Fisker taps A123 Systems for electric car batteries

Fisker taps A123 Systems for electric car batteries

Fisker Automotive has contracted with Boston-based A123 Systems to supply battery packs for the forthcoming Fisker Karma plug-in electric car.

A123 Systems on Thursday said that it will supply lithium ion-based systems to Fisker for use in the Karma luxury sedan, which is due in late 2010. The intent is to also supply batteries for Project Nina, a lower-end model from Fisker due in 2012.

As part of the deal, A123 Systems is investing up to $23 million in Fisker, which would be up to $13 million in cash and the rest in stock. The battery cells and systems are expected to be manufactured at A123 Systems' Michigan facility, which is supposed to open this year.

The $88,000 Fisker Karma is a high-end electric vehicle designed to go about 50 miles on its battery and then, like the Chevy Volt, use a gasoline engine to run a generator to charge batteries for longer rides. It's meant to be sporty, with over 400 horsepower, quick acceleration, and a top speed of 125 miles per hour.

The start-up company gained national prominence late last year when it secured a $528 million loan from the U.S. Department of Energy to promote domestic vehicle manufacturing. In a ceremony in October last year attended by Vice President Joe Biden, Fisker said it would purchase an idled General Motors plant in Delaware to build the project Nina car, which is expected to cost almost $40,000 after tax credits and incentives. The Karma will be manufactured in Finland.

A123 Systems, too, has benefited from state and federal incentives to establish production of electric vehicle technologies in the U.S., having received a $249 million loan from the DOE's auto battery program.

Fisker chose A123 Systems because it was able to meet its performance standards and scale up its production, CEO Henrik Fisker said in a statement.

The company had a provisional agreement with Indiana-based EnerDel to supply batteries for the Karma but concluded that EnerDel was not able to rapidly scale to the needed volume, according to reports.

A123 Systems' batteries are already used in power tools, but it is seeking to expand into the larger growth businesses of automotive and grid storage. The company, which had a successful public offering last year, had a battery supply relationship with Chrysler that has been derailed by Chrysler's corporate restructuring.