DETROIT -- After more than three years of handshaking, contract drafting and, ultimately, disappointment, Alte LLC has secured a deal to fund production of its range-extended electric powertrain technology.
Alte today signed a deal with Dubai-based investor Seyed Alavi and his Chinese-based investment firm Mesa Century New Technology Inc. to form a joint venture in Beijing.
The joint venture, Mesa Industrial Technology Corp., will see an influx of $200 million, which will be used to bring Alte's technology to market in China, said Alte CEO John Thomas.
Alte holds an ownership stake of a third in the new joint venture.
Under the deal, $70 million will go directly to Alte's suburban Detroit operation to fund engineering and capital equipment -- $55 million will go to engineering and $15 million to equipment, Thomas said.
The joint venture is expected to supply Alte's electric powertrain, which it retrofits to existing models, for medium-duty buses and trucks in China through Chinese government-owned auto companies. It also will work with automakers on direct supply of the technology, but no contracts are completed yet.
The joint venture is required to reach a production capacity of 240,000 units in China within two years and must generate revenue within 12 months, Thomas said.
To meet the demand, Alte will ramp up to 125 employees from the current 43. Ninety percent will be in product engineering, in suburban Detroit ahead of full production in China. Alte will perfect the manufacturing process here and replicate it in China, he said, before opening up three more plants to reach capacity in 2014. The plants will be uniform, Thomas said, of around 108,000 square feet of manufacturing space and 20,000 square feet of office space.
The deal marks the end of the more than three-year battle to secure funding for Alte.
The company won its initial funding in October 2010 from a federal visa program called employment-based fifth category (EB-5), which enabled investors from South Korea and China to invest in the company and help it grow.
The program enables foreign investors to receive a U.S. visa in exchange for investment. It then signed a seven-year lease on an 184,000-square-foot industrial building that formerly housed a Lear Corp. seating factory.
Alte's development technology included retrofitting Ford Motor Co. F-Series with hybrid powertrains that provide a range of 30 miles. A 10-gallon gas tank will fuel the four-cylinder commercial van or truck for another 270 miles. The system is designed to achieve up to 200 percent better fuel economy for fleet vehicles.
No loan from DOE
However, the company's expansion was stifled by the delay of a $64 million loan from the U.S. Department of Energy.
Alte waited for more than 30 months before abandoning its efforts to secure the DOE loan in 2011.
Thomas was critical of the DOE program, saying in March, "It was increasingly unlikely that we'd close the DOE loan because they kept moving the goalpost.
"The due diligence kept expanding, and we couldn't support a burn rate forever," he told Crain's Detroit Business, an affiliate of Automotive News. "When you're asked to raise 80 percent to 100 percent of the loan amount, you don't need the loan. You might as well fund it without them."
In August 2011, the company said it secured $100 million from a Chinese investor, but the deal ultimately fell apart, Thomas said.
"What we've learned is that billionaires are not empowered to make independent deals in China because of the reach of the Chinese government," he said.
The company was expected to go to market this year before the deal unwound.
"This is a story of being left at the alter a couple of times and a lot of frustration," Thomas said. "We've felt such a disadvantage in the U.S., but here in China, we can put our technology together and start what we set out to do."