WRAPUP 1-A123 to sell Fisker batteries in alliance
* A123 to supply batteries for Fisker Karma plug-in
* A123 to also make $23 mln investment in Fisker
* A123 shares up 8 percent at one time
By Kevin Krolicki and Soyoung Kim
DETROIT, Jan 14 (Reuters) - Lithium-ion battery supplier A123 Systems Inc AONE.O said on Thursday it would supply power packs for the Fisker Karma, a rechargeable luxury car scheduled to go on sale in September.
A123 also said it would invest $23 million in a funding round for Fisker Automotive -- the ambitious venture capital-backed start-up behind the Karma -- and expects to supply packs for a second, lower-cost plug-in hybrid under development.
Although the deal is small in terms of production, it represents a breakthrough for A123 since it would put the company's advanced batteries in cars for the first time.
Shares of the Watertown, Massachusetts-based company were up 3 percent in afternoon Nasdaq trading, after earlier rising more than 8 percent.
"We engaged with (Fisker) more than a year ago but we worked very intensely over the last quarter of last year and, very aggressively in December," A123 Chief Executive David Vieau told Reuters in an interview.
The announcement of the closely watched supply deal comes a day after EnerDel, an Indiana-based unit of Ener1 Inc HEV.O, said it had broken off talks with Fisker Automotive to be its battery supplier for the Karma.
Fisker was the recipient of a $528 million low-cost loan from the U.S. government to help fund its expansion plans, including a still-pending deal to buy an abandoned Delaware assembly plant from General Motors Co [GM.UL].
As a condition of receiving that government loan, Fisker has been raising additional equity from investors.
"We wanted to help galvanize the (funding round)," Vieau said of Fisker. "We perhaps could take a board seat, but we'll certainly participate in the round."
The Los Angeles-area start-up counts Silicon Valley-based Kleiner Perkins Caufield & Byers as an investor and plans to deliver its first Karma models in September.
The Fisker Karma, which is designed to travel 50 miles on a single charge and accelerate to 60 miles per hour from a standing start in six seconds, will sell for $87,900.
The Karma will be built in Finland by Valmet Automotive and will carry a powerful battery pack designed to allow it to travel 50 miles on electric power alone.
Fisker founder and Chief Executive Henrik Fisker said A123 was selected "because of the company's ability to meet our performance needs and rapidly scale to our production volume."
HIRING IN MICHIGAN
A123, the recipient of a $249 million grant from the U.S. Department of Energy, is expanding a battery cell plant in Livonia, Michigan, and building a coating facility in nearby Romulus.
The expansion will generate 540 new jobs, increase A123's production capacity by 18 percent and give it the annual ability to supply batteries for about 24,000 plug-in hybrids like the Karma.
A123 expects the automotive market for lithium-ion batteries to skyrocket to $22 billion in 2015, from only about $32 million in 2009, with every major global automaker rushing to bring electric vehicles to the market.
Vieau also told Reuters that A123 would work with Fisker to develop batteries for its "Project Nina," a rechargeable sedan that Fisker expects to build beginning in 2012 at a former GM factory in Delaware.
The Nina is expected to sell for $47,400 before a U.S. tax credit to consumers of $7,500.
"In the case of the Karma, we kind of came in late and said: 'OK, how do we fit our battery into your car?'" Vieau told Reuters. "In the case of Nina, we can sit down together and say: 'How do we build the car and the battery together?'"
A123 also has announced battery-supply partnerships with Chinese automaker SAIC and German luxury car makers Daimler AG (DAIGn.DE) and BMW.
A123, which went public last year in a closely watched IPO, lost out on a contract to supply batteries for the Chevrolet Volt to Korean rival LG Chem Ltd (051910.KS).
Vieau said A123's contracts with automakers would include annual price reductions as costs to adapt lithium-ion batteries for cars begin to fall with an increase in production.
He said by 2012 it would be possible to produce a plug-in hybrid battery pack with capacity of 15 kilowatt hours for about $7,500 -- roughly half of the industry-wide cost in 2009.
A123 shares were up 3.2 percent, or 65 cents, to $20.70 on Nasdaq. Earlier, the shares topped out at $22.65.
(Reporting by Kevin Krolicki, additional reporting by Soyoung Kim, editing by Matthew Lewis and Gerald E. McCormick)
((email@example.com; + 1 313 967 1902)) Keywords: A123/
(C) Reuters 2010. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nN14203076
- Tweet this
- Share this
- Digg this