A123Systems Links With Fisker: $23M and Battery Deal

Fisker Automotive has traveled a winding road on the way to picking a battery supplier. At long last, here it is: Battery maker A123Systems (s AONE) will supply the battery systems for Fisker’s upcoming plug-in hybrid luxury vehicle, the Fisker Karma, under an agreement announced by the companies today. Beyond the battery deal, A123 also plans to invest $23 million in the Irvine, Calif.-based startup.

A123 and Fisker will work together on Fisker’s planned second-gen model — the lower priced Project Nina, slated for a 2012 launch — with the intention of having A123 also supply batteries for that vehicle (the Nina deal won’t be finalized until after Fisker can ensure that A123 meets certain performance and delivery requirements). In all, today’s announcement marks the start of an ambitious new alliance between two well-funded entrepreneurial ventures (who both have Uncle Sam in their corner) hoping to build a plug-in vehicle empire in the entrenched auto and energy storage industries.

Of the $23 million that A123 plans to invest in Fisker, $13 million is slated to be in cash and $10 million in common stock. According to this morning’s release, the deal marks only the beginning: The investment arrangement is meant in part to “allow Fisker Automotive and A123 to work closely together to optimize the performance of future vehicles.”

Today’s deal comes a bit behind schedule — CEO Henrik Fisker said last month that a battery supplier would be named by year’s end. At least two other companies were in the running at some point for the deal — worth some $150 million to $200 million — including Advanced Lithium Power and Ener1 (s HEV) subsidiary EnerDel.

Fisker took a partial stake in ALP early last year, and when EnerDel announced in May “a potential long-term battery supply agreement” for the Karma, Fisker spokesperson Russel Datz told us, “We will continue to work with ALP but we are always on the lookout for new technology, especially with the government poised to finance it.”

EnerDel batteries had to undergo “some final in-vehicle tests to make sure everything checks out,” an EnerDel spokesperson told us last year. But yesterday the Indiana-based battery maker filed a brief update with the SEC informing its shareholders that it had broken off talks with Fisker (as VentureBeat notes, it could have something to do with timing: EnerDel has committed to filling a $70 million order for Think electric vehicles and it may not have enough manufacturing capacity for both projects).

Analysts estimated that Ener1 would get some 15 percent of its 2010 revenue and 28 percent of its 2011 revenue from Fisker-related projects, Cleantech Group reports.

Ener1’s stock took a dive after the announcement, closing down 15.5 percent at $5.18 yesterday. It has risen only slightly (to $5.20) in morning trading. A123, which had the biggest initial public offering of 2009, has seen its stock on the rise this morning, climbing as high as $22.64 this morning, up more 11.4 percent from yesterday’s close at $20.05.

Both Fisker and A123 have received significant backing from the federal government. In addition to raising about $100 million in venture capital, Fisker has secured $529 million loan from the Department of Energy to help it build the Karma (scheduled to begin deliveries this fall) and start working on Project Nina.

A123Systems raked in more than $249 million under the Department of Energy’s battery grant program last summer to help it set up manufacturing in the U.S. — an award the government called “the single largest investment in advanced battery technology for hybrid and electric-drive vehicles ever made.” According to today’s release, A123 will manufacture the cells and battery systems for the Karma at a facility with hefty backing from the state government in Livonia, Mich., where production is scheduled to begin this year.