which you can see that the design organization has a very significant revenue stream. We're going to publish a report for this year that will show that this revenue side has increased dramatically. In the near future, we will be making a profit, and then we will only build it up. Thank you very much, Anatoli, for the intriguing answer to the question.
We continue then. Please tell us, what are the "main bets" in the company for successful market entry and commercialization of the technology? The main bets that our company makes are spelled out in our positioning. We offer transportation: safe ("second-level" traffic, which excludes collisions and accidents), smart (it is automated and easy to integrate into the so-called "Internet of Things"), environmentally friendly (it does not take up land and runs on electricity). But, most importantly, it is very efficient.
I can confidently say: it is the most efficient of all known and promising vehicles and developments, including in terms of capital costs for construction. Our solution is at least 3 times cheaper than light rail and 10 times or more cheaper than the subway. Compared to cable cars, we reduce capital costs by 1.5-2 times.
And you can see and actually travel on our transport not in a computer game, as many technologies offer, but in the uSky Centre in the UAE and in the EcoTechnoPark in Belarus. And if you look at the operating costs, we also win a lot compared to other systems. The energy consumption for the movement of our steel-wheeled electric cars on string rails is much lower than the power, fuel, and therefore money consumption for the movement of buses, streetcars with their pneumatic tires, where the wheel rolls on a cable and which also have a very high wheel rolling resistance, and maglev trains. This is the illusion of most people. Experts know the truth, that it's not like that — push and go, no.
Maglev trains are less efficient than airplanes — the most inefficient transport, that's the point. And that's why Siemens has now shut down its TRANSRAPID project as an inefficient and unnecessary transport, having spent more than 50 years and €6.5 billion on its creation and having built only one project, the Shanghai-Airport. And it is not only in comparison with maglev trains and even streetcars. If you compare it to railway trains as well, we have less resistance to movement, and thus we use less energy.
It is very important for customers because in the long term (we expect the service life of rolling stock to be at least 25 years, and overpasses — at least 50 years), it is the cost of operation that becomes the priority for the customer and our proposal is unique in this regard. I can explain it this way: if we declare that the payback period of our systems is 5-6 years, It means that our costs are small and that we pay back the project quickly. The money comes back, then we make another cost of the project in 5 years. The next 5 years we make another cost of the project. Now imagine a payback of 30 years. So, the costs are so big that the money doesn't even pay back — not that you're going to make money on it. And that's because our operating costs are very low.
This is a very important factor; they usually don't even consider it and just ask: how much does it cost? It's more important what the operating costs are! These are electricity or fuel, wages, depreciation charges, rolling stock repairs, overpasses, and so on. These are all costs. When it comes to the applicability of uST technology, we take a number of directions. The first one is passenger traffic between cities and suburbs, for which we are already designing right now. Almost all cities, especially large ones, face the pendulum migration problem, when during rush hours a lot of traffic accumulates at the entrance to the city and creates congestion. Creating new roads does not solve these problems, it only results in new cars. We see this in Moscow, for example.
And the widespread transition to "green" electric cars, driving on the same roads on the first level, will not solve these problems either. But the creation of transport systems and transport infrastructure above ground, on the second level, solves these problems, because it does not interfere with life on the first level. To allow for comfortable travel from the suburbs to the metropolis, we make intercepting parking lots at the entrance to the city at uST stations — we are already working on several projects to integrate our stations with existing public transport stations. The second one is passenger traffic between cities and logistics hubs located beyond the city — airports, railway stations, seaports. Getting to an airport outside the city is a real challenge today.
We all know this because we all fly. Sometimes it is longer and more expensive than the flight itself. We offer an efficient solution — our stations can be integrated into the airport terminal, which will significantly reduce the time of check-in and other pre-flight formalities. We have already completed a feasibility study for one such project. The third important direction, in which we have several ongoing projects, is overcoming water and other extensive obstacles, such as mountain gorges.
