A123Systems: Dissed by GM, Scores Battery Deal With Chrysler

With less than a month left to finalize a tie-up with Fiat SpA as a condition of additional aid from the U.S. government, Chrysler is plowing ahead with plans for a lineup of five extended-range electric and all-electric vehicles. Today the automaker announced that Massachusetts-based startup A123Systems — the runner-up to supply GM’s Chevy Volt battery — will provide lithium-ion battery packs for electric versions of Chrysler’s Jeep Wrangler, Jeep Patriot, Town & Country minivan, as well as the Dodge Circuit EV and Chrysler 200C EV (pictured). Last year, Chrysler set a target of putting one model into production for North America in 2010 and three more by 2013.chrysler_200cev

Today’s announcement highlights differences in the strategies at Chrysler and General Motors as the two automakers endeavor to show progress on cleaner cars. A123 plans to build a plant in Michigan to make modules and battery packs for Chrysler’s vehicles using prismatic (as opposed to cylindrical) lithium-ion cells — a technology with which GM decided the startup had yet to gain much experience, as we explained in our post about why A123 lost the Volt battery deal.

Whereas GM plans to source lithium-ion cells from South Korea-based LG Chem, and then assemble packs with proprietary software and electronics in Michigan, Chrysler is handing off a larger chunk of development to A123. Back when GM announced its deal with LG Chem at the beginning of this year, Chevy Volt frontman Bob Lutz (who has since stepped down) took a jab at U.S. lawmakers for failing to provide support for energy storage R&D on par with the government backing enjoyed by battery developers in Japan and South Korea. Since then the landscape of aid has changed, with the stimulus package providing $2.4 billion in competitive grants for advanced vehicle battery technology development.

Earlier this year, A123 said it had requested $1.84 billion in direct loans from the U.S. Department of Energy to build a Michigan facility as part of its goal of producing (at several factories throughout the U.S.) enough lithium-ion batteries for 500,000 plug-ins or 5 million hybrid vehicles by 2013. Whether that loan comes through for A123 — one of more than 70 applicants seeking funds under the $25 billion DOE program — and whether Chrysler has the wherewithal to follow through on its ENVI plans remains to be seen.

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