A123Systems to Spend $2.3B Building Factories in Michigan

Battery developer A123Systems plans to build a manufacturing plant in Michigan with $1.84 billion in direct loans from the U.S. Department of Energy. The Massachusetts-based startup said today it expects to spend a total of $2.3 billion on several factories in the state, supplying Detroit automakers with enough lithium-ion batteries for 500,000 plug-ins or 5 million hybrid vehicles by 2013. With that timeline, A123 could be one of the first companies to take advantage of the $335 million in tax credits for battery manufacturers approved by Michigan lawmakers late last month.

All of this hinges, however, on approval of loans from the DOE’s $25 billion Advanced Technology Vehicles Manufacturing Loan Program — the same program under which rival battery maker Ener1 has asked for $480 million to accelerate production capacity and electric sports car startup Tesla Motors has applied for about $400 million to build its Model S sedan facility in San Jose, Calif.

Other battery makers, including 3M, EnerSys, ActaCell, Envia Systems, MicroSun Technologies and Mobius Power have taken a different tack, with plans to ask the Obama administration to back an EV battery plant for a coalition of more than a dozen U.S. tech companies with $1-2 billion in federal loans and guarantees. If aid comes through for both the coalition and A123Systems (not at all certain for either), U.S. battery makers might finally stand a chance in the race to power the next generation of vehicles.