Wednesday, March 5, 2008

A123Systems wins GE funding for electric car partnership

Watertown lithium ion battery maker A123Systems Inc. has cut a new deal with a Norwegian electric car manufacturer that puts its nanophosphate power plants at the heart of a five-seat "crossover" style vehicle.

The project, which partners A123Systems with electric car maker Think Global AS, is being funded by GE Energy Financial Services, an investment arm of General Electric Co. based in Stamford, Conn. GE Energy Financial Services recently invested $4 million in Think, and has provided a total of $20 million in funding to A123Sytems since 2006.

The Think concept car, which was unveiled today at the International Motor Show in Geneva, Switzerland, is a larger version of the company's traditional electric passenger vehicles. Called the TH!NK Ox, it is modeled after five-seat sport utility vehicles, though lighter and more aerodynamic than its gasoline-powered counterparts, according to officials.

Think has made electric cars for 17 years, and boasts 1,200 TH!NK vehicles operating in Norway. The company is also in the process of expanding its production facility to accommodate 10,000 cars per year, a pace officials expect to reach in 2009.

The deal is not A123Systems' first foray into the electric car market. The company last year received a $15 million development contract for next generation hybrid electric vehicle batteries from the U.S. Department of Energy and the U.S. Advanced Battery Consortium (USABC), an organization composed of Chrysler LLC, Ford Motor Co. and General Motors Corp. It has also signed a deal with General Motors to provide batteries for the Saturn Vue Green Line plug-in hybrid development program.

Other applications for A123Systems' batteries have included remote control toys, power tools and light aircraft.

According to documents from GE Energy Financial Services, the investment group is the largest cash investor in A123Systems, which has raised more than $102 million in private funding since its inception in 2001. Other investors include Alliance Capital, FA Technology Ventures, North Bridge Venture Partners, Sequoia Capital, OnPoint, the Massachusetts Institute of Technology, Motorola, Qualcomm and Desh Deshpande, the company's board chairman.

According to documents filed with the U.S. Securities and Exchange Commission, A123Systems raised $5 million of a new $16.5 million round of funding in January, though executives have declined to comment.