Achates Power Signs Joint Development Deal with Fairbanks Morse
San Diego’s Achates Power, which has been advancing a cleaner, more fuel-efficient, and easier-to-manufacture design for opposed piston engines, says it has signed a joint development and licensing agreement with Fairbanks Morse Engine, the leading U.S. maker of opposed-piston engines.
Fairbanks Morse, based in bucolic Beloit, WI, and operated by EnPro Industries (NYSE: NPO) makes opposed-piston engines for a wide range of applications, including emergency backup power generators and marine propulsion engines.
As I’ve reported, the two-stroke, opposed-piston engine has been used in ships and submarines, aircraft, trucks, and other vehicles for more than 100 years. The design succumbed to stricter tailpipe emission standards adopted during the 1970s, but Achates founder James Lemke, an adjunct engineering professor at UC San Diego, saw how to apply innovations in design and manufacturing to significantly increase fuel efficiency, minimize exhaust pollutants, and cut overall manufacturing costs.
Financial terms were not disclosed. But the deal signifies that Achates’ innovations in advanced materials and manufacturing techniques, multi-injector technology, and other advances have been accepted and are being incorporated in engines made by the nation’s biggest opposed piston maker.
Achates CEO David Johnson responded by e-mail to a few questions about the deal, which I have lightly edited.
Xconomy: What does this deal mean for Achates Power?
David Johnson: Fairbanks Morse has been making opposed-piston, two-stroke engines for nearly a century and is the market leader with an impressive track record. The fact that they find our opposed-piston, two-stroke technology compelling and have made this agreement with us speaks volumes for what we can provide, not only to the marine and power generation sectors, but also for automotive, commercial truck, and military applications; that is, clean, significantly more fuel-efficient and lower-cost engines compared to the conventional engines that we’ve been relying on for decades.
X: How big is Achates now?
DJ: As we sign contracts, we hire more people. We have a truly world-class team, which now totals 53 people.
X: Achates has raised a total of nearly $90 million since it was founded in 2004, including $35 million in a Series C round that closed a few weeks ago. Do you expect Achates will need additional rounds of venture capital?
DJ: Obviously, as we sign contracts like this one, our need for investor capital is reduced. We will continuously evaluate our capital structure and will consider the opportunity to raise further growth capital to accelerate all aspects of our business.
X: When will Achates become profitable?
DJ: We are on track to meet our financial goals. This contract is evidence of our customers’ confidence and certainly bolsters our confidence in our business plan.