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A123 gets $249m in stimulus funding

Watertown-based battery maker plans to build Mich. factory

Watertown’s A123 Systems, which makes lithium-ion batteries, was awarded $249 million in federal stimulus funds yesterday. Watertown’s A123 Systems, which makes lithium-ion batteries, was awarded $249 million in federal stimulus funds yesterday. (Pat Greenhouse/ Globe Staff/ File 2005)
By Sean Sposito
Globe Correspondent / August 6, 2009

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Watertown lithium-ion battery maker A123Systems yesterday was awarded $249 million in federal stimulus funds, which the company said will go to build factories to manufacture high-tech lithium-ion batteries. A123 previously received $100 million in economic incentives from the Michigan Economic Development Corporation to build a factory in Livonia, Mich., and that will be the first facility built with the federal money, the company said.

The money was included in $2.4 billion in grants announced yesterday by the Obama administration, with $1.5 billion of the total going to the battery industry. Among the other recipients were Ford Motor Co., Chrysler Group LLC, and General Motors Corp., which will share more than $600 million meant to encourage development of battery technology for cars.

Not included among the grant recipients was another Massachusetts battery maker, Boston-Power Inc., of Westborough, which was vying for at least $100 million in federal and state grants to finance a factory in Auburn. Boston-Power, which operates two factories in Asia and produces batteries for computer maker Hewlett-Packard Co., wants the new factory to make batteries for laptops, cars, and military uses.

Boston-Power chief executive Christina Lampe-Önnerud said the company would have created roughly 600 jobs in Massachusetts if it had received the federal grants. “I must admit I’m rather disappointed,’’ she said.

Boston-Power had leased a structure in Auburn, a 455,000-square-foot former distribution center for the retailer Filene’s Basement, which it planned to convert into a plant to produce the Swing battery for cars.

“The lease was contingent on the federal funding,’’ Lampe-Önnerud said. “We just learned about this as you did, so we need to sit back and reflect a little bit and see what our options are here.’’

Boston-Power could still end up building a Massachusetts factory if it gets other federal grants, she said.

Ian Bowles, Massachusetts secretary of energy and environmental affairs, said the grant to A123 will create between 100 and 300 engineering and science jobs in the state.

“We’re pleased that there are going to be some significant ancillary benefits in Massachusetts,’’ he said. “The main message is that [the Obama administration] focused primarily on the automotive market, and there are a lot of other advanced battery markets, and given the state of the American auto industry I don’t think it’s surprising that they’re putting their focus there.’’

An A123 spokeswoman declined to comment yesterday, citing the “quiet period’’ before the company’s anticipated initial public offering. The firm has signed a deal with Chrysler LLC to provide batteries for the vehicle maker’s line of electric cars.

Only one other Massachusetts group was among the grant recipients announced yesterday: the National Fire Protection Association in Quincy, which received $4.4 million.

Sean Sposito can be reached at ssposito@globe.com.