A123 Systems, backed with the promise of a $249 million federal stimulus grant, announced Tuesday it had developed a new version of its lithium-ion cell batteries to cut costs of rechargeable and hybrid vehicles.
The centerpiece of President Barack Obama administration’s bid to boost the U.S. electric battery industry, the company is seeking to regain its footing after an earlier battery was recalled due to potential defects.
Production of the "nanophosphate EXT" cells will begin next year, allowing for longer and more efficient operation in extremely high and low temperatures than competing lithium packs, the Waltham, Massachusetts-based company said in a statement.
The battery will reduce the need for systems in electric cars to maintain a consistent battery temperature, CEO David Vieau told Bloomberg News. "That doesn’t solve all the costs issues but it’s a step in the right direction,’’ he said.
Share prices rose as much as 45 percent in New York trading. Shares had tumbled 92 percent through Monday since an initial public offering in September 2009, according to Bloomberg.
The success or failure of the new battery may determine the fate of A123, as well as provide an early clue on Obama’s bid to promote electric cars and build an industry to make the advanced batteries to power them, the New York Times reported.
Obama’s prediction of a million electric cars on the road by 2015 seems unattainable, as combined sales of Chevrolet Volt plug-in hybrids and Nissan Leaf electric cars so far this year have totaled fewer than 10,000 vehicles, the Times said.
A123 executives say the company, founded in 2001, has gotten off to a slow start despite a 2009 government pledge of a $249 million grant because the market for electric cars has not taken off. The company reported a loss of $125 million in the first quarter of this year, the Times said. "It’s been softer than what we or everyone else expected,’’ Vieau told the Times.
Mitt Romney, the presumed Republican nominee for president, has criticized subsidies to energy companies, as highlighted by the failure of solar-panel company Solyndra at the cost of half a billion dollars in public funds, as a waste of taxpayer funds. "When Mitt Romney is president, government will stop meddling in the marketplace,’’ Romney spokeswoman Andrea Saul said on the campaign’s website.
A123 wants to spur demand for its batteries, which are also used in utility grids and telecommunications systems after it forecast in a May regulatory filing that it would suffer several quarters of "significant’’ losses that raised "substantial doubt on the company’s ability as a going concern,’’ Bloomberg reported.
A123 had to cut workers last year at its new factory in Livonia, Michigan, after its battery for one electric vehicle made by Fisker Automotive had potential defects, the Times reported. The government, which has disbursed about half of the grant, recently gave A123 two more years to meet production targets to earn the remainder of the grant.
A123 hopes the new technology unveiled today will persuade investors to back a $50 million convertible bond offering, the Times said.
The firm competes with larger, more seasoned battery makers, including South Korea’s Samsung Electronics and Japan’s Panasonic, Bloomberg reported.
© 2023 Newsmax Finance. All rights reserved.