California EV drivetrain firm eyes China’s medium and heavy commercial vehicle sector

At the Alt Car Expo in Santa Monica, CA a few weeks ago, I took a ride on a battery electric bus produced by Balqon Corp.  www.balqon.com, a small company in Harbor City, CA. Harbor City is near Torrance, which is by Redondo Beach. Which is next to Hermosa Beach. Which is next to Manhattan Beach.   Ah ha, do you finally recognize one of these towns?

Anyway, Balqon is in the Greater Los Angeles area.  Its seven engineers design electric drivetrains for medium- and  heavy-duty commercial vehicles.

I learned the company is providing the drivetrain for electric buses in China. So I went to Harbor city to talk with Balqon CEO Balwinder Samra.  It turned out to be yet another example of a U.S. company that is turning to the China market after not finding much of a market for its technology in the U.S.

Balwinder Samra's company is providing electric drivetrains for buses in China. This is one of Balqon's electric buses at the HQ in Harbor City.

Last February Balqon inked a $16 million deal with Winston Global Energy, a lithium-ion battery maker in Shenzhen, China,  to provide drivetrains for 300 buses. http://tinyurl.com/3lkkonx  A few drivetrains have already been shipped to Shenzhen, says Samra. The buses are for the domestic market.

Here’s how the agreement to supply electric drivetrains for Chinese buses came about:

Balqon’s  U.S. customers include the Ports of Los Angeles and Long Beach.  Business wasn’t good last year.  Revenue plunged 82% to $677,745, with a net loss of $4.3 million.

CEO Balwinder Samra says the U.S. market hasn’t been very welcoming to his electric drivetrain technology.  “We did take our technology to most OEMs (in the U.S.), but it didn’t seem like anyone was interested,” he says.

However, a Chinese businessman with investments in the U.S. was interested in Balqon’s drivetrain. Balqon was already buying batteries from Winston Global Energy,  http://en.winston-battery.com/ located in the southeast China city of Shenzhen. At the suggestion of the U.S. distributor of the battery, last November, Samra attended the EVS25 electric vehicle forum and exhibition in Shenzhen, China (I was there too!).

At EVS25, he met Winston Chung, owner of Winston Global Energy.  Though Chung, from south China, doesn’t speak English, he and Samra both speak the language of business. “It became a strategic relationship,” says Samra.

Chung was looking for an electric drivetrain for a recreational vehicles to be produced at MVP RV Inc., www.mpvrv.com a company Chung owns in Riverside, CA, near Los Angeles.   One 44-ft RV using Balqon’s drivetrain was produced, and worked well. “It was proof of concept,” says Samra.

If the electric drivetrain could handle a 44-ft RV, it could clearly handle a 22-ft passenger bus, says Samra. Thus, last February Balqon signed an agreement with Winston Global Energy to provide electric drivetrains for the 300 buses in China.

In December of 2010, Winston Chung also made a $5 million equity investment in Balqon, with an option to invest another $5 million.

Is Balqon worried about its intellectual property being stolen in China, I asked Samra?  Since Winston Global Energy is also an investor in Balqon,  it is in Winston Global’s interest to prevent  IP theft, points out Samra.  Like most companies, however, his main strategy to fight IP theft is to keep making his technology better. “We are obsoleting our technology,” says Samra.  “By the time they have copied us, we have innovated.”

Samra seems optimistic about Balqon’s future.  He is also targeting OEMs in Europe and India.  Currently, 82% of Balqon’s business is international, says Samra.

He has no plans to move any time soon from the small warehouse in the industrial area of Harbor City that serves as Balqon’s office and assembly plant.  Samra figures electric drivetrains have a great future in the medium- and heavy-duty commercial sector.  But it depends on improvements in battery technology.  Mass adoption will occur when battery capacity equals the range of about six gallons of gas, figures Samra.  Right now it is at about four gallons.

“We know we need to stay small and weather this thing out,” he says. “We have always believed battery-powered zero emission will be the future. We will be in our little niche until it becomes general use.”

Samra sees opportunity for his electric drivetrain in China's heavy and medium duty truck market.

Balqon is already looking at the medium and heavy truck market in China.  Samra figures it could use Balqon’s electric drivetrain, too.  Oh, and he has his eye on Turkey “because of the cost of diesel there,” he says.