Imara, one of the leading battery startups in the U.S., says it has begun to commercially produce lithium-ion batteries and may have a customer or two to announce in a few months.

Production is limited and the output will largely go to manufacturers of lawn mowers and hand tools that want to test Imara's battery. Still, it's commercial production. The company has coaters and other equipment in its 50,000 square foot facility in Menlo Park that can pop out thousands of batteries a day, according to Neil Maguire, vice president of business development.

"We've got capacity to do four million cells a year," he said. "We have forecast that we have enough capacity to satisfy demand for the next 1.5 years, but some customers have the ability to exceed our capacity."

A few manufacturers have already been experimenting with Imara batteries made on the company's R&D lines and they could soon go into field trials. If all goes well, these companies could announce that they will adopt Imara's batteries for actual products soon. (Want to see what the inside of a battery factory looks like? Check out this video.)

Imara's batteries provide 25 percent to 30 percent better performance over existing lithium-ion cells coming from Japanese manufacturers, he said.

Asia currently dominates the battery market but a few U.S. startups hope to change that. Boston-Power has begun to insert its fancy lithium-ion batteries in some HP laptops. A123 Systems, meanwhile, is working with Chrysler. Still, it's an uphill battle. Although A123 received money under battery grants issued by the Department of Energy, many of the U.S. startups didn't. In fact, two South Korean companies (with U.S. partners) received over $300 million.

The company's secret sauce revolves around a cathode that can effectively allow a battery to store more lithium ions than standard lithium-ion batteries. More ions, more stored power. The idea emerged from experiments conducted at SRI in 2000 funded by a program to develop electric cars sponsored by the Department of Energy.

Imara's current target market is power tools and handheld equipment. The qualification cycle is shorter and the 18650 cells Imara makes are suited for this market. (18650 cells are AA batteries.) Imara, though, is also designing a large lithium-ion cell for hybrid cars. The cathode in the larger batteries will be similar to the ones in the smaller batteries. If large companies adopt Imara's batteries, the next step will be a 200,000 square foot manufacturing facility.