The £9m new Joint Development Agreement (JDA) will boost the development of a first range extender product for electric buses in China using the 30 kW SteelCell SOFC range extender system that uses Compressed Natural Gas (CNG). Systems for 10 buses are set to be developed and trialed in the next two years and successful completion of the trials will lead to the JV formation which is anticipated to be in 2020 for a manufacturing plant in Shangdong. Ceres is building a manufacutring plant in Surrey, UK.
These will also be part of a licensing agreement with staged technology transfer payments of up to £30m, and ongoing future royalties to Ceres. The JV will manufacture SteelCell systems, stacks and fuel cells in accordance with the license agreement after the technology transfer, with a mixture of exclusive and non-exclusive rights for the commercial vehicle, bus and certain stationary power markets in China.
Weichai will also invest a further £28m in Ceres, bringing its total equity investment in Ceres to £48m for 20 percent of the company.
“This is a major strategic milestone for Ceres. Establishing manufacturing capability in China with a partner as strong as Weichai will enable our SteelCell technology to benefit from the kind of economies of scale and significantly lower costs we have seen in the solar and battery industries,” said Phil Caldwell, CEO of Ceres Power. “Weichai is one of the largest automotive and engine manufacturers in China and this agreement represents a scale-changing opportunity for Ceres.”
“We have made a strong start to our partnership with Ceres and we are delighted to extend our relationship,” said Tan Xuguang, Chairman and CEO of Weichai. “We see significant commercial potential for using the SteelCell to help us develop cutting edge fuel cell power systems. We look forward to trialing the new range extender and also to developing new products for the transportation and stationary power generation markets in China.”
The agreement provides Ceres with access to the Chinese fuel cell market with one of the leading automotive OEMs with a track record of successful collaborations with international companies and and provides economies of scale for the SteelCell technology providing a substantial cost reduction through a staged path to high volume manufacturing as Weichai has a network of customers in China with sales of around 30,000 buses each year. The deal also provides growth capital for Ceres as it scales up its operations in the UK and generates near term demand for its 5kW stack supply from the UK.
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