A123Systems Raises $69 Million in New Round of Private Financing; GE Increases Ownership to More than 10%, Director of GE Global Research to Join Board
13 April 2009
A123Systems has raised $69 million from GE and other investors to accelerate the expansion of its US lithium-ion battery manufacturing and smart grid capabilities. The capital will help support the expansion of A123’s facilities in Hopkinton, MA, and Novi, MI, as well as build planned new factories in Michigan. The funding will also support A123’s efforts to develop applications for the smart grid, such as utility-scale energy storage.
GE Energy Financial Services and GE Capital’s Equity unit provided $15 million of the amount raised by A123 in this financing. This is GE’s seventh investment in A123, making it the company’s largest cash investor and bringing GE’s cumulative investment to $70 million, increasing its ownership stake to more than 10%.
Mark Little, GE’s Senior Vice President and Director GE Global Research, will join A123Systems’ board of directors.
In addition to the private capital, A123 is seeking funds under federal and state stimulus and other programs to ramp up its production capabilities in Michigan. The company’s planned production facilities would be capable of supplying battery systems for five million hybrid electric vehicles or a half-million plug-in electric vehicles per year by 2013.
We’ve accelerated our plans to expand our US manufacturing. With this financing, we will begin an expansion that we expect to accelerate upon receipt of government funds.
—David Vieau, A123Systems’ President and Chief Executive Officer
The manufacturing plants are expected to produce battery cells and systems to meet the needs of A123’s automotive customer portfolio, which includes several vehicle manufacturers and 19 vehicle models ranging from hybrid electric vehicles to electric vehicles. A123 was recently awarded battery development and supply contracts for Chrysler’s first generation electric vehicle line-up and the Chinese automaker SAIC Motor Corp.’s new hybrid vehicle models, both scheduled to debut in 2010. (Earlier post.)
(Chrysler is also partnering with GE to demonstrate an economically viable OEM-integrated dual-battery PHEV technology within the next 3-5 years. (Earlier post.) GE will develop the dual battery energy storage system. Chrysler will be responsible for the vehicle integration piece. It is expected to be a $20 million project, with GE and Chrysler contributing the industry cost-share of $10 million, and DOE providing $10 million.)
A123’s plants are also expected to produce batteries for smart grid applications and grid stabilization.
Beyond providing capital, GE, through GE Global Research, provided system design expertise and supported A123’s stationary power product development for electric grid applications, and helped to design battery system components for A123Systems’ automotive programs.
The advanced battery market is at a tipping point, and our support of A123 marks the application of GE’s resources at the right time to capture leadership in an essential new field. Our resources, engineering and R&D capabilities will have the potential to play an important role as A123 scales up its operations at this critical juncture.
—Mark Little
"GE’s seventh investment in A123, making it the company’s largest cash investor.."
GE is having their own challenges these days, but it is good to see that they know a winner when they see one.
This shows me that even a company with a proven product like A123 has to search long and far to get a bit of capital. If we got off the old model of "I got mine" to the new model of working together, we can go a long way.
Posted by: SJC | 13 April 2009 at 11:35 AM
Sounds sweet SJC but your idea of "working together" is "do it MY way." That don't fly in the worlds of independent ideas. But you can have your way and the rest of us can have ours - that should work just fine!
Posted by: Reel$$ | 14 April 2009 at 06:56 PM
Whatever Reel$$...just keep those comments to yourself from now on.
Posted by: SJC | 14 April 2009 at 07:53 PM
Sorry SJ, that's not how it works. If you take exception to a comment, note it and move on. You do not dictate what, where or when people get to speak. Those days are OVER.
It's a new world pal.
Posted by: Reel$$ | 15 April 2009 at 05:26 PM