A123 Inks Deal to Develop Battery Cells for GM Electric Car

8/10/07Follow @bbuderi

A123 Systems just landed a promising deal with General Motors to co-develop the battery cell for the automaker’s Chevrolet Volt line of electric cars and other vehicles. GM Vice Chairman Bob Lutz made the announcement yesterday during a speech in Michigan.

Under the deal, Watertown, MA-based A123 will co-develop the lithium-ion battery for GM’s E-Flex electric vehicle architecture (on which the Volt is based). The companies are not disclosing the exact terms of the arrangement. But, says Ric Fulop, an A123 founder and vice president of business development, “It’s a significant deal…We are working together with GM to develop a very special product for the Volt.”

The stakes are growing in the market for alternatively fueled cars. So far, GM and most other automakers have been left in the dust by Toyota, maker of the popular Prius gas-electric hybrid. In an attempt to catch up, GM is racing to offer cars that rely mainly on electricity for power (a conventional engine serves as backup when battery power is not being tapped) and whose batteries can be charged by plugging them into a standard outlet. GM first demonstrated its E-Flex electric vehicle architecture in the Chevy Volt concept car (pictured above) unveiled earlier this year, and Lutz said in his speech that GM hopes to offer a car based on the Volt technology by late 2010.

An affordable, safe, high-powered, long-lasting lithium-ion battery is key to GM’s plans. Developing such batteries is the forte of A123, whose technology is based on a nanoscale material developed at MIT. “It’s much safer chemistry, and it has much better life than first-generation lithium ion,” says Fulop. “These batteries last better than 10 years, over 7000 cycles of use.” The company already makes batteries for products such as power tools and jet-engine starters, he notes. “We’re now focused on batteries to help drive the electrification of transportation.”

A123 is one of the most talked-about energy companies in the Boston area. Founded in 2001, it has more than 500 employees—half of whom have been added this year—and reports raising more than $100 million in private financing. Its investor list includes General Electric, MIT, North Bridge Venture Partners, Procter and Gamble, Motorola, Qualcomm, Sequoia Capital, and YankeeTek, among others. Chair of the board is Sycamore Networks founder Desh Deshpande. Board observers include noted venture capitalist Michael Moritz of Sequoia, an early backer of Google and Yahoo.

Some other good news for GM and presumably A123: Lutz’s announcement came on the same day that the Wall Street Journal reported that Toyota was being forced to delay the launch of a new line of hybrids that tap lithium-ion battery technology.

Bob is Xconomy's founder and editor in chief. You can e-mail him at bbuderi@xconomy.com, call him at 617.500.5926. Follow @bbuderi

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  • Kent Beuchert

    This article is misleading by implying that the deal announced with A123 Systems has any relevance for the first version of the VOLT. It doesn’t, although it may have for future version battery packs. Two companies are still vying to supply the VOLT’s batteries and A123 Systems is just one of them. Their battery may or may not be selected for the initial VOLT , launching in 2010. Both battery developers are said to have batteries that satisfy the VOLT specs.

  • Peter Shalless

    As, largely, a city dweller, I don’t need a petrol engined car capable of over 160 km.p.h. If I could find a four seater—four doors would be nice,too—electric vehicle with a maximum top speed of about 100 km.p.h and a range of about 200 kilometres, I would be prepared to try and but it.

    Some time soon, we are going to have to accept the fact that we can’t continue to rely on oil.

  • Karl Roebling

    A shift to powering cars with domestically-produced energy would benefit consumers & the economy tremendously. I wonder if 1) a political system that runs on loose money, in a world where most loose money is controlled by foreign energy producers, will allow such a change. And 2), if carrying heavy, toxic batteries around in cars that run 99% of the time next to existing power lines is prudent. Isn’t a modernized-for-safety third-rail system of powering electric vehicles called for?

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