Khosla-Backed EcoMotors Bags $18M Development Deal

EcoMotors, a 2-year-old developer of highly efficient engine technology backed by Khosla Ventures, has struck an $18 million deal with automotive supplier Zhongding Holding (Group) Co. and engineering services firm Global Optima. Under an agreement signed Monday in Michigan, China-based Zhongding and its international commercial partner Global Optima, based in Michigan, will invest up to $18 million to develop EcoMotors engines and work toward commercialization. According to EcoMotors’ release, Global Optima is also considering a direct equity investment in the Troy, Mich.-based startup.

The trio’s technology development program will focus on “refinement” of an existing EcoMotors diesel engine called the EM100D, as well as development of a smaller gasoline version of the technology. Eventually, the startup hopes to see its engines deployed in cars, light trucks, marine and agricultural applications, and in stationary generators — “essentially anywhere conventional gas or diesel power is utilized,” EcoMotors explains.

EcoMotors’ engine design includes stackable modules, one of which can be shut off when it isn’t needed. Focusing on developing markets, the company has been working to demonstrate a diesel engine in 2010 that can deliver 100 MPG for highway driving in a 5-passenger car.

Khosla Ventures founder Vinod Khosla sees big opportunities for innovation in this space. He commented at a recent event that technology designed to make internal combustion engine vehicles more efficient can be implemented with much less cost compared to developing an all-electric vehicle — for just “hundreds of dollars” in some cases, he said.

Improving the systems and components in gas and diesel-powered cars can have a significant impact on fuel consumption and emissions, Khosla said, boosting mileage by as much as 30-50 percent. According to EcoMotors, its so-called OPOC engine delivers up to 60 percent greater fuel efficiency and uses half as many part as conventional engines.

The startup faces plenty of competition, however. It remains to be seen whether, and how many, car companies will bet on young ventures for MPG-boosting tech. A slew of startups have emerged in recent years hoping to provide technology that could help boost the fuel efficiency and reduce the emissions of the world’s vehicle fleet — long before electric cars go mainstream (here’s 7 Startups Building Green Car Tech for a Pre-Electric World).

Image courtesy of EcoMotors

Related research on GigaOM Pro (subscription required):

Cleantech Financing Trends: 2010 and Beyond