Still, IAV is convinced more testing facilities are necessary, particularly a chassis dynamometer to accommodate a full vehicle. “We have the business to support it,” says Rob Till, director of operation.

If the expansion includes engine test cells, they would not resemble those already in place here. “Maybe they would be more focused on electrification,” Till says.

IAV currently is investing in state-of-the-art testing facilities in Ingolstadt, Germany, that integrate wind tunnels and can be used for evaluating all-wheel-drive powertrains. “We need to see how it goes in Germany and see how the market develops here,” Ridgway says.

He is eager to see construction begin on the new facilities. Negotiations are under way with partner suppliers, and two primary options are being reviewed. Once construction begins, “it would be 16 to 18 months before we are up and running,” Ridgway says.

He says IAV needs to grow outside Germany, where it owns more than 60% of the domestic market for outsourced engineering and R&D for customers such as Daimler, BMW and Volkswagen.

VW owns 50% of IAV stock, while suppliers Continental and Schaeffler own 20% and 10%, respectively.

“Get outside Germany and we have less than 2% of the global market,” Ridgway says. “That’s why we’re here. We have some strong global growth targets as a group. We here in North America are the key first major international subsidiary, the first tech center outside Germany, the tip of the spear, if you like.”

Worldwide, IAV employs 5,500 people (most of them in Germany), and the company expects to have 7,000 employees by 2020.

Part of that growth will come from developing electric vehicles.

IAV also designed the 3-cyl. gasoline engine powering Elio Motors’ 3-wheel vehicle, which is expected to go on sale in early 2015, priced at about $7,000. Prototype powertrains will be available in second-quarter 2014.

Elio Motors purchased General Motors’ Shreveport, LA, plant to paint and assemble the vehicle. The startup company expects the 2-seat, front-wheel-drive vehicle to be capable of 84 mpg (2.8 L/100 km) on the highway, making it popular with commuters.

Engineering-services companies want to grow at a time when automakers are consolidating powertrains and developing fewer unique engines. That scenario would suggest IAV is overly optimistic about the future.

But Ridgway says it was common not long ago for an automaker to produce more than 600,000 units of a particular nameplate requiring just two engine variants.

“The market has fragmented tremendously in the last 15 years and will continue to do so,” he says. “We will see different niche vehicles with niche powertrains, and they all need to be developed. And the challenge of emissions and fuel economy will be getting greater as well.”

tmurphy@wardsauto.com