A123 Systems Announces Additional Capacity Expansion Plans Based on Customer Momentum

A123 Systems (Nasdaq:AONE), a developer and manufacturer of advanced Nanophosphate lithium ion batteries and battery systems, today announced details related to the further expansion of the company's United States manufacturing capacity.

In December of 2009, A123 closed on its $249 million grant award from the Department of Energy (DOE) and is using the available capital to help fund its capacity expansion plans. A123 ended the third quarter of 2009 with final assembly capacity of 169MW hours per year. A123 announced today that it has begun to make investments in its 300,000 square foot plant in Livonia, Mich. to expand the final cell assembly capacity by up to 200MW hours once fully operational, inclusive of the previously announced 80MW hour expansion.

These investments will expand the company's global final cell assembly capacity to over 360 MW hours, with the incremental 200MW hours of capacity expected to be ready for production during the second half of 2010. The expansion in capacity will provide A123 with the overall ability to produce over 320,000 hybrid vehicles with 1.1 kWh battery systems, or over 24,000 PHEVs with 15kWh battery systems per year. A123 will continue to evaluate additional investments in production capacity in response to anticipated customer demand.

During the fourth quarter of 2009, A123 announced that it signed a lease for a 300,000 square foot facility in Romulus, Mich. A123 announced today that the initial investments in this facility are to establish the company's North American coating operations, and current plans are for the facility to be ready for production during the first half of 2011.

David Vieau, President and Chief Executive Officer of A123 Systems, said, The combination of proceeds from our recent IPO and funding support from the DOE has provided A123 Systems with the capital necessary to execute against our expansion program. Our strategy is to deploy capital as we see customer demand developing, and we are encouraged by recent developments and the momentum within our overall portfolio of customer relationships across our key target markets. Examples of such activity include today's announcement of a newly established strategic relationship with Fisker Automotive, our recently signed joint venture with SAIC and expansion of our electric grid customer base just to name a few.

Vieau added, For close to four years, A123 Systems has demonstrated its ability to manufacture advanced lithium ion batteries in scale and at extremely high quality levels, and we are now expanding our capacity to ensure customers and prospects that we can scale with them to meet expected strong demand in the years ahead.

The new facilities in Livonia and Romulus will comprise stages of production from coating and cell assembly to final assembly of complete automotive battery systems. These facilities will provide a diverse set of skilled job opportunities for Michigan's workforce including construction, engineering, sales and marketing, administration and research and development, with initial hiring to begin this year. This expansion in Michigan is a critical part of A123's commitment to build world-class lithium ion battery manufacturing in the United States.