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Summary:

A123Systems, the Watertown, Mass.-based battery maker that marked a break in the cleantech IPO drought last month with its initial public offering, shortly after raking in $249 million in federal grants, is now heading to Japan. The company announced a deal this morning with IHI Corp. […]

A123-automotive-cellA123Systems, the Watertown, Mass.-based battery maker that marked a break in the cleantech IPO drought last month with its initial public offering, shortly after raking in $249 million in federal grants, is now heading to Japan. The company announced a deal this morning with IHI Corp. for the Japan-based heavy equipment manufacturer to sell A123′s lithium-ion batteries and battery systems in Japan to automakers and for use in ships, as well as in its power supply systems, starting next year.

IHI counts among its customers hybrid vehicle heavyweights and ambitious players in the race to develop plug-in vehicles for the mass market, including Toyota, Honda, Nissan and Mitsubishi. But those automakers have already made their own investments in battery technology for plug-in and hybrid cars, forming joint ventures with consumer electronics battery giants like GS Yuasa and NEC.

So while the Japanese government has cultivated a hybrid boom in recent months with a set of incentives and policies that both lower the upfront cost of fuel-efficient vehicles and keep the fuel costs for gas-guzzlers high, A123′s deal with IHI doesn’t guarantee ready customers in Japan, at least in automotive applications.

Part of how IHI hopes to gain an edge with the Massachusetts company’s batteries is by cutting costs. Reuters reports this morning that IHI said the batteries from A123 — which does most of its manufacturing in Korea and Changzhou, China — beat out rivals’ offerings because they don’t rely on a group of metals known as rare earth elements, or REE, as a raw material. That’s more of a statement about lithium-ion batteries in general, compared with the nickel-metal hydride batteries (which contain REE) used in hybrids like the Toyota Prius and Honda Insight, than about A123 in particular.

As Lux Research analyst Jacob Grose explained to us recently, “Even though…hybrids use only a fraction of the worldwide output of these metals, if there is a shortage and prices rise, it will definitely lead to cost increases in today’s hybrids.”

Still, if A123 is going to get a piece of the Japanese market at an early stage of the government-backed boom, it won’t hurt to have a giant like IHI working to help build that business.

  1. would that be a venture of 123 USA Inc? Or would it be an afiliate like 123 Ja Inc? I wonder because of course the tax coffers of this nation are the issue here. Having just got USA taxpayer money, will they now loose track of the incoming by moving it offshore like so many others in this post national era?

    Also, please explain, author, your gaping silence of the Lithium as a resource politic so much writyten of this last 3 month period? Is it IYHO just so much word count for the journalists? Or is it something worth addressing….?

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    1. Josie Garthwaite Wednesday, October 28, 2009

      A123′s deal with IHI doesn’t change its plans to “aggressively expand” its manufacturing capacity in the U.S. with the DOE funds.

      As for the second part of your comment, I think you’re asking about the potential for a lithium squeeze, and what that will mean for lithium-ion batteries — a subject I wrote about here: http://earth2tech.com/2009/01/23/what-the-looming-lithium-squeeze-means-for-electric-car-batteries/

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  2. I think A123 Systems is wise to do business in Japan with new battery technology. In the next decade, Japan is going to be one of the leaders in hybrid and hydrogen car technology, among other things. I’m excited to see what’s going to happen.

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