A123 to Produce Batteries for Fisker

By ALEX P. KELLOGG And MARA LEMOS STEIN
A123 Systems Inc. said it will produce batteries for electric cars made by Fisker Automotive Inc., and will invest up to $23 million in the start-up auto maker as part of the agreement.
A123, based in Watertown, Mass., also said it will expand a battery-assembly plant in Livonia, Mich., with a goal of raising capacity enough to produce 320,000 hybrid-vehicle battery systems and more than 24,000 plug-in hybrid systems a year.
The company expects the plant to create more than 500 jobs.
The partnership between the two companies underscores the critical role the U.S. government has taken in trying to spur the development of electric vehicles.
A123 received $249 million in grant money from the U.S. Department of Energy's Advanced Technology Vehicles Manufacturing Incentive Program, or ATVM. Fisker received a $529 million federal loan from the program in the fall to build plug-in hybrid cars.
Fisker is using some of the money to retool a Delaware auto plant that had been owned by General Motors Co., which was bailed out by the federal government.
"The federal money has been a catalyst," said David Vieau, president and chief executive of A123 Systems.
Fisker is producing a luxury sports car called the Karma, due later this year at about $87,900. It also is working on what it calls a more "affordable" sedan that will cost about $48,000. The vehicles would run on battery power alone and owners could recharge them by plugging into a power source at home.
A123, which held an initial public offering last fall, said $13 million of its investment in Fisker will be in cash.
Last year, A123 formed joint ventures with SAIC Motor Corp., China's largest auto maker by volume, to develop battery systems for hybrid and pure electric vehicles.
The Livonia plant is expected to go online in the second half of this year. The company also said Thursday it would establish operations at a site it leased in Romulus, Mich., last month. That site is expected to start production in the first half of next year.
Write to Alex P. Kellogg at alex.kellogg@wsj.com and Mara Lemos Stein at mara.lemos-stein@dowjones.com