A123 Systems (Nasdaq:AONE), a developer and manufacturer of advanced Nanophosphate® lithium iron phosphate batteries and systems, today announced the planned expansion of its partnership with SAIC Motor Corporation Limited (SAIC Motor), the largest automaker in China. This announcement builds on the existing partnership between A123 and SAIC Motor that was established in 2009 with the formation of Advanced Traction Battery Systems (ATBS), a battery pack joint venture (JV) company. Under a new framework agreement, A123 and SAIC Motor are carrying out a feasibility study to define the business plan and required investment for a jointly developed battery manufacturing facility in China. The proposed manufacturing facility is expected to serve the local market, with an initial focus on transportation, enabling A123 to more quickly and cost-effectively meet increasing demand for advanced lithium ion battery technology.
"Since the formation of ATBS, A123 has proven to be a strong partner for SAIC, including as the supplier of lithium ion battery systems for three of our electric vehicles—the Roewe 750 hybrid electric sedan, the Roewe 550 plug-in hybrid electric sedan and the Roewe E50 battery electric vehicle," said Chen Zhixin, executive vice president of SAIC Motor Corp. "We believe there is significant opportunity for A123's technology across several different markets in China, so expanding our partnership should provide SAIC with an even broader opportunity to benefit from the increasing demand for advanced lithium iron phosphate battery solutions."
SAIC Motor is the leader in the Chinese auto market and holds the country's top market share when considering the output of its joint ventures with General Motors and Volkswagen among others. In 2011, SAIC Motor's total vehicle production exceeded 4 million vehicles for the first time.
In support of ATBS, SAIC and A123 are evaluating the feasibility of a manufacturing JV to build a coating and cell assembly facility in China that will produce A123's 20Ah prismatic cells, which is expected to create a cost advantage for A123's technology in the Chinese market. Additionally, this is expected to substantially increase the local content of systems produced by the A123/SAIC partnership, helping to qualify the output for a variety of incentives and other financial support under China's New Energy Initiative. SAIC Motor and A123 expect that the definitive agreements setting forth the terms and conditions regarding the proposed joint manufacturing facility and its operations will be negotiated and completed by the end of September 2012.
"Through our partnership with SAIC Motor, A123 has made significant progress in entering China's passenger and commercial vehicle segments," said Jason Forcier, vice president of the Automotive Solutions Group at A123 Systems. "In the automotive industry, it is advantageous to establish manufacturing operations in close proximity to the customer base, so we believe ramping up a manufacturing facility in China will help us bring our solutions to market more quickly and cost-effectively to capitalize on increasing demand."