A123 to double lithium-ion battery capacity

A123 Systems LLC plans to double the manufacturing capacity at its three lithium-ion battery plants in a $200 million investment.

The company said today it will increase capacity to 1.5 gigawatt hours at the plants in Michigan, Hangzhou, China, and Changzhou, China, over the next three years. Previous capacity was 750 megawatts.

Battery cell production also will increase from 3.3 million cells out of its two plants in suburban Detroit to 4.3 million cells, said A123 CEO Jason Forcier.

Parent company, China-based Wanxiang Group Corp., is funding the expansion.

“We’re at capacity at all of our production facilities,” Forcier said. “The growth of our low-voltage business caused us to find ways to create more efficiencies as well as expand our operations.”

After emerging from Chapter 11 bankruptcy in 2013, A123 refocused its business on low-voltage lithium-ion batteries used by automakers for weight savings and to power other MPG-lowering technologies. This is a diversion from its original plan of manufacturing large lithium-ion battery packs to power electric vehicles, though it still does that work for the Chinese market.

In the low-voltage market, A123 supplies automakers such as Daimler AG with 12-volt starter batteries and 48-volt microhybrid batteries, which are used in various technologies.

Forcier said the funds will be used to purchase more efficient battery cell assembly equipment, while new lines will be created in China.

A123 employs 610 in Michigan, but it plans to hire an undisclosed amount tied to the investment, Forcier said. It employs 1,815 globally.

The battery maker is expected to generate $300 million in revenue in 2015, with plans of reaching $600 million in 2018, Forcier said. The company is also expected to be profitable for the first time in its history in 2015.

A profit is a far cry from A123’s earlier performance, which led to its bankruptcy filing.

In April 2012, a Fisker Karma plug-in hybrid fitted with an A123 battery failed during an April 2012 test by Consumer Reports. Replacing the defective batteries was expected to cost A123 $66.8 million, including a $15 million inventory charge. The announcement devastated A123’s stock price, which fell more than 85 percent during the year.

A123 filed for bankruptcy owing millions of dollars to hundreds of debtors, including the Detroit suburbans of Livonia, Novi and Romulus. At the time, A123 held $376 million in debt with about $459.8 million in assets.

"It’s been a tremendous turnaround," Forcier said. "We’re keeping in line with where the market is going, and we’re already working on another (expansion) plan after this one is complete."