A123 Systems Inc.will supply lithium-ion cells and electronic parts to General Motors Co. for specific vehicles that will be announced later, the automaker said today in a statement.
Production will come out of Waltham, Mass.-based A123's Livonia plant. It also has a smaller plant in Romulus that supports the Livonia plant, a research center in Ann Arbor, and plants in China and South Korea.
Kevin Kelly, a GM spokesman, declined to provide financial terms of the contract or production figures in a phone interview.
"We expect the volumes to be probably starting in the several thousands and potentially going up to tens of thousands of units per year," Jason Forcier, vice president of A123's automotive group, said in a phone interview with Bloomberg. "It's a major platform, a major project win for us."
A123 will finish development and engineering of the packs for GM at the end of 2012, Forcier said. Vehicle production can start some time after that, he said.
A123 sells battery modules and packs. It manufactures products for 10 different customer lines and has been selected by customers for 10 more, Borgasano said.
The company measures capacity in megawatt hours and currently has capacity of 660 megawatt hours globally, said Dan Borgasano, public relations manager. A decision on expanding capacity to 760 megawatt hours or more could come in 2012, Borgasano said.
The Livonia plant has the majority of the company's capacity. The Associated Press reported that A123 Systems recently hired its 1,000th employee in Michigan and that it employs 775 people in Livonia.
Borgasano said A123 will add more workers as demand grows.
Neil DeKoker, president and CEO of Troy-based Original Equipment Supplier Association, said any local sourcing of battery packs equals more work down the local supply chain.
"The actual packaging, lead-ins and other components are all involved in the battery and that involves a number of suppliers," he said. "A lot of those will be local and that's a great thing."
The Livonia plant can support up to $450 million in annual revenue. The company reported revenue of $97.3 million last year and expects that to at least double this year, he said.
A123 supplies battery products to Fisker Automotive Inc., the Anaheim, Calif.-based maker of the Karma electric vehicle, and Smith Electric Vehicles US Corp., a Kansas City producer of electrically-powered trucks. Its customers also include Bayerische Motoren Werke AG, Daimler AG and Shanghai Automotive Industry Corp., Bloomberg reported.The contract with GM is an extension of Waltham, Mass.-based A123's existing agreements with the largest U.S. automaker, according to the statement.
GM began testing the packs last year and is now testing the packs in vehicles, Borgasano said. A124 has been working with GM for five years, he said.
New U.S. fuel-economy standards that take effect in 2017 and call on automakers to improve efficiency in cars by 5 percent a year and trucks by 3.5 percent most years through 2025 will drive demand for A123's batteries in the longer term, Forcier said.
The Southfield-based United States Advanced Battery Consortium LLC, an advanced research collaboration among Chrysler Group LLC, Ford Motor Company and General Motors, in March awarded A123 an $8 million advanced battery development contract. The competitively bid contract award was co-funded by the U.S. Department of Energy and included a 50 percent cost-share by A123.