Boston-Power Loses Out on DOE Grant, Aims for DOD Fund

When President Obama announced today the recipients of the $2.4 billion grants for making electric car components and demonstrating vehicle charging technologies, Boston-Power was conspicuously absent from the list of winners.

The Westborough, Mass., startup held an event featuring Massachusetts Gov. Deval Patrick when it announced the plan in June to apply for a $100 million grant to help build a 455,000-square-foot lithium-ion battery factory nearly its headquarters. The U.S. Department of Energy administers the program.

"We are tremendously disappointed," said Christina Lampe-Onnerud, CEO of Boston-Power. "If we don't get federal funding, we will not be able to bring greentech jobs to the United States."

The company is one of dozens who sought DOE funding. One of the biggest winners is General Motors, which is getting three grants totaling $241.4 million. Johnson Controls, meanwhile, won $299.2 million for its battery factory plan.

The company, founded in 2005, develops lithium-ion batteries for consumer electronics and cars. Boston-Power's first product is a battery pack for laptop computers and won a contract with Hewlett Packard.

The battery developer has been producing its products in Taiwan through a contract with GP Batteries. Boston-Power also started shipping car batteries to customers this year, though the names won't be disclosed until product launches.

The company hasn't given up hopes of building a factory in Massachusetts. It has applied for a $100 million grant from the U.S. Department of Defense, which is likely to announce the recipients in October, Lampe-Onnerud said.

The DOD grant is part of a larger program that is commonly called "Defense Production Act Title III." The battery grant is meant to create a good-size, domestic source of lithium-ion batteries.

Because the funding is coming from the DOD, grant recipients could end up selling batteries not just in the commercial sector but also to the military and other government agencies.

Boston-Power has won a commitment from Massachusetts for up to $9 million to build the factory, but the money is contingent on the company getting federal funding, Lampe-Onnerud said.

The DOD funding could make up as much as half of the costs of setting up the factory, she said. Boston-Power would use it operating capital to make up the difference.

If the company doesn't line up the DOD funding, then it would continue to center its manufacturing in Asia, she added. The company is doubling its production capacity every six months, Lampe-Onnerud said.