Allen Park, MI-based EcoMotors said this week that it has formed a joint venture with First Auto Works Jingye Engine Company (FAWJY) to develop, manufacture, service, and sell its advanced engine technology in China.
Amit Soman, EcoMotors’ president and chief operating officer, says the deal is worth more than $200 million, and construction will start later this year on a manufacturing facility with capacity for 100,000 units in Shanxi Province. FAWJY will have 51 percent ownership of the joint venture, with EcoMotors retaining the rest.
“It’s one more significant positive step in terms of showing market acceptance of our product,” Soman says. “Having a respected OEM as a second customer makes it more credible.”
In April 2013, EcoMotors announced a $200 million deal with China’s Zhongding Power to build a manufacturing plant in Anhui Province. It was the world’s first manufacturing facility for the company’s opposed piston opposed cylinder (“opoc”) engines. At the time, EcoMotors CEO Don Runkle told Xconomy that China was a big target for the company.
“It’s the most rapidly growing engine market in the world, and they’re aggressively looking at new technology rather than copying existing technology in the United States or Europe,” Runkle said.
EcoMotors claims that its opoc engine, which weighs less, uses fewer parts and is thus less expensive than traditional four-stroke engines, can increase automobile efficiency by up to 60 percent. The technology could help commercial fleets reach the new corporate average fuel-economy standards put out by the U.S. government.
Soman says opoc engines are also cheaper to manufacture. “As we go forward, now we have the basis in 2014 to scale,” he adds. “The partnership with First Auto Works allows us the bandwidth to expand our offerings in China and locally.”
Soman says EcoMotors has chosen to ink its first major deals in China because that part of the world has a greater tolerance for taking on new challenges with technology that hasn’t yet been widely used. According to Soman, there is a competitive atmosphere in China that requires technology “leap frogs” rather than incremental improvements over many years.
In the U.S., EcoMotors plans to remain engaged with commercial applications for trucking and passenger cars. The company is also aggressively hiring supply-chain talent as it plans to expand its headcount by 50 percent by the end of the year.
EcoMotors currently makes diesel engines, though Soman says the company plans to have a gasoline version by the end of the year. The company also says it plans to start acquiring companies that will help it add to its machining and testing capabilities.
EcoMotors has so far raised more than $50 million from investors, including New York-based Braemar Energy Ventures, Bill Gates, and Menlo Park, CA-based Khosla Ventures.
