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A123 Systems (AONE) has finally secured its long-awaited production contract with auto maker General Motors (NYSE:GM).

Not much by the way of detail has thus far been announced. However, this is clearly a breakthrough for AONE. The company has a number of smaller contracts for its battery packs - notably for Fisker Karma and its initial contracts with GM itself. However, shares in AONE have suffered as the industry has been waiting for the company to deliver a significant production contract with a major automaker - with a persistent rumour that such a deal was in the works with GM.

That wait had become something close to tortuous as GM continued to test AONE's battery chemistry at its lab in Warren, Michigan. Year-to-date AONE's shares were down 67% at the most recent close prior to the deal's announcement.

GM has of course already said that it plans to produce 60,000 Volts next year. Micky Bly, the GM executive in charge of the company's electric vehicle program, also stated that "GM is committed to offering a full line of electric vehicles - each of which calls for different battery specifications."

Exactly what part AONE will play in that program has not been announced. However, Reuters quotes a spokesman for the company as having stated that AONE expects to build thousands or up to tens of thousands of battery packs a year for GM.

Interestingly, this may turn fresh attention on Tesla's rumoured $1bn deal currently being negotiated with Toyota. We discussed that potential deal earlier in the week here.

Certainly, AONE's deal with GM has put the EV/PHEV market back in the spotlight.

Disclosure: I am long TSLA.

Source: A 123 Systems Secures Elusive GM Deal