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Lampe-Onnerud says the company will soon break ground on a new plant near Shanghai that is expected to turn out 18 million battery cells a year, about three times the company’s current capacity. And while the company is retaining some R&D capabilities in the U.S.—it is headquartered in Westborough, Massachusetts—most of its engineering operations will be based near Beijing, and the company is laying off about a third of its 100 U.S. employees. GSR’s Wu is becoming chairman of Boston Power in the deal, essentially taking the reins from Lampe-Onnerud, who says she will remain on the board and will continue to work closely with the company, but will not move to China. The company is currently looking for a CEO to replace Keith Schmid, who took over the slot in February from Lampe-Onnerud.

Lampe-Onnerud says the company was driven to strike a China deal because the country has demonstrated an intention to use generous incentives and funding to push its clean-tech markets, and its electric-vehicle market in particular, versus the shakier support in the United States. “China, by far, is the biggest market for us, and this was a chance to get to profitability very quickly,” she explains. “We would have loved to manufacture here, but every entrepreneur in this business who wants to stay in the U.S. will have to make some tough choices.”

Wu seconds the notion that China’s willingness to throw government resources at electric-vehicle growth makes the country increasingly hard to resist for startups in the industry. The Chinese government has already started building a large network of vehicle-recharging stations in major cities, he says, and has stated goals to get at least 300,000 electric vehicles on the road within two years, goosing the market with incentives worth more than $15,000 per car. “Being in China has become a necessary and sufficient condition for success in electric vehicles,” he adds. “U.S. startups are feeling they need to be in China for this market in the same way that Israeli high-tech companies in the early 1990s felt they had to be in the U.S.”

Marianne Wu, a partner at Mohr Davidow Ventures with experience in Asian markets, also agrees that China is likely to prove irresistible to a growing number of startups in the electric-vehicle and other clean-tech markets. The fact that China is simply buying more cars and just about everything else due to its rapid industrialization, along with its lower manufacturing costs, are reasons enough to focus operations there, she says, adding that any government help with financing is icing on the cake. “The Chinese government seems willing to provide large incentives to companies in industries that it views as strategic, to foster these industries through infancy,” she says. “EV batteries appear to be one of them, along with renewable energy in general.”

Besides, Wu says, a company that focuses its operations on China to follow the market doesn’t necessarily become “a Chinese company.” “Increasingly, we see companies trying to be nationally ambiguous,” she notes. “In China, they present themselves as a Chinese company, and in the U.S. as a U.S. company, reaping benefits in each case.” For example, U.S. electric-car manufacturer Coda Automotive and Chinese battery maker Prudent Energy both boast strong ties to, and identities in, the U.S. and China.

Boston Power seems ready to do the same. “Boston Power is still a U.S. company,” says Wu. “It’s just becoming a global company now, taking advantage of a market opportunity and government support in China. When the U.S. is ready to expand its EV market, we’ll be here.”

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Credit: Boston Power

Tagged: Energy, energy, batteries, clean tech, Boston Power

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