Valence Technology (NSDQ: VLNC) is expanding its battery work into boats and gridstorage

The Austin, Texas-based lithium iron magnesium phosphate battery maker announced Tuesday a partnership with German industrial giant Siemens to supply batteries for hybrid boats. It's an extension of the work Valence has done with Siemens building hybrid drive train systems for double-decker buses in London made by Wrightbus.

Both involve Siemens' ELFA Hybrid drive system, which is already in use by some boat manufacturers as well as in cranes, the companies said Tuesday.

Valence also announced it would be working with Chicago-based stationary electric power product and service company S&C Electric Co. on developing new electricity storage products for the electricity grid. 

Partnerships like these are likely to be critical for smaller battery makers like Valence and its brethren – PowerGenix, ZPower, International Battery, Altair Nano, and Imara are a few – as they seek to compete in the electric vehicle market.

"Siemens is a world class brand and this agreement is a testament to Valence's capabilities," said Valence CEO and President Robert L. Kanode said in a prepared statement.

In contrast, General Motors earlier this year chose a consortium led by Korea's LG Chem over startup A123 Systems to supply lithium-ion batteries for GM's promised plug-in hybrid Chevy Volt. While differences in battery design were among the reasons GM cited, so was the risk of working with a startup versus an established company (see With General Motors Snub, is A123 on the Ropes?).

A123 did land a deal to supply Chrysler with battery cells and co-develop battery packs for the automaker's promised line of electric and hybrid vehicles. Of course, with GM and Chrysler now both in bankruptcy, it's unclear how those partnerships will fare (see A123 Inks Battery Deal With Chrysler).

Electric vehicle startups are also eager for partnerships with larger counterparts, as electric carmaker Tesla Motors' deal with Daimler last month points out. The two will work together on battery and power train technology (see Daimler Takes 10% Stake in Tesla, Helps With Model S Launch).

While many battery makers are gunning for the hybrid or electric car market, Valence has concentrated on the electric bus and commercial vehicle markets as a way to get into the transportation business, though it plans to get into the car market later (see Valence: Electric Buses and Trucks First, Cars Later).

Founded in 1989, Valence has spent most of its time making batteries for computers – a shift also being done by lithium-ion battery maker Boston Power, which started shipping Asian-made batteries for automotive customers this quarter after years of lining up computer makers as customers for laptop batteries (see Boston Power Angles for $100M Federal Grant).

Like many of its brethren, Valence is also seeking federal stimulus dollars to expand its U.S. battery production (see Valence Seeks DOE Stimulus Grant For Battery Factory).

Those seeking funds range from startups to the troubled automaker Chrysler, and are pledging to use the support to boost the United States' share of advanced battery manufacturing compared to Asia, which is where the majority of those batteries are built today (see A123 Lands $100M in Tax Credits and Will The U.S. Move From Arab Oil Dependence to Asian Battery Dependence?).

As for Valence's move into grid storage, it's part of a growing focus by lithium-ion battery makers on storing power for utilities, which see the growth of automotive battery manufacturing as potentially driving down costs. That will be important, since lithium-ion batteries are still several times more expensive than the most economical forms of grid storage (see op 10 Smart Grid). 

Among the battery makers focusing on grid storage include Deeya Energy and ZBB Energy Corp. (see ZBB Seeks DOE Dollars to Expand Flow Battery Production and Deeya Energy Raises $30M: Flow Batteries For India Cell Towers). General Electric is also seeking to develop grid storage batteries (see GE Aims For Energy Storage For Trains, Grid). 

A proposal to provide a 20 percent tax credit  for grid storage projects could give a boost to the nascent field (see Energy Bill Could Boost Storage Technologies).