Summary:

Lithium ion battery maker A123 Systems officially opened up its stimulus money-funded battery factory in Michigan, which will eventually reach 600 megawatt hours of annual production capacity, and, according to the company, represents the largest lithium ion battery plant for electric vehicles in the U.S.

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Here’s a milestone for U.S. electric vehicle battery manufacturing and the green car stimulus funds: Lithium-ion battery maker A123 Systems officially opened up its stimulus-funded battery factory in Michigan this morning, which will eventually reach 600 megawatt hours of annual production capacity, and, according to the company, represents the largest lithium-ion battery plant for electric vehicles in the U.S.

It’s clearly a big deal to the Obama administration, which has been trying to prove (with varying degrees of success) that its clean power stimulus package has been creating jobs and stimulating the economy. President Obama reportedly congratulated the company in a phone call this morning.

The Massachusetts-based, lithium-ion battery maker received a federal grant of $249 million to build the 291,000-square-foot factory, which not only makes the prismatic cells but also assembles them into battery packs. A123 said it will also open a coating plant in Michigan and expects that plant to start production in the first half of 2011. The company has received $125 million in state incentives for the two factories.

However, now that the company has officially opened its plant, it remains to be seen how successful the firm will be at selling its batteries to plug-in vehicle makers, and power grid operators.

The company debuted on the NASDAQ last year to great fanfare, opening at $17 per share and closing at $20.29 per share on the first day of trading. However, its stock hasn’t fared well, falling to less than $10 per share in recent months. A123’s shares rose about 9 percent to $8.03 per share after announcing the factory opening.

The company counts BAE, Eaton, Fisker Automotive, Navistar and Shanghai Automotive Industry Corp. among its customers. A123 has pledged to invest $23 million in Fisker.

A123 has lost out on at least two deals, however. Back in March, Chrysler and Fiat said they will launch an electric Fiat 500 with A123’s batteries in the U.S. market in 2012. But A123 has since left the deal because it didn’t want to compete with another company that was offering what A123 considered an unprofitable bid. A123 also said that Chrysler’s car program “has significantly diminished in scale from our earlier expectation.”

A123 also lost a deal to supply batteries for Chevy Volt last year. General Motors decided to turn to larger, more experienced battery manufacturer LG Chem for the debut of its first plug-in hybrid electric car.

The battery company is looking for opportunities beyond the car market and has turned its attention to providing energy storage for the smart grid. Recently, A123 said it has shipped more than 20 megawatts of batteries for the grid market, and said back in August that it had been working with a customer to integrate A123’s story system with wind power production. AES Energy Storage has also ordered 44 megawatts of A123’s storage systems for several projects that will be deployed by the end of 2011.

The company posted a net loss of $34.2 million on $22.6 million in revenue for the second quarter of this year, compared with a net loss of $21.9 million on $19.7 million in revenue in the same year-ago period.

Image courtesy of A123 Systems.

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