By Jeff St. John
The investment comes at a time of mixed prospects for the Watertown, Mass.-based company. While it landed a contract last week to supply batteries to Chrysler's next generation of hybrid electric vehicles, it also lost a high-profile bid to design batteries for General Motors' (NYSE:GM) upcoming Chevy Volt hybrid in January (see A123 Inks Battery Deal with Chrysler and With General Motors Snub, Is A123 Systems on the Ropes?).
A123 has seen losses mount – from $15.8 million in 2006 to $31 million in 2007 and $52 million in the first nine months of 2008 – as it has expanded, though the company's revenues have grown as well. It has also reported shrinking revenue from its largest customer, Black & Decker (BDK) (see Green Light post).
Now the company is hoping to expand its factories in Hopkinton, Mass. and Novi, Mich. and build new factories in Michigan -- and like other battery makers and electric and hybrid vehicle manufacturers, it is asking the Department of Energy for help.
Specifically, A123 is seeking a $1.8 billion loan from DOE's $25 billion Advanced Technology Vehicle Manufacturing Program (ATVM) to build a Michigan plant to supply its batteries to hybrid and electric vehicles.
Chrysler didn't specify last week which of its several planned hybrid and electric vehicles will use A123 batteries (see (see Chrysler Eyes 2010 for Launch of One of Three Electric Cars). In any case, that deal likely will hinge on whether or not the automaker survives the economic downturn and its own troubled financial situation (see Obama Gives GM, Chrysler Ultimatums; GM's Wagoner to Resign).
A123 recently landed a deal to supply batteries for Chinese automaker SAIC Motor Corp.'s new hybrid vehicle models and has a deal to supply batteries to Norway's Think Global – although that company has seen its share of troubles (see Green Light post).
A123 also has relationships with other vehicle makers, including a project to develop heavy vehicle hybrid drives with BAE Systems.
A123 also wants to develop batteries to store power for the electricity grid, a task being undertaken by a host of battery makers (see A123 Batteries to Help Stabilize Electric Grid and Batteries for the Grid). The company installed its first "Hybrid Ancillary Power Units" for utility AES Corp. in November.
Monday's investment news continued GE Energy Financial Services and GE Capital's high-profile support of A123. The two contributed $15 million of Monday's investment, bringing GE's total investment in A123 to $70 million.
That brings GE's stake in the company to more than 10 percent. Along with the recent investment, GE will have Mark Little, senior vice president and director of GE Global Research, join A123's board of directors.
Other investors in the $69 million round include Conoco Phillips, Detroit Edison, Espirito Santo Ventures, North Bridge, CMEA, Alliance Bernstein, Qualcomm, Sequoia, Novus and MIT.
A123 has raised between $250 million and $300 million since its 2001 founding, according to various estimates. In June it filed for a $175 million initial public offering, but has yet to follow through on the plan (see A123Systems Files for $175M IPO).