ALTe Powertrain Technologies has a lot of room to grow. Both literally and figuratively.
Inside the company’s mammoth 150,000 square foot headquarters in Auburn Hills, MI, pieces of white paper arranged on the floor neatly mark the location of soon-to-be assembled parts of its product: A powertrain kit that will convert ordinary gas-powered vehicles into plug-in hybrids.
Other than some showcase vehicles and a few engineers hunched over a laptop, the place is pretty empty. But that will soon change.
If all goes to plan, ALTe, founded by Tesla Motor veterans and backed by former Chrysler CEO Tom LaSorda, will start shipping out its powertrain kits in July 2012. The startup has already secured $16.5 million in capital and is looking to raise another $100 million in debt and win a $65 million loan from the U.S. Department of Energy.
“Everyone seems to be saying ‘yes’ right now,” CEO John Thomas tells Xconomy. “Two years ago, there were a lot of ‘maybes’ and ‘nos’. For the first time, it looks like our financing will be in place.”
“Now,” he says, “we finally get to go big.”
Thomas is the former general manager of Tesla, the Silicon Valley-based company that sells high-end electric cars to wealthy customers. The idea was to first target customers who can afford the pricey vehicles and then expand into the larger consumer market, he says.
But given the cars’ cost and limited range between recharging, average consumers will not be purchasing them in large numbers anytime soon, Thomas says.
“We fell in love with electrification but we felt it would take a long time,” he says.
What’s needed, Thomas says, is some sort of transitional technology that could lead the way to electric cars.
Enter Andy Grove. In 2008, the legendary former Intel chairman, alarmed by rising gas prices, began to push for retrofitting cars with electric car technology.
“Grove said ‘if you can convert gas guzzlers, you can have a significant impact on foreign oil consumption,'” Thomas recalls.
Inspired by Grove’s call, Thomas and others formed ALTe in 2009 to focus on a market where they believed gas to hybrid conversion technologies could pay for themselves: commercial and government fleets which operate approximately 10 million to 30 million vehicles in the United States.
“The fleet was dying for a solution,” Thomas says.
ALTe’s technology centers on a patented hybrid control unit, which essentially serves as the cars’ brains. The technology manages everything from power demand and consumption to how the newly installed batteries interact with the car’s existing internal combustion engine.
ALTe also developed an efficient, systematic approach to creating the conversion kits, wheras other companies tended to only focus on specific pieces of technologies, Thomas says.
The company has partnered with Manheim, the world’s largest vehicle wholesaler, to install the technology on customer fleets. ALTe will ship the kits out of Auburn Hills to warehouses located near Manheim facilities across the country. Customers who wish to do their own retrofits can learn the technology in training sessions at ALTe’s headquarters.
ALTe’s technology is not cheap: $27,000 for the basic kit and $40,000 for heavier vehicles like buses and vans. But Thomas insists the technology pays for itself. By boosting the vehicles’ fuel economy from 60 to 200 percent (and meeting emission standards), a customer can recoup the investment within eight to 30 months, he says.
Thomas says Europe and India are interested in the technology, and the Chinese are particularly interested because they are both trying to control pollution and to develop their own domestic car industry.
But there are plenty of potential customers in the United States, specifically the federal government, which is requiring its cars go green, Thomas says.
“If we sold to no one but the government, we would sell our factory out,” he says.
ALTe recently formed an advisory board of companies it expects to purchase its technology, including Frito Lay, DirectTV, Waste Management, Cox Cable, NBC, and Pacific Gas & Electric.
Thomas envisions ALTe as “an umbrella company” that provides carmakers with the technology and expertise to exploit the latest energy technologies, whether its solid state lithium ion batteries or hydrogen fuel cells. An IPO or a strategic alliance with a major supplier are possible, he said.
But in the end, “we expect electric vehicles to be the answer,” Thomas says.
