Westport Innovations Looks to Crack Chinese Market

Westport Innovations CEO David Demers in Bejing. Together with China's Weichai Power, Westport will try to fill growing demand for natural gas enginesused in heavy-duty trucks in China.

Having already secured alliances with many of the Western world’s largest vehicle and engine manufactures, Vancouver’s Westport Innovations (TSX:WPT) has set its sights on China.

Last month in Beijing, the company introduced the first natural gas engine there to feature Westport’s high-pressure direct injection technology.

The Weichai Westport HPDI engine is the result of a collaboration with China’s Weichai Power. The pair will try to fill growing Chinese demand for natural gas engines used in heavy-duty trucks.

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Westport CEO David Demers’ comments revealed he believes the opportunity in the relatively untapped Chinese market is big for Westport. “There are enormous potential fuel savings to be made if Chinese fleets adopt natural gas technology for transportation,” he said, adding: “The successful progress of the Weichai Westport HPDI engine marks a historic shift in technology and engine development in China.”

An August, 2011 report from Weichai showed they sold over 200,000 heavy-duty engines in China for the six months ended June 30, 2011. This makes the company already the leading player in a market that passed one million heavy-duty engines total for the first time in 2010.

Westport Innovations grew out of a research project by Professor Philip Hill at the University of British Columbia’s Mechanical Engineering Department. Hill was developing a concept called high pressure direct injection (HPDI) of natural gas. In 1994, through UBC’s University-Industry Liaison Office, Hill met current Westport CEO David Demers. In 1995, with HPDI technology as its principal strategic asset, Westport Innovations Inc. was formed. Today, the company boasts a market capitalization in excess of $2-billion, has attracted legendary investor George Soros as its largest single shareholder, and has created valuable strategic partnerships with some of the world’s largest engine and vehicle manufacturers, such as Volvo, Kenworth, and Cummins.

While Westport was busy becoming a cleantech leader in Canada, the Chinese auto market was emerging from its adolescence. In 2009, China surpassed the United States as the world’s largest automobile producer by volume. And, despite sluggish growth of late, the trend is definitely up; after China entered the World Trade Organization in 2001, the auto industry boomed, growing an average of 21% per year between 2002 and 2007.

Shares of Westport Innovations closed Friday down 1.8% to $37.57.

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