We can have unsupported spans up to 2 km long, and up to three or more kilometers in special designs. The uPods are capable of crossing wide rivers, bays, and straits with a minimum number of towers, while maintaining high performance. Thus, we can solve the same logistics problems that are solved by building conventional bridges, but at a much lower cost. For example, one of the bridges connecting two islands was built in Japan. It was only 3 kilometers long, but it cost $10 billion at the prices of twenty years ago, and today it would probably be $20-30 billion.
The fourth direction is cargo transportation in territories with harsh natural and climatic conditions or topography, for example, in the Far North. We have started active work in the Arctic direction. In the Arctic, the ground for conventional transport systems such as roads and railroads is very hard — it is the permafrost.
Today, they use mostly winter roads — roads are flooded and frozen. Roads that are used only in the winter time do not operate in spring and summer, because they simply melt. That is why most transportation in the Arctic is done by air. It's very expensive. And our solutions enable efficient transport logistics in these remote regions.
The fifth direction is transport accessibility of new lands, such as islands, including undeveloped, mountainous areas, deserts, which were previously inaccessible or poorly developed. We integrate uST complexes into the developed areas so that to ensure their transport accessibility, including their connection to the existing regions, for example, island to shore. This is a very advantageous solution for many customers, because the integration of uST transport complexes into development projects allows increasing the market value of real estate in the future. For example, in Dubai, the value of real estate along the subway line, when it was built, increased by 1.5 times. That is, on the one hand, the developer solves the problem of transport accessibility for customers, but on the other hand, it improves its profitability from the project by increasing the cost of real estate.
We have one such project at the final stage in the United Arab Emirates. And, of course, the sixth direction is passenger transportation in areas with strict environmental requirements, such as parks, nature reserves, wildlife sanctuaries, and specially protected areas. We are already negotiating on a number of such projects with very stringent environmental requirements. Since uST does not take up land or disrupt animal migration routes and the flow of ground and surface water, we can solve the transportation problem in such areas with zero impact on natural ecosystems.
I can give you an example. In Australia, about 12 years ago, there was a project linking a port with an inland deposit that would have had a $10 billion return if the railroad had been built. But when the project was done, it failed examination because the road crossed the migration routes of some big-eared, furry, lizards or some rare animals or maybe frogs. I don't even remember exactly, some kind of small animal. So that fact shut the project down. We don't interfere with that. Thank you, Anatoli. You of all people know how much everybody loves and looks forward to EcoFest, and what an incredible atmosphere of friendship, mutual support, and understanding it creates.
So, I have another relevant and very common question: will EcoFest happen in 2023? Oh, if only you knew how much I missed these EcoFests! Because the last one we had was in 2019. Online format doesn't really work that way. And so, of course, we should be able to see eyes, to hug and chat and things like that. That's why we want to hold the next EcoFest in March–April 2023 live, right here in the Emirates, in Sharjah, and to coincide with the launch of the new transport and infrastructure complex, This is a complex with a heavy string rail overpass, and before that all of our rail overpasses were light.
What does this mean? It is designed for the movement of rolling stock weighing up to 60 tons. I said it's the weight of a heavy tank — but a heavy tank weighs less. It's a heavier load than a tank.
The spans are 144 meters long (there are only two such spans), and the main spans are 288 meters. These are very large spans. The Moskva River is not wider than 300 meters. That is we can cross the Moskva River with one span. The length of the string rail overpass is more than two and a half kilometers, including the unstressed section, which will allow the rolling stock to start from ground level.
We previously planned to start from the station, but then you have to go up by elevator, escalator, or stairs, and not everyone can do it because of their age or some other reason. That's why we decided to make the unstressed section, to go down from the station and make a pavilion there — a simple ground level station where you can get in our car, go up and start on the track. Our 25-seater uBuses, which can take up to 250 people, can also go down and start from the bottom.
That's the uBus I'm talking about, the one coming to Sharjah right now. This will allow the uBus and the uCont container carrier, which is a new, already fifth generation of heavy uPods, with a capacity of up to 35 tonnes, to start from the ground and show the possibility to set up the station at ground level. At the same time, when our uPods are already up on the track, it will be possible to move there at the long-expected speed of 150 km/h. This is the closest solution to the one we will get to the market in the near future, because we could not achieve such speeds before. Firstly, because there were no heavy tracks, and secondly, the previous test tracks were very short.
