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Summary:

A123Systems looks like it’s making its way through the haze of the downturn, despite that lost deal to supply batteries to GM’s ( s GM) Volt and a stalled IPO. The good news started last week when the lithium-ion battery maker announced a deal to supply […]

a123systemsbatteryA123Systems looks like it’s making its way through the haze of the downturn, despite that lost deal to supply batteries to GM’s ( s GM) Volt and a stalled IPO. The good news started last week when the lithium-ion battery maker announced a deal to supply Chrysler with batteries for electric vehicles, and this morning the company says it has raised $69 million from GE and a list of investors including Conoco Phillips, Detroit Edison, Espirito Santo Ventures, North Bridge, CMEA, Alliance Bernstein, Qualcomm, Sequoia, Novus and MIT.

GE has sure taken a fancy to the battery maker — this is the seventh investment from GE Energy Financial Services and GE Capital’s Equity unit, and at $15 million it brings GE’s investment in A123Systems to $70 million. GE now owns more than 10 percent of A123Sytems and is the battery maker’s largest cash investor. GE made its sixth investment in A123Systems just back in October.

A123Systems says the funds will be used to build new factories in Michigan and expand its current businesses. A123Systems, indeed, has big plans to use not just private capital, but also state and federal funds to build enough factories to create batteries for 5 million hybrid electric vehicles, or a half-million plug-in electric vehicles per year by 2013. The company said back in January that it expects to spend a total of $2.3 billion on several factories in Michigan and other states, and was looking for $1.84 billion in direct loans from the U.S. Department of Energy. A lot of that depends on how fast the DOE’s $25 billion Advanced Technology Vehicles Manufacturing Loan Program starts handing out funds. Companies like Ener1 and Tesla Motors have also lined up for loans under that program.

In addition to constructing factories, A123Systems says the investment will help the company work on offering its batteries as utility-scale energy storage for the power grid. That shouldn’t come as a surprise, as everyone from wireless companies to various tech firms to utilities are in a feeding frenzy to push hard into the smart grid market. A123Systems has actually been working on supplying its batteries for the power grid for awhile, and last November began talking about an installation of its first Hybrid Ancillary Power Unit at a power plant owned by AES in Southern California.

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