The proposae to cooperation

Project proposal
3rd generation traffic lights based on light-emitting diodes: product design, development of the manufacturing process, and production


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Svecha has been developing and manufacturing LED-based signals for automotive and pedestrian traffic since 1993. More than 2000 traffic lights built by Svecha have been in use on the streets of Moscow and other Russian cities for over 6 years and have proven to be highly reliable and inexpensive in operation.


Our experience with LED-based traffic lights, as well as the analysis of market trends shows that it is necessary to implement a substantial reduction in the cost of the traffic lights, both through technology development and broadening of the market penetration.


Solving this problem requires the creation of a new generation of traffic lights. This, in turn, will require investment in the new product design and development of capabilities for the manufacturing of polycarbonate parts and modules, and assembly of complete traffic lights. Svecha, Ltd., a technology leader in LED-based signaling equipment, islooking for a   partner for a joint manufacturing venture to produce new third generation LED traffic lights.

Our Russia-based company has been engaged in research, design and manufacturing of LED signaling equipment for nine years. Our product line covers several modes of transportation, but is primarily focused on automotive transport. Svecha was the first in the world to perform a large-scale installation of full-color LED-based traffic lights. 1000 traffic lights were installed in 1997 in the city of Moscow, including prime locations such as the Kremlin.


The third generation LED-based traffic lights are characterized by higher reliability, are capable of operation in any climate, and are much more economical. The cost of such traffic light under fully-automated manufacturing can be as low as US$300. This should be compared to US$230 for the cheapest incandescent bulb-based traffic light. We now have a complete package of design, schematics and technical documentation for several devices. We are open to discuss any forms of cooperation.


Detailed description of the project


LED-based traffic lights have a number of major advantages over incandescent bulb based products. The lifetime of the light source is approximately 100 times longer, the electric power consumption is reduced by a factor of four to nine. As a result, the cost of operation is reduces several-fold. The occurrence of false signaling due to sunlight is eliminated by design. The complete, or “catastrophic” failures of the LED-based traffic light are also designed out. The lights are “vandal-resistant” and perform under extremely stringent conditions. High reliability of the signals benefits traffic safety. 


The traffic signals in Svecha’s product portfolio outperform all models on the world marked today in terms of the uniformity of illumination of the aperture. This is achieved through the use of a unique lens raster diffuser as the protective cover glass. All other technical performance characteristics of the traffic lights are equal or exceed those of the competing products.


The only shortcoming of LED-based traffic lights is their relatively high upfront cost compared to incandescent lights. This limits the market for LED-based devices. The purpose of the new 3rd generation LED lights is to achieve cost reductions, improve technical performance and operational characteristics. The largest expense item in the development of manufacturing facilities is associated with the design and manufacturing of the equipment for making cast enclosure parts.


Proposed means to achive the project goals:

Designing and organization of manufacturing of the enclosure with the use of impact-resistant polycarbonate, which will provide the following advantages:

·        Elimination of custom-fitting of enclosure part during assembly

·        Elimination of paint job

·        Elimination of metal hardware for mounting of electronic components.

·        Efficient optical scheme with the use of the most efficient LEDs

·        Implementation of Svecha’s latest electronics design


The new traffic lights comply with the EU standard EN 12368:2000 and the Russian standard ÃÎÑÒ 25695-91. They are 30% lighter than the old design, have 25% lower power consumption, and substantially lower estimated selling price (US$200-400 as opposed to 300 to 900 for the old design).


The new traffic light will incorporate Svecha’s latest designs protected by patents and patent applications.


The new design continues the basic concept Svecha follows in its traffic lights development, namely the development of a specialized enclosure optimized for the properties of LED light sources, coupled with continuous performance improvements of the LEDs, optical and electronic circuits.


Servicing the traffic lights should be performed by the manufacturer. High reliability of the traffic lights will free the user from the need to perform repairs. The repairs, if necessary, will be performed by the manufacturer free of charge during the 5-year warranty period and at a cost beyond that. As the installed base grows, new field service locations will be created.


The main trend in the world-wide development of LED-based traffic lights is towards LED kits for retrofitting existing lamp-based lights. This assumes the existence of a sufficient quantity of installed traffic light enclosures in satisfactory operational condition. The existing enclosures must also allow cost-effective retrofit that does not impair technical performance. Dozens of companies have manufactured tens of millions of lamp-based signals of different designs, which requires the creation of a number of different LED retrofit modules. This approach inevitably results in the traffic light having an unnecessary double enclosure and affects costs. Will the enclosures be still available when the old ones fail, but the LED retrofit kit is still operational?


