Venture Beat said:A123Systems (AONE), the advanced battery maker best known for its surprisingly lucrative IPO in September of last year, has landed itself back on the industry’s radar. It’s just inked a deal to supply Fisker Automotive with batteries for its highly-anticipated plug-in hybrid, the Karma, slated to launch late this year.
This is great news for A123, which had been fairly quiet since its public sale, reporting deep quarterly losses and paring down its major supply deal with Chrysler — one of the only big automakers to slash its green car programs. With Panasonic snapping up a supply contract with Tesla Motors and Ford turning to competitor Johnson Controls-Saft, things looked pretty bleak for A123. But now, with another bright EV star hitched to its wagon — especially one that was officially blessed with $528 million in loan guarantees from the U.S. Department of Energy — A123 might be able to reclaim its title as the green battery company to watch.
The multi-year deal with Fisker includes a $23 million investment from A123 in the carmaker, including $13 million in cash. In return, it will not only be tapped to supply batteries for the $90,000 luxury Karma, but also for the stealthy Nina model Fisker has been talking about since last fall, assumed to be a more practical, moderately-priced sedan set to compete with Tesla’s Model S. As a result of the deal, A123’s stock price jumped from $20.05 to $21.74 from market close to market open today (though now it’s back down to $20.67).
Yesterday, VentureBeat reported that Fisker had dumped battery maker Ener1 as a possible supplier for the Karma. Already bound up in its deal with Norwegian EV maker Th!nk, that company just didn’t have the production capacity to meet Fisker’s needs, especially by its targeted 2010 launch date.
This is one reason A123 was probably so appealing to the company. It has the capital — not to mention $249 million in grant money from the Energy Department — and plans already nailed down to expand its battery assembly plant in Michigan, allowing it to churn out upwards of 24,000 plug-in hybrid battery packs. After all, Fisker is looking to grow too, spending 80 percent of its money from the DOE to convert an old General Motors plant in Delaware into a Fisker factory.
Now, with supply deals with both Fisker and the Shanghai Automotive Industry Corporation (SAIC) in its pocket, A123Systems may be on a roll. The company actually formed a joint venture with SAIC, China’s largest automaker, in mid-December, so that they could work on developing efficient, battery systems for both hybrid and fully electric vehicles together. At the time of its launch, the venture was valued at only $20 million, but it has incredible growth potential once EVs are rolling off the assembly line.
A123 may be celebrating, but it’s probably a dark day for both Ener1, which would have derived 28 percent of its revenue next year from the Fisker contract, and Valence Technologies, a smaller venture-backed battery maker that seems to be missing out on all the big supply deals. In December, it landed a $1.4 million agreement with Smith Electric Vehicles in the United Kingdom, but that may not be enough to keep it afloat.