An E-Z Pass for emissions tests

Drivers may be able to skip the long lines at motor vehicle departments if SysTech's wireless pollution-data-collection system takes off.

By Lisa Palmer, FSB contributor

(FSB Magazine) -- Fifteen years after receiving his first patent for an automobile-emissions testing device and ten years after founding a company to build and market emissions-testing systems, Pradeep Tripathi has learned a thing or two about his niche. He knows, for example, that neither consumers nor regulators like the current setup. Drivers regard the annual emissions test as a pain in the tailpipe. And regulators question the value of a system that gives them only one shot a year -in some places, once every two years - to certify that a car meets emissions standards. "In between, it could be polluting like crazy and no one will ever know," says Tripathi.

These insights helped lead the 38-year-old engineer to what he thinks will be a breakthrough product for SysTech International (systechportal.com), his 40-employee firm in Murray, Utah. SysTech spent nearly $500,000 to develop a matchbook-sized device that connects to a car's onboard computer and continuously collects emissions data, which it transmits via a built-in transponder to a wireless data network.

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Pradeep Tripathi's invention makes life easier for drivers - and could make the air cleaner, too.

Voilą! Drivers can forget about scheduling an appointment for an emissions test. And regulators have a new tool to enforce emissions regulations.

That new tool comes in handy right now because many states are looking to tighten limits on auto emissions. Typically, new regulations have required new testing equipment, but the Remote OBD (for onboard diagnostics) system could make changing the rules easier. "States were primed to spend a lot of money retooling their emissions-testing outfits," says Gene Tierney, senior policy analyst at the Environmental Protection Agency. "But then SysTech's continuous test comes along, and now they won't have to." Instead of recalibrating or replacing test equipment installed at hundreds of inspection stations, states can enforce new standards by having SysTech change the programs in its centralized computers.

So far SysTech has won contracts for tests in Oregon and Maryland, which is trying the system with 100 taxis. Oregon has committed to buying 10,000 Remote OBD units and related systems for collecting the emissions data this year, and began offering transponders to motorists on June 1, primarily in more densely populated areas such as Portland.

Once they've been installed by a mechanic, the monitors work like the E-ZPass toll system, beaming data to radio antennas, which relay the information to state agencies. If a car is out of compliance, the owner gets a warning in the mail and has 45 days to fix the problem. If the car is running clean, the owner gets an annual inspection sticker in the mail.

Because of the cost $50 a vehicle - remote monitoring is not likely to become a mandate in Oregon or elsewhere, Tripathi says. Also, the system works only on post-1995 cars that have onboard computers, and he adds that the setup may not appeal to drivers who are leery about installing a device in their cars that can be used to track their movements.

But even if a relative handful of motorists choose the system, it could make a huge difference in SysTech's fortunes. By the end of next year, Tripathi says, Oregon will take 200,000 units. That's enough for about 13% of the more than 1.5 million registered private vehicles in the state, but it will generate $10 million in sales, or about 40% of SysTech's projected 2008 revenue. The company had sales of $8 million last year and expects to finish 2007 with $18 million, thanks to new business in Nashville and Rhode Island and a $2 million boost from the new product line.

Next? Tennessee, New Jersey, Wisconsin, and Massachusetts are considering remote monitoring. And the EPA is giving the technology a push by supporting the SysTech tests and giving extra pollution credits to states that adopt the new technology, which can translate into increased highway funding.

Tripathi's remote monitoring system has attracted at least one competitor. Environmental Systems Products (esp-global.com), based in East Granby, Conn., is a vehicle-testing company that uses cellular networks to retrieve emissions data. But ESP did not submit a bid for the Oregon contract.

While SysTech is gaining share, the overall emissions-test market has been contracting because of falling hardware prices and a 50% drop in annual inspection-station fees over the past decade. SysTech's lead in remote diagnostics could put it in position to capture the new wave of demand that Tripathi expects as the EPA takes on greenhouse gases. "When I factored in the cost and time savings for the consumer," he says, "I knew it was a winner."

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.