A123 secures $69M for smart grid, car batteries

Watertown, Mass.-based lithium ion battery maker A123 Systems today said it raised $69 million in a private equity round led by existing investor General Electric (NYSE:GE).

The funding is expected to be used to expand A123’s battery cell and system production facilities in Hopkinton, Mass., and Novi, Mich., in addition to building new factories in Michigan, the company said. A123 also plans to fund the expansion with money from federal and state programs, including stimulus packages (see US car battery companies seek $1B in federal aid).

The planned expansion would bring annual production capacity by 2013 to 5 million battery systems for hybrid electric vehicles, or 500,000 battery systems for plug-in electric vehicles.

But A123 said it also plans to use the money to extend the use of its lithium ion batteries to the smart grid, including utility-scale energy storage and grid stabilization.

Other investors included DTE Energy Investors. GE contributed $15 million to the round, bringing its total to-date to $70 million in the battery maker and expanding its stake to more than 10 percent (see Cars, energy storage and windy dealmaking). GE Senior Vice President Mark Little is planning to join A123’s board of directors.

“The advanced battery market is at a tipping point,” Little said in a news release. “Our resources, engineering and R&D capabilities will have the potential to play an important role as A123 scales up its operations.”

A123 has signed deals to supply its batteries to Chrysler’s first generation electric vehicle line-up and Chinese automaker SAIC Motor’s new hybrid vehicles, both planned for 2010. A123 has also signed a supply deal with Oslo, Norway's electric car maker Think Global (see Think halts electric car production, plans layoffs).

A123 was collaborating with General Motors (NYSE:GM) on battery technology (see GM, A123Systems to co-develop battery), but GM ultimately selected LG Chem as the battery supplier for its Chevy Volt (see Hyundai plans to sell hybrid in U.S. in 2010).

A123 has not yet acted on its previously announced plans to raise up to $175 million in an IPO (see A123 Systems going public).

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