Lithium-ion battery maker A123 Systems is officially unplugging from the grid. The company, which was acquired by Wanxiang Group last year, is selling its grid-storage business to Japan-based NEC Corp. The company's Massachusetts and Missouri facilities are going along with it.

A123, whose production and engineering operations are now in Hangzhou, China, is instead making a big bet on micro-hybrids and will focus its efforts on making and marketing 12-volt batteries for three unnamed automakers. The company is also expanding its production and selling of cell products for industrial and commercial uses and wants to make batteries for hybrid, plug-in hybrid and pure EVs from whatever automakers will have it.

A123 went bankrupt in 2012 and was acquired last year by Wanxiang Group, which agreed to pay $257 million for A123's automotive battery business and related assets in a bankruptcy auction. A123's customers had included General Motors, BMW and the pre-bankruptcy Fisker Automotive. The latter company, whose battery recall was particularly costly for A123, is also an area of focus for Wanxiang, which won a bankruptcy auction for Fisker last month for $149.2 million. Wanxiang officially just took ownership of the old GM plant in Newport, DE, with visions of restarting production for the extended-range plug-in vehicle. You can check out A123's press release about its grid-division divestment below.
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A123 Systems Divests of its A123 Energy Solutions Business Unit

Transaction with NEC Represents Increasing A123 Focus on Transportation Applications

March 24, 2014 08:15 AM Eastern Daylight Time

LIVONIA, Mich-- A123 Systems LLC, a developer and manufacturer of advanced Nanophosphate® lithium iron phosphate batteries and systems, today announced an agreement to divest of its grid storage business and other assets related to energy storage for telecom and IT data storage applications. A123 is increasingly focused on the transportation market with a particular emphasis on micro-hybrids. This rapidly growing application segment is attractive because automotive OEMs around the world are steadily turning towards simpler forms of electrification in their mainstream high-volume vehicle lines to address the ever-increasing regulatory requirements of lower emissions and better fuel economy around the world. A123's battery technology is very well suited to the requirements of this market and the company is currently producing 12-volt micro-hybrid batteries for numerous programs across three vehicle manufacturers.

A123 also continues to actively serve and grow its customer base in the fields of hybrid, plug-in hybrid and fully electric vehicles globally. With the recent integration of battery production and engineering facilities in Hangzhou, China, which were previously under the management of Wanxiang EV, A123 has expanded its battery technology portfolio to include additional products well suited to the requirements of electric cars and buses.

"Our move to sharpen focus on current and future customers in the global transportation market demonstrates strategic clarity in our business. Our customers and partners around the world will benefit from the organization focusing its R&D strength and system engineering capabilities on clear priorities" said Jason Forcier, CEO of A123 Systems. "We look forward to continued growth as a provider of leading-edge energy storage technology to the world's vehicle manufacturers as they continue to develop the most economical forms of electrification."

The divested businesses are being sold to NEC Corporation of Japan which intends to incorporate them into its Smart Energy Business Unit. The former A123 Energy Solutions facilities in Westborough, Massachusetts and Chesterfield, Missouri are included in the deal. As part of the transaction, A123 will retain all of its cell manufacturing locations globally including those in Michigan and China and become a key cell supplier to NEC.

In addition to the transportation business, A123 intends to expand its marketing and distribution of cell products for commercial and industrial applications. The company has formed a new commercial products business unit and will retain its relationships with existing distributors, integrators and value-added resellers of lithium-ion battery cells. A123 already enjoys considerable brand strength in this market and additional investments are planned.

The third pillar of A123's future is its Venture Technologies unit. Last year, A123 Venture Technologies was introduced to offer a new model for cooperative development and commercialization of innovative battery technologies by drawing on the considerable R&D resources and experience of the company. A123 Venture Technologies has already become successful in establishing strategic relationships with battery start-ups who are in early phase development. The unit has also developed an impressive performance record in motorsports and other high performance applications.

About A123 Systems

A123 Systems LLC, a wholly owned subsidiary of Wanxiang Group, is a leading developer and manufacturer of advanced lithium-ion batteries and energy storage systems for transportation and other commercial and industrial applications. The company's proprietary Nanophosphate® lithium iron phosphate technology is built on novel nanoscale materials initially developed at the Massachusetts Institute of Technology and is designed to deliver high power and energy density, increased safety and extended life. A123 leverages breakthrough technology and expert system integration capabilities to enable next-generation products for its customers globally. For more information, please visit www.a123systems.com.


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