Launching this line is a crucial and mandatory step before most of the ongoing commercial projects get to the construction site. So, there are a lot of customers who are waiting to see this line up and running. I think we will schedule EcoFest to celebrate that. But since we do not know exactly when our machine from Belarus will arrive, I would say it will be two months. And if the car arrives later, how will we hold EcoFest? That is why we still have to clarify the date of EcoFest.
We will be looking forward to this event. We must monitor the car's movement, because it is necessary to take it across the border to the ports, and then by sea through the Suez Canal and other canals, and then across the oceans. In fact, it's all around the globe with overloads. It's a very long way, but what can you do.
In the future, we can set up production of uPods here, too, in the country where we will be building the tracks. We won't have such problems there. Here is my final question. Anatoli, do you think the company will survive the economic crisis in the world, and are you confident in the success of uST? Look how many of these force majeure events we've had! How many companies have died, and I think there are millions of startups around the world that have sunk. Millions of companies, no less! We survived, and what's more, we're growing successfully.
The history shows that one of the most effective ways out of economic crises, and now it is happening, for states is to start major infrastructure projects. This was the case, for example, in the U.S., when the construction of highways and their infrastructure, including the so-called one-storied America — I live outside the city and work in the city — helped tackle the economic crisis and reduced unemployment in the country during the Great Depression. This was the case in Germany in the 1930s, when the construction of autobahns gave a powerful impetus to the country's economic revival, and then to its intensive growth. That is why we believe that the forthcoming crisis will only increase the demand of states for new and more efficient not just transport but transport and infrastructure solutions, and the word "infrastructure" is even more important than the word "transport". And this is exactly what we propose. The crisis will most likely hit existing factories, plants, and car manufacturers, because people's purchasing power will fall considerably.
But the demand for technologies related to logistic construction and spatial development of territories, countries, and continents will only increase, that will guarantee the success of our string technology. We are witnessing this trend now — the demand for our technology is only increasing year by year, especially recently. And we are ready to provide our world's finest uST Transport & Infrastructure Technology to all our customers.
Thank you very much, Anatoli, for your fascinating and exciting interview. I can only wish you every success in the development of the company and the technology. Thank you, we are developing and you can clearly see that.
And even in these times of crisis, we have accelerated the pace of development in some ways. As for the fact that the market entry has been delayed, I explained that. That's because I underestimated and the experts underestimated how complicated the complex technology is and how difficult it is to enter the market. If we were selling toothpaste or beer or burgers or iPhones, believe me, we would already be selling them in millions. But our product is completely different. Nevertheless, we are making progress, and we are already on the market.
We have already received and are receiving orders, and we are already making money on this. So, thank you for your questions, and thanks to all of our investors, thank you for investing. It is only with your help that we exist, that we work, that we develop.
It is only with your help that we will reach those goals, those heights of common humanity, of common civilization. What we're talking about is saving the planet. And not even the planet itself. The planet will exist without us, it existed before us for billions of years, and it will exist after us. We are saving a civilization that is an engineering civilization, which many don't understand. They think bankers created our civilization, or politicians, philosophers, and economists.
The word "technocratic" or "technogenic" has become a swear word. But technocracy is not to blame. If I made a knife to cut bread, and someone took the knife and stabbed or killed someone, am I to blame? I'm an engineer! And so everything that surrounds us, everything that we possess, everything that we live by, was created by engineers like me. That's why our civilization is an engineering civilization. And this is the path our civilization chose about two million years ago, when the first such great inventor, we don't know his name and will never know it, invented fire, a campfire.
And it wasn't just that he lit something, it was the beginning of cooking on fire, roasting meat, dressing hides, heating. This is the beginning of what then became the steam engine, the automobile, the internal combustion engine, the jet engine, the rocket. All these thermal engineering processes, even oil refining and the like, they all came from the first fire. And that's why you finance engineering technology. You are the ones who care about the future, not only your own future, but the future of our children, our grandchildren, and our great-grandchildren. Thank you very much! We and I, we will fulfill our mission to the end, no matter what it takes.
2023-02-13