General Motors' venture capital unit is buying a minority stake in electric car start-up Bright Automotive to advance the development of fuel-efficient vehicle technologies.
GM and Indiana-based Bright Automotive said on Tuesday they have agreed to pursue a strategic partnership under which GM will invest $5 million to help accelerate Bright's production of its IDEA plug-in hybrid commercial vehicle.
GM is also launching this year its highly anticipated Chevrolet Volt electric car for the consumer market, a program it started four years ago in part to shake an association with gas-guzzling trucks and to show it could compete with the likes of Toyota Motor Corp on hybrid technology.
The Bright deal marks the first investment by General Motors Ventures LLC, a $100 million venture capital arm set up by the U.S. automaker in June with the aim of investing in auto and transportation start-ups in areas such as lightweight materials, clean engine technology and on-board electronics.
Funding early-stage start-up companies is a new way of doing business at GM to accelerate the introduction of innovative technology to support our core automotive business and give us a competitive advantage, said Jon Lauckner, president of GM Ventures.
In this case, our funding of Bright Automotive will accelerate the introduction of advanced propulsion and lightweight technologies in the commercial vehicle market.
The companies signed a memorandum of understanding in July. GM Ventures provided funding to Bright this week, and the companies intend to complete the formal agreements later this year.
Upon completion of the agreements and other terms, GM Ventures will have a minority stake in Bright, and Bright will have access to GM technologies, and advanced engine and transmission systems, for its vehicle. The size of the GM stake in Anderson, Indiana-based Bright was not disclosed.
With this deal, Bright gets financial support that puts us on the fast-track toward mass production of the IDEA, said Reuben Munger, Bright chairman and chief executive.
Bright, which was founded in early 2008, said the investment will allow it to begin ramping up development of the production program for the IDEA in the current quarter.
The Bright commercial van, like those used by cable, telecommunications or utility companies, was originally intended to launch in 2012 but the recession delayed that to 2013 or 2014, Bright officials said.
Munger said the potential market in North America is 900,000 units a year and the company expects to be able to produce initially at least 50,000 units annually. The vehicle's price and where it will be built have not been determined, but Bright sees more than 1,000 jobs created.
Where the Bright vehicle will be distributed and serviced has not been determined.
Bright has applied for a low-interest loan from the U.S. Department of Energy under a program that also has been used to support Tesla Motors, Nissan Motor Co and Ford Motor Co.
The IDEA is designed to operate on electric power for about 38 miles before switching to hybrid mode where it would get an estimated 36 miles per gallon for about 400 miles of total range.
Last month, GM said it would offer the Volt starting at $41,000 before federal tax credits. It is designed to be recharged overnight for about 40 miles of electric driving and will also include a small gas engine expected to give the vehicle a total range of about 340 miles.
The U.S. automaker expects to produce 10,000 Volts for the 2011 model year and about 30,000 for 2012.
Tesla, a Silicon Valley start-up that went public in June, has the only highway-ready electric car now on U.S. roads with the $109,000 Roadster. It also formed an alliance to develop electric vehicles with Toyota, which is planning to bring a plug-in hybrid to market in 2011.
Ford has said it will introduce five electric vehicles by 2013, including a battery-powered version of its Transit Connect light delivery van.
Nissan's battery-powered Leaf claims a driving range of 100 miles and has a U.S. retail price of $32,780, while Honda Motor Co has said it plans to launch a plug-in hybrid and battery electric model in 2012.
(Reporting by Soyoung Kim and Ben Klayman; editing by John Wallace and Matthew Lewis)