Westport Fuel Systems Inc. announces that it has entered into definitive development and supply agreements with Weichai Westport Inc. (WWI) to develop, market, and commercialize a heavy-duty, natural gas engine featuring the Westport HPDI 2.0 technology, based on one of Weichai Power Co., Ltd.’s (Weichai Power) heavy-duty engine platforms. Weichai Power and WWI are affiliates of the Weichai Holding Group Co., Ltd (Weichai).
Under the new development program for the Chinese market, Westport Fuel Systems will support the adaptation of the Westport HPDI 2.0 technology onto one of Weichai Power’s heavy-duty engine platforms, building on the years of experience WWI has with Westport HPDI technology. The new natural gas engine will be certified to meet China VI emissions standards and is expected to be launched in the second half of 2019.
Once in production, Westport Fuel Systems will supply critical HPDI 2.0 system components to WWI, each of which is required for every HPDI 2.0 engine sold by WWI. WWI has committed to purchase HPDI 2.0 system components required for a minimum of 18,000 HPDI 2.0 engines between the launch date and the end of 2023. In addition, Westport Fuel Systems will receive a royalty payment from WWI for each engine sold in consideration of the HPDI license rights provided to WWI. WWI will market and sell the heavy-duty natural gas engines with the Westport HPDI 2.0 technology to various truck original equipment manufacturers (OEMs).
“We have achieved another milestone by fully and formally supporting our partner, Weichai, a dominant engine producer in China, in the development of clean heavy-duty vehicles to help reduce greenhouse gas (GHG) emissions in China,” says Nancy Gougarty, Chief Executive Officer of Westport Fuel Systems. “It really is a continuation of the successful relationship between Weichai and Westport Fuel Systems. These agreements demonstrate the viability of our market-ready, clean technology solutions; secure the value of our Westport HPDI technology; and provide protection to our intellectual property. With WWI’s committed volume, this will extend our first mover advantage and allow us to access further economies of scale with our suppliers.”
“As the demand for natural gas vehicles has grown significantly over the years, the demand for better performing, cleaner, and more efficient engines has also increased,” says Dr. Tan Xuguang, Chairman of Weichai. “Westport HPDI 2.0 technology provides the only proven and commercially available solution that can deliver on all of these demands and provide up to 20% GHG reduction, while using a more economical fuel. This, combined with the extensive liquefied natural gas (LNG) fueling infrastructure network in China, will provide the domestic Chinese market with a viable clean technology solution that we believe will become the leading powertrain solution in the world for heavy-duty long-haul trucks.”
Westport Fuel Systems will supply the HPDI 2.0 system components on a limited exclusivity basis. Under the terms of the agreement, Westport Fuel Systems is precluded from selling these system components for use in commercially available engines sold in China with the exceptions of certain global OEMs and their affiliates, for a minimum period of 5 years from the date of execution of the development agreement, subject to WWI meeting defined volume targets. Other key terms of the agreements, such as pricing, have not been disclosed for competitive reasons or due to confidentiality restrictions.