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Fallbrook Pulls IPO, Still Revving for China

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The blockbuster IPO by Tesla Motors (s TSLA) – along with the launch of the Chevy Volt and the Nissan LEAF – have revved up the public profile of electric cars in the past year. But that doesn’t mean a killer IPO for everyone in the space. Fallbrook Technologies — a company that has developed a transmission system for bicycles and is aiming to do the same for electric cars — just pulled its $50 million IPO plan because of “unfavorable market conditions.”

Likely Fallbrook will fare better with private investors. The San Diego company began offering $50 million worth of private shares last summer and managed to raise about $39.2 million E round in equity by December, according to a filing with the U.S. Securities and Exchange Commission. Fallbrook withdrew the IPO plan on Friday.

Fallbrook had developed what’s called a continuous variable planetary transmission technology, which eliminates many parts found in a traditional transmission, such as multiple gears and shifting clutch. But such technology hasn’t been easy to design and tends to suffer poor efficiency, reliability and other problems (see Fallbrook’s demo video).

The company had developed a transmission system for bicycles and was aiming to do the same for cars, small wind turbines and other markets when it filed to go public in February last year. Fallbrook launched its transmission system for bicycles in 2007 and then signed manufacturing and marketing deals with Chinese companies to sell its technology not only for bicycles but also cars.

Electric bicycles are popular in China – they were everywhere when I spent a month there last year. The growing number of car owners in the country also makes it a target for electric carmakers. In fact, as we mentioned in a previous post, electric car companies need to figure out how they will tackle the world’s largest car market. With about 35 cars per 1,000 people in China’s 1.3 billion-person population, roughly 80 percent of car sales in the country are currently made to first-time buyers.

As Josie wrote for GigaOM Pro (subscription required), the large amount of first time car buyers can lower the barrier to adoption of alternative vehicles. Nearly half of the more than 5 million electric vehicle charge point installations anticipated worldwide by 2015 will happen in China, according to Pike Research. In addition, the government-owned utility State Grid Corp. plans to invest $586 million in a smart grid build out over the next five years.

Silicon Valley-based Better Place last week announced a deal with China’s Southern Power Grid, the country’s second largest and the world’s eighth-largest utility, to try out both battery swapping and old-fashioned plug-in charging in a citywide network by the year’s end. The move follows Better Place’s deal announced last year with Chinese car company Chery to collaborate on electric vehicle technology, to develop electric vehicle prototypes with switchable-batteries and to seek work with the Chinese government on electric vehicle pilot projects.

Coda Automotive, which is launching its first electric sedan later this year, also has a Chinese manufacturing partner. Likewise, Indiana-based Ener1 formed a joint venture with one of China’s largest auto parts supplier, Wanxiang, last year to produce lithium-ion batteries for cars.

In January 2010, Fallbrook signed on Shanghai, China-based Tri star Group as its contract manufacturer for a new generation of the bicycle CVT. The plan is to “concentrate the supply base in one off-shore region or location” for the new model and phase out the old design. Fallbrook also talked about partnering with Shanghai-based Advanced Strategic Leadership Limited, “for market development and consulting services for the Chinese EV market,” according to its IPO filing last year.

The partnership with Advanced Strategic Leadership has led to a recent opening of an electric vehicle design center in Shanghai.

Photo courtesy of Fallbrook Technologies