Weichai Power, a leading Chinese automobile and equipment manufacturing firm, signed a strategic collaboration deal Wednesday with British solid oxide fuel cell (SOFC) maker Ceres Power.
Under the agreement, Weichai, which is listed in both Hong Kong and Shenzhen, plans to pay more than 40 million British pounds for a 20-percent stake in Ceres Power, developer of the SteelCell, a leading low-cost SOFC technology.
The two also agreed to set up a joint venture for fuel cell system manufacturing in the eastern Chinese city of Weifang, where Weichai is headquartered, by 2020.
The strategic relationship provides Ceres Power access to the Chinese market, the world's fastest-growing market for fuel cells.
Ceres Power agreed to authorize phased technology transfer to manufacture products for commercial vehicles, buses and certain stationary power markets in China.
Their initial plan is to jointly develop and launch an SOFC fuel cell range extender system using compressed natural gas for China's fast-growing electric bus market.
"We are delighted to be working with Weichai in a partnership that provides access to the Chinese market for our SteelCell technology and also scale-up capital for our growth in the UK," said Phil Caldwell, CEO of Ceres Power.
The SteelCell technology generates power from widely available fuels, like natural gas, gasoline, diesel, methane and hydrogen, and is manufactured using conventional materials such as steel, meaning that it can be mass produced at an affordable price.
"China has set very ambitious targets to significantly reduce air pollution, and our bus transportation system is key to this," said Tan Xuguang, Chairman and CEO of Weichai.
"We expect that the cooperation with Ceres Power could add further fuel to the development of China's new energy industry," Tan said.
Weichai reported sales of more than 150 billion yuan (23.5 billion U.S. dollars), producing more than 600,000 engines, 830,000 transmissions, 150,000 heavy duty trucks and 200,000 forklift trucks in 2017.
Weichai has planned to invest 50 billion yuan in forming a complete new-energy industrial chain, including batteries, electric engines, powertrains and complete vehicles, in its 2020-2030 strategy.