A123 Systems made its initial public offering Thursday despite years of failing to turn a profit. Its shares soared more than 50 percent. The company already has huge backers in the Department of Energy and Chrysler, and the clamor for shares demonstrates how much pressure there is to find the next power source for cars, one that drastically cuts emissions.Watertown, Mass.-based A123 Systems, founded by Massachusetts Institute of Technology scientists, has a contract to build lithium-ion batteries for Chrysler, but has not produced a car battery that is market ready.In August, the U.S. Department of Energy announced $2.4 billion in federal grants to develop next-generation electric vehicles and batteries. A123 Systems was the second biggest recipient with $249 million.
The company lost more than $40 million in the first half of this year, but that has not diminished the push to create new batteries that would cut down on greenhouse causing gasses.The lithium-ion battery would be the heart of any electric car. Yet there are significant technological barriers, one of them being cost. A single battery can go for $40,000.
The batteries, which power electronics and mobile phones, have also been the subject of mass recalls because of overheating.David Vieau, A123 Systems president and chief executive, said the company's batteries use a technology licensed out of MIT that provides more power, lasts longer and operates more safely than other designs.
And the batteries can be shaped and linked to fit into different types and models of vehicles. "Height and clearance, for example, on a Jeep, is quite a different problem then if you're in a two-seat sports car or if you have a minivan," Vieau said.
The nickel-metal hydride batteries used now in cars like the Toyota Prius must still be paired with a combustion engine. Hydride batteries can give you short bursts of power. A123 is looking to tap into a global lithium-ion battery market expected to skyrocket from $31.9 million this year to $21.8 billion by 2015 and $74.1 billion by 2020, according to business consulting firm A.T. Kearney.
The company lost more than $40 million in the first half of this year, but that has not diminished the push to create new batteries that would cut down on greenhouse causing gasses.The lithium-ion battery would be the heart of any electric car. Yet there are significant technological barriers, one of them being cost. A single battery can go for $40,000.
The batteries, which power electronics and mobile phones, have also been the subject of mass recalls because of overheating.David Vieau, A123 Systems president and chief executive, said the company's batteries use a technology licensed out of MIT that provides more power, lasts longer and operates more safely than other designs.
And the batteries can be shaped and linked to fit into different types and models of vehicles. "Height and clearance, for example, on a Jeep, is quite a different problem then if you're in a two-seat sports car or if you have a minivan," Vieau said.
The nickel-metal hydride batteries used now in cars like the Toyota Prius must still be paired with a combustion engine. Hydride batteries can give you short bursts of power. A123 is looking to tap into a global lithium-ion battery market expected to skyrocket from $31.9 million this year to $21.8 billion by 2015 and $74.1 billion by 2020, according to business consulting firm A.T. Kearney.
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