US motor-maker revs up in China
Updated: 2014-03-06 12:17
By Jack Freifelder in New York (China Daily USA)
Engine manufacturer EcoMotors Inc (EM) formed a joint venture earlier this week with a Chinese automaker to develop and sell its "opposed-piston, opposed-cylinder" (OPOC) engines in China, a move that brings EM's clean diesel engines to a new, important market, according to a company official.
Amit Soman, EM's president and COO, said the deal with the FAW Group Corp is a "remarkable milestone for EM" that "gives credence to the potential of our engine technology".
"Our agenda is not about profit or market share because that's not how we intend to look at our product," Soman told China Daily.
EM signed a deal on Monday with First Auto Works Jingye Engine Company (FAW JY), a subsidiary of the FAW Group, to create BEM Co, which aims to begin building EM-designed engines in China by 2015.
This marks the second China venture for EM, which announced a similar deal in April with Chinese automotive parts firm Anhui Zhongding Holding Group Co.
Zhongding, a diversified international company established in 1980 with headquarters in Ningguo, Anhui province, invested more than $200 million to construct the first OPOC plant in China, which has an annual capacity of 150,000 units.
Both China ventures will feature EM's OPOC engine, which was designed by Peter Hofbauer - a former Volkswagen engineer and current chairman of EM - and can run on diesel fuel, gasoline or compressed natural gas.
Due to Chinese government regulations, foreign manufacturers producing vehicles in China must do so as a joint venture with a Chinese company. However, only a limited number of partnerships are permitted.
Reuters reported on March 5 that the FAW's manufacturing partners in China include Volkswagen AG, Toyota Motor Corp and General Motors Co (GM) - three of the leading foreign car manufacturers in China, according to a May 2013 report from the United States International Trade Commission.
FAW JY is set to spend in excess of $200 million to build a commercial-scale plant that can handle an estimated production capacity of 100,000 engines a year in Jinzhong City, Shanxi province. As a result, FAW will retain a 51-percent stake in BEM, with EM taking the remaining 49 percent.
EM - the Allen Park, Michigan-based developer of the OPOC engine technology, which is designed to improve both fuel efficiency and reduce exhaust emissions - is a portfolio company backed by several investors, including Khosla Ventures, Braemar Energy Ventures and Microsoft Corp founder Bill Gates.
The company has managed to raise nearly $70 million in private investment since it began operations in 2008, according to Braemar Energy.
EM's CFO Soman added that for customers in China the OPOC engine would provide access to affordable technology that could have a positive influence on the country's transportation emissions.
"The desire to achieve a lot in a short amount of time acts as a stimulus, but emission regulations will keep getting stricter," Soman said. "In China, the push is so rapid and aggressive that following the standard curve of incremental progress is not going to cut it."
Yu Bowei, FAW JY's executive vice-president, said the "OPOC engine has the potential to contribute to a low-carbon future for China".
The innovation of the OPOC engine design allows for the use of fewer components and far less mass than a conventional internal combustion engine. With the potential for 20- to 50-percent better fuel economy, the OPOC engine accounts for only about half the fuel consumption and greenhouse gas emissions when compared with engines of a similar power.
Amit Soman (third from left), president and COO of EcoMotors, at the Peking University campus in Beijing on Feb 28 following the signing of a joint venture between EcoMotors and the FAW Group. The company hopes to begin building engines in China by 2015. Provided to China Daily
(China Daily USA 03/06/2014 page2)