EcoMotors Founder Peter Hofbauer Says Company Is Inking Customer Deals, Eyeing Production Facility in Michigan for Its “Opoc” Engine

1/24/11Follow @xconomy

Peter Hofbauer spent nearly a decade in advanced propulsion system research and nearly another decade in power train development at Volkswagen. After creating and developing the automaker’s first diesel engine, he was ready to relax.

“In 1997, I moved to Santa Barbara, CA, and my main idea was to retire—and that did not work,” says Hofbauer, founder, chairman, and chief technology officer of EcoMotors International, an Allen Park, MI-based engine developer funded by Bay Area and Seattle investors led by Sun Microsystems-cofounder-turned-venture capitalist Vinod Khosla, and Bill Gates.

Instead, he continued working on engine innovation and started his own company, Advanced Propulsion Technologies, in Santa Barbara in 2003. The company developed what’s called opposing piston, opposing cylinder technology that would eventually form the intellectual property of EcoMotors. (As I wrote last fall, the company sees the engine as a way to make cars cleaner and cheaper, and would involve an easier infrastructure transition than revamping fleets of vehicles with hybrid technology, according to CEO Don Runkle.)

APT worked on creating the engines for military applications, but needed a different setting, Hofbauer says. “We started to design it, but you cannot develop an engine in Santa Barbara,” he says. So he moved the company to work out of an engineering firm in Detroit.

In 2006 APT firm signed a deal with defense firm L3 Communications (which has a subsidiary in Michigan), creating a joint venture called Combat Advanced Propulsion, to continue working on the technology for military uses. Two years later, EcoMotors kicked off with $10.5 million in funding from Menlo Park, CA-based Khosla Ventures to continue advancing the opoc engine for civilian vehicles.

The opoc is named (as you no doubt guessed) for its opposing pistons and opposing cylinders, which have a single crank in the middle and together work to create a combustion event with every revolution. The design, which allows the units to be stacked to scale up to meet bigger engine needs, involves fewer parts and provides more power per size and weight than existing engine technology, according to Runkle.

EcoMotors’ plan has been to license its technology to automakers or engine suppliers, who would then develop opoc engines for specific vehicles. The company has already gained some traction on this strategy. Last year, it signed a deal with Chinese automotive parts maker Zhongding Holding Group. The firm will build an opoc engine development center in Shanghai, first focusing on truck engines, then on passenger cars. Because China has fewer restrictions in getting technology to market than the U.S., Hofbauer expects China will be the first country to see the opoc technology in vehicles on the road. “We are there full speed on the Chinese market,” he says.

The U.S. market is still in the game for EcoMotors’ opoc engine, though. The firm just signed another deal with a U.S. auto company, but can’t reveal the name just yet. We can expect the announcement in a week or two, Hofbauer says, but for now, know that it’s “one of world’s leading truck and engine companies.”

And EcoMotors isn’t just looking to ink licensing deals with auto manufacturers. The company also plans to develop the engine itself, for use in commercial airplanes and helicopters, as well as for specialty vehicles like sports cars.

“There are lots of other applications where we also intend to produce this engine,” says Hofbauer. “Our engine is very good for aircraft, but it’s also good for wherever you need a very compact engine.”

And on this front, the company plans to develop and produce the engine right in Michigan. It’s already eyeing an old General Motors factory in the Wolverine State that it hopes can be retooled for that purpose, and has applied for a loan from the U.S. Department of Energy to fund the project, Hofbauer says. That production, which may not ramp up for a few years, could add 1,000 direct jobs in Michigan and potentially seven times that number in indirect jobs at parts suppliers and other companies involved with making the opoc engine, Hofbauer says.

Speaking of money, EcoMotors raised a $23 million Series B round from Khosla and Bill Gates last summer. Those two investors are willing to return for a Series C round, but the financing may not be necessary if the company can continue to ink customer deals, Hofbauer says.

The military use for the opoc engine has been a bit on the sidelines, as all the core development work has been done at EcoMotors (and not APT) since the company kicked off, Hofbauer says. But the defense sector is not necessarily out of the picture, he says. “There is still a high interest on the military side,” Hofbauer says. “They are waiting for the development, which is done at EcoMotors. The military wants to use commercial products for cost reasons. They are watching very carefully what we are doing at EcoMotors, and they will jump in if we are ready.”

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