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Protean finds funding in China for electric vehicle system; U.S. may benefit eventually

July 30, 2012

I’ve written about U.S. alternative fuel tech companies that turned to China for funding after being shunned by the U.S. Department of Energy.  Well, some U.S. companies that looked to China for funding even didn’t even bother to apply with the DOE.

“We did not apply for a DOE loan,” Protean Electric Inc. CEO Bob Purcell told me.   “We thought our technology had enough promise to attract private investors. “  Those investors turned out to be in China, and not all are private.

Protean , of Troy, MI, produces in-wheel motors for electric drive systems.   On July 9 it announced it had landed an investment of $84 million from a group of Chinese investors:  GSR Ventures; a Liyang, China – based company called New Times Group; and the government of Liyang.

Protean CEO says his company didn’t even apply for a DOE loan. It hopes to find a market for its in-wheel systems in China initially then other areas.

Chinese investors seek proven technology and Protean’s in-wheel system is proven—sort of.  Not proven for high-volume production, but at least proven in a car that one can drive around.  Protean’s system was installed on the Trumpchi EV that the Guangzhou Automobile Corp (GAC, which I hate to say because it sounds like the noise my cat makes when he is about to cough up a hairball. GAC, GAC….) showed at the 2011 Guangzhou Auto Show, as well as three Mercedes E –Class sedans at the 2011 Frankfurt Motor Show.

China offered Protean more than just money; it also offered a potentially huge market, said Purcell.  “The general frame on all of this is you want to launch the technology in the market that has the most real demand potential,” he said.   “The Chinese government for some years now has expressed a very strong industry in moving to electric based technologies.  I give the policy makers a lot of credit for passing policies to promote the major components inside of China.”

Indeed, the Chinese government has stuck to its guns regarding growing the new energy vehicle segment in China (which includes electrified vehicles).  And it has issued policies that offer preferential treatment to companies producing the major components of an EV system.  The problem:  Chinese companies couldn’t produce many of the most important components, such as battery management systems.  So the recently-issued Fuel Efficient and New Energy Vehicle Policy encourage cooperation with foreign firms.   All the better for companies such as Protean.

I get comments on my blog fairly often about how Chinese companies just want to steal the technology. Fair enough and intellectual property protection should be a major concern of any U.S. company working with Chinese partners.  But as Dan Squilller, CEO of PowerGenix told me (more on what PowerGenix is up to soon):  “When you get married to somebody you don’t go into it expecting the person to cheat.”  Of course, cheating does occur nonetheless.

I asked Purcell about intellectual property concerns.  Purcell, who has a long history in Asia including working closely with GM’s powertrain joint ventures in China,  told me the best protection is being partnered with the right people because they want to protect the IP, too.  I know nothing about Liyang or Jiangsu New Times Group. I guess we will see.  Purcell said Protean would also soon be partnered with some automakers.

The city of Liyang has provided space for Protean to begin prototype production of its in-wheel drive systems.  That should start in early 2013, said Purcell.  Liyang is also “supporting our ability to build a factory,” he said.  I assume that means free land and low taxes.  The factory should be finished by early 2014, said Purcell.  Protean is aiming to produce 100,000 motors annually – each vehicle uses 2-4 motors. You do the math. That’s not too many vehicles.  But Protean’s main goal is licensing, so selling motors it has produced won’t be its primary income stream, it seems.    Purcell said he is already talking with potential customers in China, the U.S., and Europe.  “We will help our customers early on with motors produced in our plant,” he said.   The first customers are likely to be Chinese, said Purcell.

Protean’s current in-wheel electric drive system fits an 18-inch road wheel, which is the type on larger passenger vehicles and light commercial vehicles.  Protean expects early customers to be light vehicle manufacturers, said Purcell.  “It is ideal for minivans,” he said.  Also the smaller delivery vans (I guess he means mianbao che) and executive sedans.  The cost of the in-wheel motors and electronics is $1,500.  A battery pack and system control (I guess he means BMS) is extra.  “The advantage we have is our regenerative capability is very high,” said Purcell, “so the battery can be downsized.”  So less expensive, I guess.

Purcell claims the strength of Protean’s in-wheel system is that it can be used on existing vehicles, so “we are the fastest path to high volume application of hybrid systems in the world.”    I do not claim to be a technical expert so readers can weigh in on this assertion.  In any case, it can be used on pure EVs or PHEVs, Purcell said.  He figures, however that converting existing vehicles to PHEVs will be the first use of Protean’s system in China.   Purcell says the best application is for light city delivery vehicles.  What advice would he have for U.S. companies with alt fuel tech eyeing China as a source of investors, I asked Purcell?  “Go for it,” he said. But there was a caveat.  “You have to create a world presence for your technology,” he added.

I heard that same advice, phrased slightly differently, from a handful of companies I recently talked to for an upcoming story in Automotive News, that is, make sure you have technology that is already tested and has commercial applications.  China isn’t looking to nurture new tech firms, at least not non-Chinese firms.  It wants technology it can put to use immediately.

Of course, none of the companies I talked to had technology that has been tested in high-volume production.  So China is actually doing the U.S. a favor by investing in these companies.  If the technology is as good as the companies always claim it is the U.S. can also use it after it has been tested in China.  For a price….

2 Comments leave one →
  1. August 1, 2012 12:31 am

    Clarification: Purcell worked closely with GM’s powertrain JVs in China rather than being in charge of GM’s powertrain ops there. The change is in the text.


  1. Promising US Electric Motor Company Gets Chinese Funding

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