A123 Keeps Going, And Going Well
Not too long ago, A123 Systems looked poised to become one of the costliest VC-backed busts of the new millennium. The Watertown, Mass.-based company had raised over $200 million to make lithium-ion batteries for electric vehicles, but couldn't find takers. In fact, A123's only contract at this time last year was with Black & Decker, which used the startup's batteries in some of its cordless power tools. Overall, the company was operating at a loss. A123's most painful loss was General Motors, which had been looking for batteries for its upcoming Chevy Volt. Not only did GM pick a Detroit-based subsidiary of South Korea's LG Chem, but President Obama poured salt on the wound by publicly lamenting that America wasn't making batteries for the next generation of hybrids. As one Boston-area VC put it to me last December: "I'm not sure they have many bullets left, except for the one they'll need to use on themselves." Since then, A123 has experienced the ultimate V-shaped recovery. First came news in April that Chrysler had picked A123 to supply batteries for its first-ever line of electric vehicles (due in showrooms next year). That deal included a plan to open a manufacturing facility in Michigan, and was soon
