Achates Power, Stealthy Diesel Startup, Comes Clean

Achates Power, which has been touting its opposed piston/opposed cylinder engine for the past few years but not providing a lot of details, unfurled a good portion of its business plan today at the Cleantech Forum during a presentation and an interview.

First, to recap. The company is working on engines based around a design originally coined by the Junkers aircraft company back in the 1930s. (You know—the guys who made planes for the Third Reich.) The Junkers Juno had one of the most efficient engines ever made, said CEO David Johnson (Johnson replaced James Lemke who became CTO a bit ago.) In these engines, the pistons face each other in one long cylinder, rather than sit in separate cylinders. Competitors like EcoMotors (which also has opposed piston/opposed cylinder engines) say these engines could lead to cars that get 100 miles a gallon.

Now, the new material. Although based around the engine in the Junkers Juno, Achates has tweaked the engine to give it more balance torque. “We are both highly efficient and have high power density,” he said, calling the engine “clean, durable and compact.”

“We eliminate the cylinder head and improve the performance,” he added. The engine also weighs less than standard diesel engines, which further improves gas mileage.

The company has already completed and built a two-stroke first generation engine, which it calls the A40. It has one cylinder and two pistons. “A military customer has already taken it and packaged it into a vehicle,” he said.

A new engine with four cylinders and eight pistons will be done in about two months.

Achates now wants to raise $25 million to design a second generation engine based on a different design. To date, Achates has raised $35 million already from, among others Sequoia Capital and John Walton. Walton, a member of the Wal-Mart family, is also the guy who plunked money into First Solar.

Achates, he added, won’t make engines. It will license the designs to large manufacturers and vehicle makers. The company will charge $50 million in up front fees and five percent of revenue earned from its products after that. It hopes to sign its first deal in 2010. Licensing is common practice in pharmaceuticals, but in hardware it often results in acrimony and lawsuits. Johnson, though, said that the vehicle industry would license. One, they’ve done it before—the Wankel engine was produced under licenses.

Second, vehicle makers have to meet CAFE standards. They may have no choice.

The first customers will likely be truck makers. Diesel in the U.S. is bigger in trucks than cars and truck makers are friendlier when it comes to licensing than car makers.

Johnson showed a slide that says the company has been in talks with Eaton, Delphi, Caterpillar and others. Oh, one of the board members is Gary Convis, who ran Toyota in the U.S.