A123 Shifts Away From EV Battery Packs In US

Battery maker A123 Systems has announced it will be moving away from producing lithium ion batteries for U.S. market electric cars.

Instead, said CEO Jason Forcier, the company’s automotive efforts will concentrate on more commonplace and potentially profitable batteries for starter batteries and so-called microhybrids.

“We won’t spend too much effort on the EV markets in Europe or the U.S., because we don’t see them as viable markets in the next 10 years,” Forcier said.

A123 will continue using its Hangzhou, China, factory to produce lithium ion batteries for electric cars and buses. But these battery packs, which account for 25-percent of A123’s total revenue, will only be sold in China.

For the U.S., Forcier said A123 is running both of its Detroit factories at maximum capacity to provide starter batteries for Mercedes-Benz.

The next core product will be small lithium-ion batteries for the U.S. market. By 2017 or 2018, A123 wants to begin building 12-volt batteries for microhybrids. With start/stop systems and storage only for regenerative braking, microhybrid batteries are smaller than the large packs needed on battery electric vehicles.

Forcier said he anticipates these batteries will sell for about $300 each when he brings them to market. That’s three-times more expensive than the glass mat batteries typically used now in microhybrids. But Forcier said that with a lighter weight and longer lifespan, A123’s lithium-ion starter batteries will be an appealing alternative for consumers.

After shifting away from selling larger batteries in the U.S., A123 said it’s already seeing an upward income swing. Last year, the company reported revenues of $200 million. And it’s expecting more than $300 million in 2015.

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Even with this focus on starter batteries for the U.S., Forcier isn’t ruling out the possibility of adding larger battery packs back into production.

A123’s parent company, Wanxiang Group, also owns the now defunct electric carmaker Fisker. Under its newly named Elux brand, the company wants to revive the all-electric Karma and will need large battery packs.

“I’d love to have them as a customer,” Forcier said. “We will support them in any way we can, but that doesn’t mean they have to use our battery.”

In the meantime, Forcier is confident in his business model and the outlook for A123.

“Our parent has been investing, and our financial concerns are gone,” he said.

Automotive News