Fallbrook Follows Qualcomm’s Patent Strategy With Innovative Transmission For Vehicles

10/14/08Follow @bvbigelow

Bill Klehm may not be aware of his wordplay when he says, “We’re seeing significant traction in the European bicycle market and in light electric vehicles.”

Klehm, 45, is the chief executive of San Diego’s Fallbrook Technologies, a startup that has been developing an innovative transmission without gears. The company says its “NuVinci” technology is scalable and improves acceleration, performance, cost, and overall vehicle efficiency over conventional transmissions.

Fallbrook’s transmission, designed by San Diego inventor Don Miller, is known as a continuously variable planetary transmission, or CVP.

Unlike a conventional transmission, which uses a set of gears with specific fixed-speed ratios, a CVP uses a mechanism that changes seamlessly as a drive train accelerates and decelerates. In effect, the system provides an infinite number of gear ratios between its highest and lowest speeds.

NuVinci transmissionAt a time when U.S. automakers are reeling from the 2008 spike in gasoline prices and a litany of other problems, Klehm says, “I can accurately describe us as being overrun with requests to build transmissions for electric vehicles and for hybrid vehicles.”

The company, which has raised about $25 million from more than 80 private investors is not yet profitable. But Klehm remains optimistic, saying Fallbrook Technologies has been extending its business beyond bicycles and light electric vehicles such as golf carts.

Fallbrook’s seven-member board of directors includes Gary Jacobs, a San Diego investor and son of Qualcomm founder Irwin Jacobs; Gary Weiss, whose Weiss Group provides management, advisory, financing and executive search services to growth companies; and James Bartlett, a retired principal of Cleveland-based Primus Venture Partners.

Miller, a bicycle enthusiast, developed his original CVP design while tinkering in his garage to develop his concept for “the world’s fastest bike.”

Other continuously variable designs use belts, pulleys, and various doughnut-shaped designs, but Fallbrook’s design uses a set of steel balls to vary the transmission’s speed ratio. The balls surround a device mounted on the axle hub called an idler and a mechanism tilts the balls as the idler changes position. Tilting the balls changes the speed ratio because it takes longer to travel around the equator of a ball than it takes to travel around a near-polar latitude.

The design was unusual enough to win early support from angel investors, and the company was founded in 1998. An engineering assessment of Miller’s CVP by the Southwest Research Institute near San Antonio established the versatility of his design. Miller became vice president for advanced research when Klehm joined the company in 2004 as CEO.

Klehm says he was recruited to take the company from a successful science experiment to a commercial business. He was previously the president of a San Diego automotive marketing services business, and an ex-Ford Motor Co. executive.

Klehm’s strategy since then can be boiled down to two words: technology licensing. While continuing its own development of Miller’s original design, Fallbrook has moved to license its technology to manufacturers in a number of other industries.

“The original thought behind the business was that we intend to license a fundamentally different mechanical device in multiple markets,” Klehm says.

Fallbrook’s CEO says he’s emulating a strategy that San Diego-based Qualcomm perfected in its development of proprietary digital wireless technologies. Fallbrook now has more than 300 patents and pending patent applications, and expects to share in technical innovations developed by others.

After introducing its CVP for bicycles in late 2006, Klehm plans to “island hop” through other industries, licensing the NuVinci transmission for use in light electric vehicles, tractors, automobiles, and even power-generating wind turbines. In another tactic announced earlier this month, Fallbrook said it has prepared a “developer’s kit” to enable designers building electric-, gasoline-, hybrid-, and human-powered vehicles to integrate the NuVinci drivetrain into their designs.

“There’s even a guy out there who’s going to put our transmission into his asparagus harvester,” Klehm says with a laugh.

Today Fallbrook has about 50 employees and is near signing development agreements with the military to develop its NuVinci technology for small engines and accessory drives. Klehm says he can’t discuss the prospective deal in further detail.

Accessory drives include a variety of powered automotive systems, such as alternators and air conditioners, that draw power from the main engine. Klehm says such “parasitic losses” in efficiency will make accessory drives the focus of increased attention as the auto industry responds to demands for more fuel-efficient vehicles.

“Every system that uses energy today has to become more energy-efficient,” Klehm says. The potential demand for such technology is enormous—and that’s the market that Fallbrook is gearing up to meet.

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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