Historically, U.S. car makers have had to look outside the country for batteries for their electric cars. But that may have changed with A123 Systems, a Massachusetts start-up company that makes lithium-ion batteries. A123 gained a contract with Chrysler, and went public in September 2009.
According to CNN Money, A123 Systems, which trades on the NASDAQ under the ticker symbol AONE, raised $380 million in its initial public offering and the price of its shares jumped 50% on the first day of trading. A123 Systems grew out of the research labs at the Massachusetts Institute of Technology and was founded in 2001 with a $100,000 grant from the Department of Energy. Since then, it has received financing from venture capital firms, General Electric and Motorola.
In April 2009 the Detroit News reported that Chrysler signed a contract with A123 Systems to supply lithium-ion batteries for the electric vehicles it is planning to put on the road in 2010 such as the Dodge Circuit. In August 2009 the U.S. Department of Energy awarded Michigan more than $1.35 billion in grants for advanced battery and electric vehicle manufacturing and development as part of the federal stimulus plan. As one of the 12 projects in Michigan that received grant money, A123 was awarded $249.1 million for facilities in Romulus and Brownstown. A123 will manufacture nano-iron phosphate cathode powder and electrode coatings, battery cells and modules, and in conjunction with Chrysler will assemble modular battery packs that can be used in a variety of vehicles.
Earlier in 2009, Michigan governor Granholm signed legislation to provide up to $700 million in refundable state tax credits to companies that develop and manufacture advanced batteries and commercialize the technology in Michigan. A123 was one of several companies that qualified for these credits.
In order for lithium-ion batteries to be successful for mass commercial use in hybrid and all-electric vehicles, there are some challenges that will need to be overcome. Safety is a principal concern. As explained by John Voelcker in IEEE Spectrum there is a potential for a cell in a lithium-ion battery to short out, get hot and start a runaway thermal reaction. These failures are rare, occurring once in every 5 million to 10 million lithium-ion cells, but the more cells the greater the chance and new technologies will be held to high standards. Paul Evans points out in gizmag that the batteries designed by A123 Systems use a modular system of prismatic cells with a lithium iron nano-phosphate electrode that is much more stable than the lithium cobalt oxide used in other batteries such as in laptop computers. These iron nano-phosphate cells are less likely to overheat so the cooling system is simpler.
The time to recharge the batteries used in electric vehicles has been another challenge. But A123’s batteries can accept an 80% charge in as little as 5 minutes. The batteries store less energy than other types, but they can be discharged to as low as 10% without deteriorating. This would provide a range of up to 200 miles, which has been another challenge for all-electric vehicles.
John Voelcker discusses another major challenge – the cost. Lithium-ion cells cost about $450 per kWh, compared to $40 to $50 per kWh for a traditional 12V lead acid battery. The U.S. Advanced Battery Consortium as set a target of $300 per kWh, which manufacturers think they can achieve by 2015 with technology improvements.
The other challenge facing A123 Systems is competition from the large Asian battery makers. According to IEEE, North American and European car makers prefer to work with battery suppliers in their own backyards, and A123 is concentrating its sales and marketing in those regions. A123’s research and development is concentrated in the U.S. but is has manufacturing facilities in Asia. CNN reports that A123’s biggest current projects include bus batteries for BAE and a deal with Mercedes-Benz’s High Performance Engines. GM has not designated A123 as its battery supplier but has left room for opportunities in the future.
Alisa Priddle, “Chrysler taps A123 Systems as electric car battery supplier” – The Detroit News
Dirk Lammers, “Electric-car battery maker A123 Systems goes public with a splash” – Monterey Herald
John Voelcker, “Lithium Batteries Take to the Road” – IEEE
Megan Brown, “Granholm, Cherry Hail 12 Michigan Projects Awarded Federal Advanced Battery Grants” -Office of the Governor of the State of Michigan
Paul Evans, “Chrysler chooses A123 batteries for Electric Vehicles” – gizmag
Steve Hargreaves, “AONE IPO charges car battery market” – CNN Money