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PHOTO CAPTION: VIA electric truck, one of several models offered by the company.

A123 to Supply Lithium Ion Batteries to VIA Motors

A123 has 22 transportation programs under signed contracts with automakers including GM and SAIC Motor Corp.

Published: 08-Jan-2012

NEW YORK -- A123 Systems Inc. AONE +0.96% said it will supply lithium-ion battery packs to electric-vehicle maker Via Motors, aiming to meet rising demand from commercial and government users that can benefit from electrified fleets.

A123's contract agreements have historically bolstered the company's stock and on Thursday that trend continued, with shares rising 9.4% to $2.10 in recent trading.

Via, a privately held electric truck maker, has said it hopes to ramp up production to 20,000 units annually in the next few years. Though A123 concedes that target is probably a bit aggressive, it sees Via production of "several thousand" vehicles by the 2013-2014 time frame.

Jason Forcier, vice president of A123's automotive solutions group, told Dow Jones Newswires there is greater growth potential in the near term on the commercial side, saying those vehicles tend to have poorer fuel efficiency and make a lot of stops.

He said adding battery packs to commercial vehicles can help lower costs as electricity is cheaper than fuel and, as the vehicles are used for roughly 12-hour periods, there is an opportunity for charging between routes.

The company has 22 transportation programs under signed contracts, including commercial deals with General Motors Co. GM -0.18% , BMW AG and Chinese auto maker SAIC Motor Corp. .

While A123's revenue in the past has been more heavily weighted to the commercial side, the company has inked some key deals to provide batteries for BMW's hybrid models, Fisker's high-end luxury Karma and GM's Chevy Spark. Still, initial costs are high for passenger cars as the average consumer doesn't see financial benefits by purchasing an electric vehicle at current gas prices.

Forcier said while there has been some waning interest from consumers with low fuel prices, battery prices are falling, which can lower upfront costs. He said A123 expects over the long term, there will be continued interest in electric vehicles.

"The real growth and penetration [for consumer vehicles] is a couple years out, while on the commercial side, it's more near term," said Forcier.

A123 Systems, whose business is tied heavily to the electronic-car industry, hasn't turned a profit as soaring costs have offset increasing product shipments. While A123 participates in a segment of the auto industry that is new and growing, it has been unclear how much of that market A123's technology will capture.

The company, which went public in 2009, saw shares rise as high as $26.74, though the stock has been steadily declining since the beginning of 2010. Analyst say investors were concerned about the growth potential of the electric-car market, as well as A123's delayed deliveries to Fisker Automotives. While financial terms for the Via deal weren't disclosed, analysts say Thursday's announcement highlights A123's ability to secure other contracts.

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