Realizing President Obama’s highest hopes for selling “all kinds of stuff” to China, LA-based Balqon Corporation (OTCBB: BLQN) announced a $15.9 million deal to sell 300 of its heavy-duty electric drive systems to Shenzhen, China’s Winston Global Energy. The company expects the sale to allow them to add 150 Los Angeles County jobs in manufacturing and engineering over the next eighteen months. But that’s just part of the deal.

Winston Global Energy President and CEO Winston Chung, the inventor of the lithium-rare earth battery, said he expects to buy 500,000 of the $53,000 Balqon drive systems for use in fleets of 15- to 40-passenger electric buses over the next five years. But that’s just part of the deal.

Balqon President and CEO Balwinder Samra explained that the drive system sale is part of a reciprocal relationship the two companies are developing in which Balqon will send its high quality heavy-duty electric vehicle drive systems to China and Winston Global will send its heavy-duty batteries to the U.S.

“It’s a relationship we have with them where we are exclusive distributors of their batteries in North America,” Samra said. They have a formal three-year agreement. “When you form this sort of partnership,” Samra added, “you create this balance in the relationship. They continue to innovate on the battery side, we continue to innovate on the drive side.”

The reciprocation stands to make both partners major players in the as-yet little-tapped heavy-duty EV market. “We will be selling drive systems to them for the Chinese market but similarly we’re buying batteries from them for the whole North American market.” `The two potentially very big emerging markets, which a recent Pike Research study predicted to keep growing at least through 2015, add up to one humongous chunk of customers.

On the face of it, Winston Energy’s decision to import the 100-horsepower Balqon drive systems seems impractical. The expense of shipping the 38-inch-long, 28-inch-wide, 22-inch-high, 1,500-pound drop-in combination electric motor and drive systems would seem not to be cost-effective. However, Samra said three factors make undertaking the expense a smart investment.

First, Balqon’s drive systems are perhaps the most proven available, having been used in a variety of heavy-duty transport situations. Second, Balqon consciously keeps the price of its product uniquely low. Third, the partnership between the two companies makes the success of each a success for the other. They are literally invested in one another.

The lithium-rare earth battery developed by Chung, which uses yttrium as its ionic element, is heavier than the lithium-ion batteries used in EVs like GM’s Chevrolet Volt and Nissan’s Leaf. Unlike in the cars, where every ounce and square inch is precious, heavy-duty truck, bus and RV applications do not struggle with greater size and weight. For this reason, the range of heavy-duty EVs can be much greater than that of the cars and charge times can be much shorter.

Also, Samra added, yttrium is abundant and therefore inexpensive in China, allowing Winston Energy to make and deliver its batteries cost-effectively. Lithim-rare earth batteries are also less prone to the overheating issues of lithium-ion batteries, allowing them to do heavy-duty work and recharge quickly. 

Chung was unwilling to detail his expectation of sales in the North American market but said he expects the partnership’s battery-drive system production capacity to be unable to keep up with market demand.

Samra said Balqon will explore a variety of battery market opportunities. “We have to look at energy storage,” he suggested. “These batteries are more suitable because they are large format batteries with 10,000 amp-hour type cells.” He said he also expects them to find smart grid applications.