In January, A123Systems Inc.
lost out to a Seoul competitor in the race to get a General Motors Corp. (NYSE:GM) contract to supply lithium-ion batteries for electric cars at a new Michigan plant. So, the eight-year-old Watertown, Mass., company just
turned to another U.S. auto giant -- Chrysler LLC.
On Monday, Chrysler and A123 announced a deal where A123 would supply Chrysler with li-ion battery packs for electric vehicles that will hit showrooms late next year. GM plans to bring the Chevy Volt to market next year as well.
A123 also plans to build a plant in Michigan to assemble battery packs and cells among other similar products for Chrysler. It plans on asking the Department of Energy for
$1.84 billion to build that plant. A123 isn't the only one looking to make a profit
building batteries in Michigan. Mercedes-Benz is one of a few that plan on competing.
The li-ion market itself looks to be an
interesting battle ground, with companies like China's
BYD Co. and
Valence Technology Inc. looking to muscle in. But A123 is well-established and has a decent war chest. A few days ago, it announced a deal where it would
supply hybrid technology to Chinese auto manufacturer SAIC Motor Corp. Ltd., and it's also in
talks about a deal with French automaker Renault SA.
In the battle for market share, we can probably expect to see more advertising for hybrid and electric cars. Ahead of its planned IPO, A123 is in a quiet period, but it's getting some marketing help from a Rhode Island engineer who claims to have built a motorcycle dubbed
the Killacycle -- using A123 technology -- that travels from 0 mph to 60 mph in under a second and proves electric vehicles don't have to be "nerd-mobiles." -
Baz Hiralal
Go to the Chrysler-A123 announcementAlso see: GE betting on battery maker A123Systems
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