A123 Systems said Tuesday that it had secured more than $100 million in refundable tax credits from Michigan – a down payment, of sorts, on the company's plans to build battery factories in the state.

The news comes one day after the Watertown, Mass.-based lithium-ion battery maker announced $69 million in funding to help it keep its factory building plans on course (see A123 Systems Raises $69M).

A123 also said Tuesday that it had chosen Livonia, Mich. as the site for one of the factories it intends to build in the state. That's the same city chosen for A123's planned "Michigan Center of Energy Excellence," a research institution to be partly funded by a $10 million grant from the state.

But despite the tax credits from the Michigan Economic Development Corp., the future of A123's new factory in Livonia could hinge on a lot more money – $1.8 billion, to be specific.

That's the amount of the loan A123 is seeking from the Department of Energy's $25 billion Advanced Technology Vehicle Manufacturing Program (ATVM) to help it build its plants.

Another factor may be the future viability of Chrysler. The automaker chose A123 last week as the supplier of battery cells and systems for the its next generation of hybrid electric vehicles (see A123 Inks Battery Deal with Chrysler).

While the automaker plans to roll out several hybrid and electric vehicles, some as early as next year, it is also facing the threat of bankruptcy (see Chrysler Eyes 2010 for Launch of One of Three Electric Cars and Obama Gives GM, Chrysler Ultimatums; GM's Wagoner to Resign).

A123 won't be supplying battery cells for General Motors' upcoming Chevy Volt plug-in hybrid, however. It lost that contract in January to a coalition led by LG Chem (see With General Motors Snub, Is A123 Systems on the Ropes?).

Still, A123 does have a contract to supply battery cells for Chinese automaker SAIC Motor Corp.'s new hybrid vehicle models, as well as a previous deal to supply batteries to Norwegian electric car maker Think Global, though the latter company has seen financial hard times of late (see Green Light post).

A123's other customers include Black and Decker, Procter and Gamble, Cessna, Delphi, Google.org and several potential utility customers looking for grid storage batteries (see A123 Batteries to Help Stabilize Electric Grid).

A123 is pushing its goal of building its factories in the United States as a way to create "an advanced battery ecosystem" for the country, it said in a Tuesday news release. Most of the world's advanced batteries are now made in Asia.

That's a similar line being taken by a consortium of chemical and battery manufacturers formed in December. The alliance is asking the federal government for up to $1 billion to build a commonly shared battery cell factory (see Will the U.S. Move From Arab Oil Dependence to Asian Battery Dependence?).

That alliance announced Monday that it picked Hardin County, Kentucky as the site for a proposed $600 million-plus lithium-ion battery factory.

Whether the alliance can land a piece of the $2 billion set aside in the federal stimulus package to support advanced battery manufacturing remains to be seen (see Obama Signs Stimulus Package).

A123 wasn't the only battery maker to get help from Michigan. A consortium of U.S. battery maker Johnson Controls and French battery maker Saft said Tuesday that it had secured $148.5 million in state tax credits and other incentives to build a lithium-ion battery plant in Holland, Mich.

As for A123, it already has a factory in Novi, Mich., which it got in 2006 when it acquired Ann Arbor, Mich.-based T/J Technologies, and also has a factory in Hopkinton, Mass.

The company has reported mounting losses as it has increased its workforce to meet demand for its batteries. Losses grew from $15.8 million in 2006 to $31 million in 2007 and $52 million in the first nine months of 2008.

But the 2001 Massachusetts Institute of Technology spinout also has raised between $250 million and $300 million, according to various estimates.

In June it filed for a $175 million initial public offering, but has remained quiet on the subject since then (see A123Systems Files for $175M IPO).

Tags: a123, avtm, chrysler, lithiumion