US-based energy storage company A123 Systems built on its partnership with Japan-based industrial equipment manufacturer IHI Corporation on Monday by signing an agreement that will see A123 licensing its battery technology to IHI for use in its electric vehicle products. In return IHI is investing $25m in A123.
The two firms originally signed an agreement in October 2009 based on the marketing of A123’s battery systems in Japan but under the terms of the latest agreement, IHI will be the sole provider of A123’s battery technology, licensing IHI built systems to Japanese automotive companies.
A123’s initial public offering (IPO) was the largest of 2009, according to venture capital news site Dow Jones VentureSource, and raised $371m. A123 floated just four months after it secured a grant of $249m from US government agency the Department of Energy.
At the time of the grant, A123 claimed to have raised more than $350m in equity from private investors, which would include corporate venturing funds representing semiconductor and telecommunications corporation Qualcomm, energy conglomerate General Electric, telecommunications company Motorola and consumer health and wellness conglomerate Procter and Gamble.
Taizo Suga, general manager of IHI’s Corporate Development Division, said: "Since first partnering with A123 in 2009, we have seen increasing interest in A123’s advanced lithium ion battery technology for transportation and other applications. We believe that expanding our partnership enables IHI to address this growing market opportunity by commercialising innovative solutions powered by A123’s batteries."
Suga continued: "A123’s Nanophosphate lithium ion chemistry has proven to be among the highest-performing, most durable and longest lasting battery technologies we’ve seen, which we feel makes them optimal for vehicle electrification. We look forward to working closely with A123 as a technology partner, and we also believe our equity investment in A123 will demonstrate a meaningful commitment to our expanded strategic business relationship."
The agreement came two days before A123 announced its third quarter financial results, as increased production saw the firm record revenues of $64.3m, its highest quarterly figure yet. The revenues were offset by an overall quarterly loss of $63.7m, but A123 expects its quarterly gross margins to break even next year.