A123 Tapped for Chinese Auto Giant’s 2012 Electric Car

One of China’s largest automakers has tapped Massachusetts-based A123 Systems (s AONE) to supply lithium-ion batteries for an electric car slated to roll out in 2012. A123, a poster child of government efforts to jump-start a U.S. advanced battery industry, announced the deal on Tuesday, amidst reporting disappointing earnings for the three months ending September 30.

A123 reported a loss of $43.7 million in the third quarter of this year, substantially more than the $22.8 million loss posted in the same period a year earlier. In addition, the company’s operating expenses climbed to $41.1 million for the quarter, nearly double the $20.8 million reported for the year-earlier period.

A123 posted $26.2 million in revenue for the most recent quarter, compared to $23.5 million in the third quarter of 2009. For 2010 annual revenue, the company lowered its guidance by $20 million to $100 million — mostly because transportation customers have bumped their production ramp-ups to the second quarter of 2011, instead of the end of 2010, executives said in a call with shareholders yesterday. The company noted that the customers are not shifting their timelines due to changes in demand forecasts, but rather because it’s taking longer than expected to get their vehicles ready for production.

A123’s customers include BAE, Eaton, Navistar, and plug-in hybrid vehicle startup Fisker Automotive, a company backed by venture capitalists, the Department of Energy, and A123 itself that plans to launch its first car next year.

On Tuesday, A123 said that its joint venture with Shanghai Automotive Industry Corp., or SAIC, will supply battery packs for an electric passenger car that SAIC plans to launch in the 2012 model year. Under the agreement described on Tuesday, A123 says it will “use its cells to develop a customized battery pack,” which the joint venture will produce.

The deal fits into a roadmap unveiled nearly a year ago, when A123 and SAIC announced a new joint venture in China — the first such partnership between a non-Chinese battery maker and a major Chinese automaker, according to A123. Dubbed Shanghai Advanced Traction Battery Systems Co., or ATBS, the joint venture was established as the preferred supplier of energy storage systems for all hybrid and electric vehicles manufactured by SAIC. At the time, SAIC already had plans to roll out an all-electric model in 2012.

While A123 is just beginning to set up manufacturing stateside with support from the state and federal governments, the company historically has done most of its manufacturing in South Korea and Changzhou, China.

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