Monday, June 28, 2010
A123 grows both business and grid batteries
A123 Systems Inc. isn’t just getting bigger as a company. Its products are getting bigger, too — much bigger.
Selling batteries for Blacker and Decker power tools put the Watertown-based lithium ion battery company on the map in 2005. But A123 has been putting less emphasis on consumer products as it’s shifted into electric car batteries and tractor-trailer-sized batteries for electric grid uses.
“Over the last few years, we were really focusing on the transportation market, just because you have to put in a lot of infrastructure in order to pursue that business,” said Andy Chu, the company’s vice president of marketing and communications. “We’re well down that path now, so we’re actually devoting more resources to the grid.”
It’s that side of the business that has A123 expanding in Massachusetts. The company already manufactures the trailer-sized battery systems — which are used to help stabilize electric grids — in Hopkinton.
Now, A123 plans to open a new location in the Bay State that will focus on grid battery R&D, Chu said, even as it plans to move its headquarters and R&D operation in Watertown to a larger facility in Waltham next March.
The expansion comes through a $5 million forgivable loan from the Massachusetts Clean Energy Center,
which requires the company to add 250 jobs in the state over four years, doubling its head count in the state. Most of the jobs will be in the company’s grid business.
A123 saw its grid revenue jump to $11 million in 2009, from $2.9 million the previous year. The grid business represented 14 percent of the company’s product revenue in 2009.
Chu said he eventually expects grid to contribute 30 percent of the company’s revenue, with 60 percent coming from transportation (batteries for electric and hybrid-electric vehicles) and 10 percent from consumer products.
Focusing on transportation and grid is a wise move for A123, said Michael Lew, a research analyst who follows the company at New York-based Needham & Co. Inc. “Those are the big market opportunities right now,” he said.
The trailer-sized batteries have applications for stabilizing both electric grids and the power flow from renewable energy systems, said Lew.
Meanwhile, a number of electric vehicle milestones are expected in the United States this year, including the release of a mass-produced electric car by Nissan and an initial public offering by electric car maker Tesla Motors.
“The transportation industry is at a crossroads,” Chu said. “Up until now, all of transportation was fueled by liquid hydrocarbons — gasoline and diesel. Now you can power your vehicle using any source of electrons.”
A123’s vehicle battery manufacturing facility in Livonia, Mich., is expected to go online this fall, Chu said. The company has deals to produce batteries for customers including Chrysler, Navistar, BMW, Fisker Automotive and Eaton Corp.
Some electric trucks made by Navistar using A123 batteries are already on the road, while Fisker’s Karma plug-in hybrid will likely be the first passenger vehicle on the market with A123 batteries, Chu said.