Vasily Shkondin must have had a lot of free time when he commanded a Red Army radar station in East Germany back in the 1980s. Between shifts of watching for the first blips of World War Three, he sketched out plans for a new kind of electric motor. The NATO bombers never did strike, but inspiration did.

Nearly two decades later, Mr. Shkondin’s idea for a thin electric motor is the flagship product of Ultra Motor, a British company with designs on an emerging and undefined market that stretches from commuters in Zurich to rickshaw drivers in Calcutta.

The company’s motor—which is about the size of two dinner plates 4 centimeters apart—fits into the hub of any wheel, whether it’s attached to a bicycle or a car. Ultra Motors plans to blanket the globe with fleets of electric bikes, motorcycles, motor-scooters, wheelchairs, and cars.

While hub-mounted electric motors aren’t new, Ultra Motors claims its design allows for much higher torque than conventional hub-type motors without the need for gears, belts, or chains, allowing it to match the performance of pricey competitors at a fraction of the cost.“When it comes to daily travel within the world’s cities, vehicles powered by our motor will be all you need,” says Ultra Motors chief executive Paul Dyson.

A lot of money awaits Mr. Dyson if he’s right. The global market segment for two- and three-wheeled electric vehicles is expected to grow from $75 million in 2005 to $11 billion by 2015, according to Cambridge, U.K.-based IDTechEX, an independent market research and consultancy firm that monitors all types of electric vehicles.

Ultra Motors has raised $3.25 million from Moscow-based VC firm Russian Technology Limited and the U.K.’s Flintstone Technologies, a publicly traded incubator focused on Russian-originated technologies. The company now is looking to close an additional $4-million Series B fundraising in the coming months.

The future may be promising for electric vehicles, but the sector’s history is littered with the wrecks of reinvented wheels that never rolled. Remember the Segway? In 2001, veteran venture capitalist John Doerr, a Segway investor, described it as being potentially bigger than the Internet and predicted the company would be the fastest tech company ever to generate sales of $1 billion.

But the Segway ended up as a niche, rather than a mass-market, product. Price was a problem. Segways cost thousands of dollars, too much for most U.S. consumers and completely out of reach for the majority of the population in India and China, where demand for alternative types of energy-efficient transport is high, but annual average income is low.

Ultra Motors has a different strategy. It aims to first provide high-end products at low prices to the mass market in the developing world. Its electric bikes, for example, are expected to sell for around $250 compared to prices of $1,000 or more for high-end models sold by competitors.

Later, the company plans to morph the low-cost, three-wheeled electric rickshaws it plans to sell for about $1,900 in developing countries into sleeker, more sophisticated versions for congested cities in the West. Think BMW’s C1, a small motorcycle with a safety cage, but with two wheels at the rear, room for passengers and groceries, and no gas-guzzling motor.

Prototype electric bicycles, scooters, and rickshaws using Ultra Motors’ technology can operate at speeds of up to 60 kilometers per hour and need to be recharged after 40 or 100 kilometers, depending on the usage and battery, says Mr. Dyson.

Here’s how it works: The motor’s patented technology consists of stationary permanent magnets surrounded by pairs of electromagnets. The electromagnets are attached to the cylinder, which is attached to the wheel. Rapidly changing the polarity of the electromagnets from positive to negative propels the wheel forward.

A Shot at Success

After the Berlin Wall fell in 1989, Mr. Shkondin left East Germany with the rest of his comrades and returned to the disintegrating Soviet Union. He took the idea for the motor with him. Even in the hyper-capitalistic “new” Russia of the early 1990s, Mr. Shkondin failed to interest anyone in the motor. He lived outside Moscow, and couldn’t boast connections to people with money to invest. Still, he didn’t give up.

Eventually, Mr. Shkondin hooked up with British entrepreneur Ian Woodcock of Flintstone Technologies, who had success commercializing Russian technology for another startup called Sterilox Technologies, which specializes in water treatment, disinfection, and sterilization technology.

The pair founded Ultra Motors in 2001 in England. Mr. Woodcock recently asked Mr. Dyson, an Australian engineer and businessman with 23 years of experience in international technology companies, to become CEO. Mr. Dyson previously served as Sterilox’ CEO, and is credited with helping Mr. Woodcock turn Sterilox—now based in Philadelphia with projected 2005 sales of $20 million—into a viable international company.

Mr. Dyson’s first task as CEO of Ultra Motors will be to identify where the market for its motor is ripest and then link up with third-party manufacturers. It’s a risky gamble; a bid to introduce rickshaws to Britain five years ago was a disaster.

But Peter Harrop, chairman of IDTechEX, says Ultra Motors has a shot at success. “It is possible to create a new market sector and have a sudden and very great breakthrough,” he says. However, “It is necessary to sign up companies in the East, preferably China, to make high-quality products of this type in great volume,” he adds.

With a slight variation, Ultra Motors plans to do just that. In September, the company hopes to launch its first model, the Ultra1, in the high-volume scooter and bicycle business in India. Its key partners are Compton Greaves, which, with $1 billion in sales, is one of the largest electrical manufacturing firms in India, and two of the top four bicycle manufacturers in India—TI Cycles of India Limited and Avon Cycles—which combined produce 5 million bicycles per year.

The gamble is whether a $400 electric scooter or $250 high-end electric bike—prices that are within reach of many Indians, who now pay around $50 for a regular bicycle and $700 for a motor scooter—can entice consumers. Ultra Motors is first targeting this sector because in most countries, these electric bikes allow owners to avoid purchasing insurance, paying road tax, or obtaining a driver’s license.

In India alone there are 1.8 million new two-wheeled vehicles sold every month. “By targeting two new segments of this market, electric bicycles and scooters, with our proprietary motor, Ultra Motors aims to capture a significant share of this huge business,” says Mr. Dyson.

Ultra Motors’ electric bikes will compete with Western producers of relatively expensive bicycles with electric motors such as Heinzman and Wavecrest (which can run as high as $2,900) and low-cost electric motors produced by companies such as China’s Toprun and Taiwan’s Giant Manufacturing, says Mr. Dyson.

Of course, anyone wanting to sell anything these days has to have a China strategy. Fortunately, the Chinese government is giving electric vehicle makers a push in the form of legislation passed in 2002 that promotes their use as a means to help reduce the country’s oil consumption and auto emissions. Production of electric bikes rose to 6.76 million in 2004, up from 54,000 in 1998, and there are now more than 15 million electric bikes in use inside China, according to a report from the China Bicycle Association published in the People’s Daily Online in July. Demand is being met by dozens of companies that design e-bikes in China, all of which are potential customers, says Mr. Dyson.

Next will come electric scooters, wheelchairs, rickshaws, and within two to three years, cars, says Mr. Dyson. It’s a big vision. The Ultra-motor has already survived the Cold War and the collapse of the Soviet Union. The ferocious competition of globalization shouldn’t be a problem.