The Monday announcement is a coup for the startup battery developer in Watertown, Mass., which recently lost a bid to sell battery cells to General Motors for powering the Chevy Volt (see With General Motors Snub, Is A123 Systems on the Ropes?). The Volt is GM's first plug-in hybrid electric car, which is used by GM to trumpet its technical achievement and serious intention to make cars with low-carbon emissions (see Chevy Volt Goes West).
Chrysler said it plans to put A123's battery technology in its first-generation plug-in hybrid and all-electric car, but it didn't say specifically which models. The carmaker announced last September an ambitious plan to launch an all-electric, sporty Dodge Circuit, plug-in hybrid Jeep Wrangler and a plug-in hybrid Town & Country minivan (see Chrysler Eyes 2010 for Launch of One of Three Electric Cars).
Chrysler hasn't said which of the three models will show up in showrooms first. The company created its electric car program in 2007 and was reported working with A123 on battery development, though the company declined to confirm it when it announced its electric-car lineup last fall.
Unlike the batteries A123 proposed for the Volt, these batteries will be prismatic, i.e., rectangular, rather than cylindrical. This cuts down volume. While that will help with the car design, the big challenge will be to see how A123's batteries perform in a car.
The company specializes in lithium phosphate batteries, meaning the battery has a cathode that includes phosphate. These batteries are safer than lithium cobalt batteries, the standard in notebooks that occasionally have "thermal runaway reactions." The energy density, however, is lower. This means that a car manufacturer has to sell a car that goes fewer miles on a single charge or put in more battery cells. Besides adding cost, additional cells add weight.
Many other car manufacturers, and some new battery startups like Imara in Menlo Park, Calif., are opting for lithium manganese. Lithium manganese is safer than lithium cobalt but denser than phosphates. LG Chem of South Korea will sell its manganese battery cells to GM for building the battery packs for the Volt. Nissan will use a lithium manganese battery it's designed with NEC for its electric car coming next year.
Last summer, A123 filed papers with the U.S. Securities and Exchange Commission to raise $175 million through an initial public offering. At the time, the company had bagged not only big investments but also development and sales deals with well-known companies, including Black & Decker, AES Energy Storage (part of power company AES Corp.), and General Electric. A123 also had signed a contract to sell batteries to Think Global, the Norwegian electric-carmaker.
The success of Chrysler's electric-car program will not just depend on securing good battery technologies. The carmaker is in deep financial trouble and is depending on the federal government for aid (see Obama Gives GM, Chrysler Ultimatums; GM's Wagoner to Resign).