UPDATE 2-GM takes stake in battery startup Envia

* GM invests $7 mln in battery start-up, licenses tech

* Asahi Kasei, Asahi Glass, venture backers join funding

* Envia raises total $17 mln (Adds detail on additional investors, Lauckner quote, Volt background)

DETROIT, Jan 27 (Reuters) - General Motors Co GM.N has invested $7 million in Envia Systems, a California-based start-up that has been developing more powerful and cheaper batteries for electric vehicles.

Newark, California-based Envia has developed cathode technology for lithium-ion batteries that it says will improve power storage for electric cars, addressing the problems of limited driving range and high costs.

GM said Wednesday it also reached a separate licensing agreement to use the Envia technology, which was first developed at a U.S. Department of Energy lab, in future electric vehicles.

Envia raised an additional $10 million from investors including Asahi Glass 5201.T and Asahi Kasei 3407.T and three existing venture investors: Bay Partners, Redpoint and Panagea Ventures.

Jon Lauckner, who heads GM’s venture investment arm, said the automaker believed that the Envia technology showed that “major improvements are already on the horizon” that promise to make electric vehicles more mainstream.

The investment marks the second time this month that GM has taken a stake in a start-up in order to assure its access to technology related to electric vehicles.

In early January, GM announced that it was investing $5 million in Powermat, a company that provides wireless charging for electronic devices like cell phones. The top U.S. automaker plans to incorporate the Powermat technology into upcoming vehicles, including the 2012 Chevrolet Volt.

The Volt is priced at $41,000 -- as much as some luxury vehicles -- in large part because of the cost of its 400-pound lithium-ion battery pack.

GM has said it expects to lose money on the first-generation Volt.

The Volt’s rechargeable battery provides an electric-only range of 25 to 50 miles. After the battery is depleted, a 1.4-liter gasoline engine provides power.

GM believes that “extended-range electric vehicle technology” will be more popular with consumers than pure electric vehicles because of the additional range provided by the gasoline-burning combustion engine.

Chief Executive Dan Akerson, who took charge of the top U.S. automaker in September, has said he wants to see the company move faster to roll out plug-in hybrids derived from the Volt while increasing production of the Volt this year and next to bring down costs.

GM founded a venture capital arm in June last year with $100 million in funding. GM Ventures is headed by Lauckner, a veteran GM engineer, and overseen by GM Vice Chairman Steve Girsky, the former investment banker in charge of strategy at the automaker. (Reporting by Kevin Krolicki, editing by Gerald E. McCormick, Dave Zimmerman)