A123 Battery Capacity Expansion for HEVs

A123 Systems, a developer and manufacturer of advanced lithium ion batteries and systems for hybrid electric vehicles (HEVs), announced its financial results this week. This company is one of the leaders in this technology area and has received numerous U.S. Department of Energy and stimulus grants to fund its R&D. Headquartered in Massachusetts and founded in 2001, A123 Systems' nanoscale electrode technology is built on foundational research at the Massachusetts Institute of Technology. A123 Systems is winning new contracts on a regular basis and is expanding production domestically. They are advancing Li ion batteries for HEVs to ensure this becomes the winning technology over competing options such as hydrogen fuel cells, which will improve their long-term financial performance.

Their latest financials revealed this week showed total revenue for 2009 was $91.0 million, an increase of 33 percent compared to 2008. Product revenue for 2009 of $76.5 million increased 43 percent compared to the year before, while R&D services revenue of $14.5 million decreased from $15.0 million over the same time period. This company had a successful IPO in 2009, which led to a 50 percent stock share price boost in the first day of trading.

In recent months, A123 signed an agreement with Navistar, Inc., a leader in global commercial transportation, to develop lithium ion battery systems for electric vehicles for the Navistar Modec Electric Vehicle Alliance, a joint venture between Navistar and Modec, which is an English battery technology company. According to the agreement, A123 will develop battery systems for Navistar's HEVs, and it is expected that these A123 battery systems will be manufactured in A123's Livonia, Michigan facility, scheduled to open this month. Rather than converting an existing, conventional fossil-fuel powered truck, Navistar's HEV will have a unique design that has a gross vehicle weight (GVW) rating of 12,100 pounds and a payload capacity of two tons. It is also supposed to generate zero tailpipe emissions, which has the potential to reduce greenhouse gas emissions by as much as 10 tons annually, when compared to an equivalent diesel-powered vehicle.

A123's Li ion battery pack will enable the Navistar hybrid truck to travel a distance of approximately 100 miles on pure electricity before needing to be recharged. The battery pack will be capable of a rapid charge rate and will have a charge-time dependent on the power of the charging system applied.

In December of 2009, A123 closed on its $249 million grant award from the DOE and is using the available capital to help fund its production expansion plans, although it should be eligible for emerging clean energy manufacturing tax credits as well. Their intended range of investments will expand the company's global final cell assembly capacity to at least 360 MW-hr. The expansion in production capacity will provide A123 with the overall ability to produce over 320,000 hybrid vehicles with 1.1 kW-hr battery systems, or over 24,000 plug-in hybrid electric vehicles with 15kW-hr battery systems annually.

Michigan has truly benefitted from its aggressive marketing campaign designed to attract innovative high-tech companies such as A123 from other states, while offering competitive incentive policies to close the deal. This state is fortunate to have had prior history and exposure already to the auto industry, allowing it to make a strong case for enticing new suppliers that support next generation vehicles. However, the Toyota Prius hybrid electric car fiasco may not entirely good for this branch of vehicles offered by the Big 3 automakers in Michigan, and of course- the supply chain, as customer confidence has fallen with respect to new hybrids in the wake of faulty parts leading to numerous accidents.

"Photo credit- www.greencarplanet.com: 2010 Toyota Prius may lessen sales for all HEVs."