The double enclosure affects the thermal conditions of LED operation by increasing their temperature. Temperature increase results in the reduction of light output and lifetime. Taking into account the thermal conditions is especially important when designing traffic lights for use between 30 degrees of northern latitude and 30 degrees of southern latitude.


The proposed traffic light designs do take into account thermal processes and provide for normal operation in tropical conditions.


The new generation design allows customizing the traffic lights for users in different countries based on the specific requirements for light output and operating conditions, such as the electric power parameters and climate.


The scope of the proposed project includes the design and production of traffic lights powered by 24 Volts complete with a controlled with 24 Volts output voltage. Information about the complete kit is enclosed. There are no known analogues to such a kit on the market.


Market analysis


Svecha, Ltd. was the first in the world to manufacture approximately 1000 LED-based traffic lights in 1997. Moscow highway authority installed these traffic lights in the city center, starting from the Kremlin. In 1998 municipal authorities of several russian cities and towns started using our traffic lights on a pilot basis. In 1998 we supplied a batch of traffic lights that have been in use since September of that year on Khreschatik street – the central thoroughfare of the city of Kiev (Ukraine).


The first large-scale installations of LED-based traffic lights in Western Europe started in 1998 in Stockholm, the capital of Sweden, where 8,000 units were brought into operation. Installations in London and other cities followed in 1999.


The basic trend today is clear: LED-based traffic lights will inevitably replace incandescent bulb-based lights. The speed of adoption will be determined by availability of new less expensive and more reliable LED-based models.

Estimate of the market size and composition

There are approximately 15 to 30 million traffic lights operating in the world. The average price is can be estimated to be US$200 (e.g. products of Swarco (Austia), Eagle (USA)), so that the total value of the total world installed base is between US$3 billion and 6 billion.


The traffic lights are not distributed uniformly. There is one traffic light per 100 people or fewer in developed countries, while developing countries have one traffic light per 500 people or more.


There are 8 to 15 million traffic lights in the USA and Canada, 4 to 6 million in Western Europe. These markets are unlikely to be accessible to a Russian manufacturer. The following regions are more realistic target markets and are of interest to us:

East-Central, Eastern, and South-Eastern Europe, from Poland to Yugoslavia, Greece and Turkey. The population of this region is about 200 million, which allows estimating the market of about 1.5 million traffic lights. The countries are small enough so that it probably makes no sense to for each of them to have a traffic light manufacturer of its own. The condition of existing traffic lights is generally poor, especially in the post-communist countries.

Iran, the Indian subcontinent and Southeast Asia. This region is home to one third of the world population. We estimate the market as 1.5 million devices. The attitude towards Russian products in these countries is generally favorable, and good political and economic relations with Russia should help in gaining access to their markets. This region will require traffic light design adapted to tropical conditions.

China and Korea will not allow access to their market to a foreign supplier.

The market of Russia does not exceed 350,000 units, while the rest of CIS account for about 150,000. These are low-income countries with limited resources to devote to traffic lights upgrades. The city of Moscow has allotted about US$2 million since 1997 when the LED traffic lights were introduced through the year 2000.


Western manufacturers have changed their view on the prospects of LED-traffic lights from caution in 1997 to active pursuit of market share via the creation of multinational companies. For example, LumiLeds, an American company, has merged with Swarco, the largest European manufacturer of traffic lights based in Austria, with the goal of producing LED lights based on LumiLeds’ design. LimiLeds’ position in the market is helped by the fact that the firm is jointly owned by Agilent, a Hewlett-Packard spin-off and the largest LED manufacturer, and by Philips.


Preparation for production


The design documentation for the traffic light was completed in 2001. The diffuser is the only part that has not been prototyped; its design drawing are based on simulation results, and have not been confirmed by testing.


Primary manufacturing processes and required equipment


1.     Design and manufacturing of machine parts for making the enclosure and optical components. The cost of this work if performed in Russia is approximately US$150,000, in Asia -- $400,000, in Europe – 550,000. The quality of Russian made parts is low.

