Battery supplier A123 Systems expects to supply power packs for a second, lower-cost plug-in hybrid model being developed by Fisker Automotive as it takes a stake in the start-up carmaker, A123 Chief Executive David Vieau said on Thursday.
A123 announced on Thursday that it would supply lithium-ion battery packs for the Fisker Karma, a rechargeable luxury sports car scheduled to go on sale in September.
Although the deal is small in terms of production, it represents a breakthrough for A123 since it will put the company's advanced batteries in cars for the first time.
Shares of A123 were up 8 percent in Thursday trading.
Vieau told Reuters that A123 would also work with Fisker to develop batteries for its "Project Nina," a rechargeable sedan that Fisker expects to build beginning in 2012 at a former GM factory in Delaware.
The Fisker Karma, which is designed to travel 50 miles on a single charge and accelerate to 60 miles per hour from a standing start in 6 seconds, will sell for $87,900.
The Karma, which has a list of celebrities on its waiting list including former Vice President Al Gore, will be built in Finland by Valmet Automotive.
Fisker's second vehicle, the Nina, is expected to sell for $47,400 before a U.S. tax credit to consumers of $7,500.
"In the case of the Karma, we kind of came in late and said, 'OK, how do we fit our battery into your car?'" Vieau told Reuters. "In the case of Nina we can sit down together and say, 'how do we build the car and the battery together?'"
A123 will also invest $23 million in Fisker as part of a funding round still being negotiated by the three-year-old start-up, Vieau said.
Fisker was the recipient of a $528 million low-cost loan from the U.S. government to help fund expansion plans.
As a condition of receiving that government loan, Fisker has been raising additional equity from investors.
The Los Angeles-area start-up counts Silicon Valley-based Kleiner Perkins Caufield & Byers as an investor and plans to deliver its first Karma models in September.
"We wanted to help galvanize the (funding round)," Vieau said of Fisker. "We perhaps could take a board seat but we'll certainly participate in the round."
The announcement of the closely watched supply deal comes a day after EnerDel, an Indiana-based unit of Ener1, said it had broken off talks with Fisker to be its battery supplier for the Karma.
A123 also has announced battery-supply partnerships with Chinese automaker SAIC and German luxury car makers Daimler AG and BMW.
Boston area-based A123, which went public last year in a closely watched IPO, lost out on a contract to supply batteries to the Chevrolet Volt to Korean rival LG Chem.
Vieau said A123's contracts with automakers included annual price reductions as costs to adapt lithium-ion batteries for cars begin to fall with an increase in production.
He said by 2012 it would be possible to produce a plug-in hybrid battery pack with capacity of 15 kilowatt hours for about $7,500, roughly half of what the industry-wide cost had been in 2009.
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