Chrysler Picks A123 Systems To Provide Batteries for Its Planned Green Fleet

In what company executives are describing as an all-American venture, Chrysler LLC today announced that Massachusetts-based A123 Systems will provide battery packs for its first-generation ENVI extended-range hybrids and battery-only vehicles that are scheduled to start appearing in dealer showrooms in 2010.

A123 Systems is developing proprietary next-generation lithium-ion technology at its Watertown, Mass. headquarters. The company plans to open a production facility in Michigan to serve Chrysler.

A123 Systems earlier had been in the running to supply battery packs for the competing Chevrolet Volt. It also has applied for $1.84 billion in federal loans to help build out its proposed lithium-ion battery plants.

Chrysler has been talking about its extended-range and battery-only vehicles for some time. During recent automobile shows it unveiled plans for five green vehicles: the Dodge Circuit EV, Jeep Wrangler EV, Jeep Patriot EV, Chrysler Town & Country EV and a Chrysler 200C EV concept.

"The most significant challenge to electric vehicles is battery technology," Frank Klegon, Chrysler's executive vice president for product development said. "The diligent selection of strategic partners like A123 Systems helps Chrysler achieve its leadership in electric-drive systems and vehicles."

The battery company has a small presence in Michigan, but has yet to say where (or when) it would build a proposed plant to manufacture the batteries for Chrysler. Michigan officials, not surprisingly, welcomed the news.

"Chrysler's partnership with A123 Systems marks a significant milestone at a critical time in the automotive industry and in the state of Michigan," said Michigan Governor Jennifer M. Granholm. "This strategic alliance that will result in two companies joining forces to develop and produce advanced technology in Michigan will create new jobs in the state, deliver benefits to consumers and contribute significantly to bringing more environmentally friendly vehicles to market."

The Chrysler announcement could mark the second important contract in recent weeks for A123. On April 1, The Wall Street Journal reported that SAIC (Shanghai Automotive Industry Corp.) plans to use A123 batteries in its cars.

A123 Systems is one of dozens of competing firms in the U.S. and abroad that are racing to develop powerful, reliable battery systems that will be needed for the next generation of electric and hybrid-electric vehicles to take to the road. A123 Systems uses a proprietary nanophosphate chemistry to produce lithium-ion batteries. Its technology builds on research done by researchers at the Massachusetts Institute of Technology, where one of the company's three co-founders is a professor. Another is an MIT business school graduate.

Today's announcement comes as Chrysler scrambles to complete a deal with Fiat that President Obama ordered on March 30.

Chrysler on Monday described ENVI as its "entrepreneurial in-house organization focused on electric-drive production vehicles and related advanced technologies. ENVI is a cross-functional, nimble team empowered to move quickly and access vast resources within Chrysler LLC in order to integrate electric-vehicle technology into existing products."

Greg Johnson, Contributor

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Greg Johnson April 6, 2009, 11:53 AM

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