GE boosts battery and hybrid bets

GE has just increased its investment in battery-maker A123Systems, which is not only a leader in electric car technologies, but is working to develop large scale energy storage solutions that will be needed by the nation’s budding smart grid.

Get out of my dreams; Get into my car: A123’s batteries will help power Chrysler’s new line of electric cars, such as this concept car. GE’s investment in A123 is just one part of our hybrid transportation work, which includes this hybrid diesel-electric locomotive that will capture the energy dissipated during braking and store it in a series of sophisticated batteries. GE’s work on hybrids includes development of the first hybrid mine haul truck, a hybrid tugboat being developed with C-MAR Group, and research into a zero emissions hybrid fuel cell bus.

With the new investment, A123′s planned production facilities will be capable of supplying lithium ion battery systems for five million hybrid electric vehicles — or a half-million plug-in electric vehicles — per year by 2013. A123′s work already involves several manufacturers and 19 vehicle models — and the company was recently awarded battery development and supply contracts for Chrysler’s first generation electric vehicle line-up and the Chinese automaker SAIC Motor Corp.’s new hybrid vehicle models, both scheduled to debut in 2010.

As The Wall Street Journal says about A123′s work on smart grid technology: “Finding a cost-effective, reliable way to store the intermittent electricity produced by wind farms and solar panels would make it easier to use a lot more clean energy. It could also mean cheaper electricity — if power companies can draw on stored power at times of peak demand, rather than firing up their most expensive power plants, that could lead to lower electricity rates.”

The investment also translates into jobs with plans to open new Michigan factories and expand existing ones.

Having made seven investments totaling $70 million in A123, GE is now the company’s largest cash investor with an ownership stake of more than ten percent. In the latest round of financing, GE Energy Financial Services and GE Capital’s Equity unit provided $15 million of the $69 million that A123 raised.

As Mark Little, GE’s Senior Vice President and Director GE Global Research, who will join A123′s board of directors, said: “The advanced battery market is at a tipping point, and our support of A123 marks the application of GE’s resources at the right time to capture leadership in an essential new field.”

* Read The Wall Street Journal’s story
* Read The Journal’s blog post on what the deal means
* Read GE’s announcement about the new investment
* Read GE’s backgrounder on our “plug-in” to hybrid and battery technologies
* Learn more about GE’s previous investment in A123