For A123 Systems, the third time might be the charm.
The battery maker, which held a celebrated initial public offering last year, has landed a deal to supply lithium ion batteries to Fisker Automotive. A123 will supply batteries to the luxury plug-in hybrid, the Karma, coming later this year and the two will work together on a battery for the mid-priced Nina, due in 2012. If all goes well, Fisker will adopt the A123-Fisker pack for the Nina.
Fisker was working with Ener1, but Ener1 already had commitments to supply $70 million worth of batteries to Norway's Think, which is just moving into volume production after a series of delays and financing problems.
As part of the deal, A123 will become a strategic investor in Fisker, plunking $23 million into an ongoing funding round. It's an interesting move. A123 was one of the finalists for the contract to supply batteries to the General Motors Volt. It lost out to Compact Power, a joint venture that includes South Korean giant LG Chem as a partner. After that deal fell through, A123 landed a deal to supply Chrysler with batteries for its electric cars. But, oops, Fiat and Chrysler subsequently pushed back and scaled down the conglomerate's interest in electric cars.
A123 will pay $13 in cash and $1o million in stock. The company specializes in lithium phosphate batteries. Lithium phosphates do not provide the same sort of energy or power density of some other types of lithium ion batteries, but they are far safer with the risk of "thermal runaway reactions" far lower. It spun out of MIT in 2001. To date it has sold most of its batteries to power tool companies and defense contractors like BAE Systems. It has not turned a profit but revenue continues to grow.