Shares of battery maker A123 Systems are sharply higher on todays news about GM's new all-electric car, the Chevy Spark EV (see GM's Chevy Spark EV will be their first 100% Battery EV since the EV1). Buried in the announcement for that car is this statement: A123 Systems will supply the advanced nanophosphate lithium-ion battery packs that will power the Spark EV. This marks a change in battery suppliers for GM, after they tapped LG Chem to supply the Chevy Volt battery, and should be seen as a major win and validation for A123.
A123 Systems is a start-up lithium-ion battery design company, whose product line of nanophosphate lithium batteries are based on battery research at MIT a decade ago. Their batteries are highly regarded if only because of the performance of electric race vehicles like the KillaCycle and last years Lightning Motors electric motorcycles.
The company had been a finalist in GM's evaluation of battery suppliers for the Chevy Volt, but were passed over in favor of LG Chem. Reports from the time suggest that GM was nervous because A123, as a startup, didn't have experience with large scale production, while LG Chem, as a veteran battery company, did. In the years since A123 has begun supplying batteries to electric truck maker Smith Electric Vehicles, as well as Fisker Automotive and Navistar (another electric truck maker).
Some reports are claiming A123 swung a better deal on the Spark EV than LG Chem has with the Volt. For the Volt, GM is assembling the battery packs and LG Chem is only only supplying the cells. GM has said this is so they can develop in-house manufacturing competence in battery system manufacturing, to treat this as a core competence similar to having competence in engine manufacturing. Some sources are reporting that A123 will be supplying fully integrated battery packs, including cells, battery management, wiring and enclosures. This should be a higher margin product than just selling the cells.
In August, there was mixed news between GM, A123 Systems and LG Chem. In late August LG Chem and GM renewed their supply agreement for the Volt batteries, which disappointed who had hoped A123 might get the deal. Especially as earlier in August GM and A123 had inked a deal where A123 would supply battery systems to GM for "future vehicles being sold in select global markets". We can now understand that referred to the Spark EV announced today.
A123's stock price has been trending downward the last few days, closing yesterday at $3.32 per share. It opened today sharply higher at $3.74 and just kept climbing, closing at $4.19 for a gain of $.87 for the day.
See:
Why A123 didn't get the Volt contract
GM picks A123 Systems for battery pack contract
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