Battery Maker A123Systems Raises Additional Cash, Adds Top GE Exec to Board

Amid all the doom and gloom, there's some good news out there in automobile land -- alternative auto land, that is.

Battery maker A123Systems said this morning that it has raised an additional $69 million in funding and will use the cash to speed up expansion of its lithium-ion battery manufacturing and smart grid systems capabilities.

The new round of financing shows that not every funding source has dried up in the ongoing recession and that belief in the future of the electric and hybrid vehicle market remains strong in some quarters.

The lead investor was electrical equipment and consumer goods manufacturer GE, which kicked in $15 million through its GE Energy Financial Services and GE Capital Equity units.

It was GE's seventh investment in Massachusetts-based A123Systems and brought its total ownership stake in the battery maker to more than 10 percent. GE's cumulative investment totals $70 million.

In recognition of its expanded equity position, GE's global research director Mark Little will join A123's board of directors, the companies said.

Little, who also is a GE senior vice president, said the energy giant believes development of advanced batteries to power electric and hybrid-electric vehicles is "an essential new field" and that the advanced battery market "is at a tipping point."

GE, he said, intends to continue using its research, development and engineering resources to help A123 scale up its operations.

A123, which also is applying for federal and state financing available for advanced battery technology development efforts, has said previously that it intends to expand existing facilities in Massachusetts and Michigan and to build new factories in Michigan.

The planned new production facilities would give A123 the capacity to supply battery systems for five million hybrid electric vehicles or a half-million plug-in electric vehicles per year by 2013.
 
A123 already supplies batteries to several major U.S. and overseas automakers for a total of 19 vehicle models including hybrids from China's SAIC and electric and extended-range hybrids from Chrysler -- is the struggling U.S. automaker survives the recession.

Other vehicle manufacturers on A123's customer list include General Motors Corp., Daimler and Volvo Truck.

A123 said that other investors in its latest financing round included Conoco Phillips, Detroit Edison, Espirito Santo Ventures, North Bridge Venture Partners, CMEA Capital, Alliance Bernstein, Qualcomm, Sequoia Capital, Novus Ventures and MIT.

Posted by

John O'Dell April 13, 2009, 8:08 AM

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