2.     Casting presses for making enclosure parts and optical components. The maximum weight of a part is 2 kg, dimensions 400x400x180 mm, the material is polycarbonate. Traffic lights with optical aperture of both 280 and 190 mm have been designed and will need to be made. It is assumed that the manufacturer either has this equipment or outsources the manufacture of the parts to an outside supplier.

3.     Manufacturing, stuffing and soldering of printed circuit boards. Again, the manufacturer has to either possess the necessary equipment or outsource these manufacturing steps. Items 2 and 3 are fully automated processes.

4.     Assembly, testing and packing. The design of the product minimized the use of manual labor required. The expenditures on the equipping the workstations and personnel training will not exceed $200,000, exclusive of the cost of factory space.

5.     The manufacture and testing of pilot and production units, corrections to design documentation. Certification of the product and of the manufacturing process. Patenting. Cost: approx. $150,000

6.     The organization of large-scale production of no less than 25,000 units in 2003, with the total dollar volume of approximately $7.5 million. The assembly, testing and packing of 100 traffic light per shift will require no more than 10 to 12 workers.

The Austrian company Swarco built an addition to its existing factory in 2000 with the capacity of producing 150,000 units a year.


After the decision on the project is made, additional research and planning will be required on the production of about 250,000 traffic lights per year starting from 2005.


Since LEDs account for 15 to 40 % of the cost of a traffic light depending on the particular model, the natural choice of country for the production site is Malaysia. The leading LED supplier Agilent has its factory in that country. The ambassador of Malaysia inquired Svecha in 1999 on the possibility of supplying traffic lights, but our proposal to organize their manufacture in Malaysia was rejected. According to advertising, Malaysians have opted to import traffic light made by the Swedish firm Itab, whose technical specifications are in our opinion ill-suited for the conditions of that country. Unfortunately, we have no information on whether local Malaysian manufacturers are ready to in terms of their technological expertise to organize production of traffic lights. South Korea is ready to implement LED-base traffic light manufacturing, and the project of a new standard has been prepared, but the progress has been delayed by the absence of a government decision on traffic light replacement.


Unit cost estimate


We have chosen the most common type of traffic light for the purposes of the estimate. It is  T.1.II, which has three sections, and the optical aperture of 300 (280) mm. The selling price of this kind of traffic light in Russia prior to August 17, 1998 was US $1230. Starting from January 1, 2000 our company has set the price at the level of $800 to $900 depending on size of the order. The profit margin is 5 to 8% depending on the size of the order. The cost of a traffic light made for export is $600 to $680.


The new generation traffic light will have a cost of approximately $300 if manufactured outside of Russia.


 Cost structure of a T.1.II traffic light


Cost item

Cost, US$

1. Enclosure


2. Protective glass


3. Printed circuit board, populated and soldered


4. LEDs


5. Other components


6. Labor


Total cost





Project participants and their responsibilities


In order to achieve the project goals, three organizations: Svecha, Ltd. as represented by President,

have organized the joint venture “Traffic Light” (placeholder, actual name to be determined).


The principal tasks of Svecha are:

·        the preparation of technical documentation: design documentation, including schematics, manufacturing documentation (assembly and production of printed circuit boards and the traffic light as a whole), operational documentation

·        the transfer from Svecha to “Traffic Light” of rights to Svecha’s patents

·        securing of copyright protection for the new technology used in the product design

·        participation in the implementation of manufacturing of traffic lights at “Traffic Light”

·        participation in marketing research


The principal tasks of -- to provide investment into the design, the organization of production, and actual production, marketing activity.


The principal tasks of -- the preparation of design and manufacturing documentation for the cast dies for the production of enclosure parts, including optical components, manufacture of dies, the organization of production and running the manufacturing operation of polycarbonate parts and assemblies, the organization of manufacturing, running the manufacturing operation, sales and distribution.




The implementation of production of 3rd generation traffic lights will ensure that the product will be able to compete successfully on the global market, and will open new possibilities for LED-based traffic lights in tropical countries. In order to mount effective competition to Siemens (80% market share in incandescent bulb traffic lights) a light with the selling price of at most US$400 (the cheapest western-made incandescent traffic light sells for $220). In terms of return on investment, the 3rd generation traffic light is expected to pay for itself in less than one year in all countries except Russia. On the completion of the project, once the demand for traffic lights has been met by LED-based devices, the incandescent traffic lights will be obsolete and their production will be discontinued.


Svecha, Ltd.                                                B. Trinchuk

President                                                     March 15, 2002