Thursday, January 8, 2009

A123 Systems seeking $1.8B from Feds for U.S. battery plants

By Efrain Viscarolasaga

Watertown-based lithium ion battery maker A123Systems Inc. has announced plans to build an undisclosed number of automotive battery manufacturing facilities in the United States, and reports it has applied for $1.84 billion in government loans to fund the construction.

While the number or location of the proposed plants were not disclosed, the first plant, said officials, is expected to be located in southeast Michigan. A123Systems’ federal application falls under the $25 billion loan package for the U.S. auto industry appropriated by the U.S. Department of Energy last year. A123Systems is expected to invest another $2.3 billion of its own money for the new facilities.

If the application is approved, the program would allow the company to dramatically expand production capacity in the U.S., with full production volumes designed to supply battery systems for five million hybrid vehicles or half a million plug-in electric vehicles per year by 2013, according to a company statement. The plants would also support 14,000 jobs at full operation.

A123Systems lithium ion battery technology has found its way into a number of applications, including power tools and electric vehicles. While no announcements have been made, the company is in competition to supply batteries for General Motors Corp.’s Chevy Volt, a plug-in hybrid electric vehicle.

The company has also received funding from the U.S. Department of Energy for hybrid and plug-in hybrid electric vehicle battery development, and is working with major automakers on 19 vehicle models, ranging from hybrids to plug-in hybrids to full electric vehicles, according to the company.

A123Systems has closed on more than $132 million in private funding since its inception in 2001, including a $30 million investment from General Electric Co. last October. In addition, the company filed documents with the U.S. Securities and Exchange Commission last summer indicating its intention to bring its stock to the public market.