“Cleantech is the new frontier for civilization,” Pin Ni, the President of Wanxiang America, told me in an interview this week. While Wanxiang might be an entirely unfamiliar name in the U.S., it’s one of China’s largest industrial parts companies with $13 billion in revenue and 45,000 employees. Wanxiang’s American division is sizable in its own right, with around $2.5 billion in revenue and 6,000 people.
Wanxiang has emerged as a company that has been making some really aggressive investments into U.S.-based cleantech startups, and the firm has invested in quite a few companies that had hit a wall financially. Most recently Wanxiang said it planned to invest up to $450 million into ailing lithium ion battery maker A123 Systems (s AONE), which could eventually give Wanxiang 80 percent ownership.
A123 Systems, based in Waltham, Mass. has been bleeding cash for months, with weak sales and a battery recall for a line it produced for electric car maker Fisker Automotive. It was on the verge of being delisted from the Nasdaq. Ni described A123 Systems to me as one of the clear leaders in lithium ion battery manufacturing that has been facing significant financial challenges. Wanxiang will work to help A123 get “financially stabilized,” said Ni.
Wanxiang also invested $420 million into GreatPoint Energy, a company based in Cambridge, Mass. that converts coal into cleaner-burning natural gas. At the time that deal was described by the Wall Street Journal as “the largest ever by a Chinese corporation into a venture-capital-funded U.S. company.” GreatPoint Energy planned to use the money partly to build a large-scale plant in China to convert coal into natural.
But before Wanxiang’s investment, GreatPoint Energy’s technology had stalled in the U.S., partly because U.S. shale natural gas had emerged as so cheap plentiful. GreatPoint’s technology showed great promise, but “economically they were finished in the U.S. The shareholders had decided to not give the company any more money,” said Ni. However, in China, GreatPoint’s economics worked far better.
Ni told me for U.S. cleantech startups, Wanxiang can provide valuable resources like capital, management, and help with expanding into China. Wanxiang is involved in all types of clean technology, from electric cars, to solar, to wind farms, to batteries. Wanxiang invested in another struggling company electric car company Smith Electric Vehicles.
When I asked Ni if Wanxiang looks for undervalued, under performing, cleantech startups, he said, it probably only looks that way because of the few press releases about these companies. Wanxiang also invests in energy companies that are thriving, says Ni.
But the reality of cleantech is that “we’re not there yet in terms of technology and cost,” says Ni, “the industry needs a lot of support from governments and private companies. It’s not a viable business as of today.” However, Wanxiang and Ni don’t waver on the sector in the long term: “There’s no question we need to get there.”
Wanxiang’s investments in U.S. cleantech companies aren’t without controversy; particularly for companies that have gotten money from the U.S. government, and then are building products in China. A123 Systems received a $249 million matching grant from the Department of Energy to build its factory, which will now be mostly owned by the Chinese conglomerate.