Mass. battery maker seeks US loan for plants

A123 wants funds from pool aimed at fuel-efficiency

Automakers are considering using A123 batteries in alternative-fuel vehicles, such as the electric Chevrolet Volt. (Kevin Lamarque/ Reuters/ File)

A123 Systems Inc., the Watertown high-tech company that hopes to manufacture batteries for electric and hybrid cars, said yesterday it applied for $1.84 billion in federal loans from the US Department of Energy to build several new manufacturing plants in the United States. The first plant would be located in Michigan, but some facilities could be built in Massachusetts.

If approved for the loans, A123 said, the money would come from the $25 billion approved by Congress last year to help the US automotive industry invest in new technology to produce more fuel-efficient vehicles. Several automakers, including Chrysler and General Motors Corp., are considering using A123 batteries in alternative-fuel vehicles, such as the widely anticipated Chevrolet Volt plug-in electric car.

A123 said it plans to spend $2.3 billion on plants that could eventually employ more than 14,000 workers, and supply lithium-ion batteries for 5 million hybrids or 500,000 electric vehicles a year by 2013. A123 already has smaller plants in China, South Korea, and Massachusetts.

The southeastern Michigan location planned for the first new plant would place it near the heart of the US auto industry. Last month, Michigan agreed to give battery companies up to $335 million in tax credits to build plants in that state.

In addition, US Senator John Kerry's press secretary, Brigid O'Rourke, said A123 plans to expand its current facilities and add new ones in the Bay State. A123's press release also quoted Kerry, a Massachusetts Democrat, as saying he is looking "forward to the plant that will be based in Massachusetts."

A123 spokesman Stephen Roy declined to give additional details, saying the company is in a "quiet period" because it is in the process of trying to sell shares to the public.

In August, A123 filed plans to raise $175 million through an initial public offering, though it's unclear when the stock sale will actually occur. In the past few months, the IPO market has been largely frozen.

The company also faces other challenges. Many automakers have recorded a steep drop in sales this year because of the global recession, which could curtail investment in new models. And a steep drop in oil prices could dampen demand for hybrids and electric cars. In addition, A123 could face competition from other battery makers.

A123 was founded in 2001, based on technology developed at the Massachusetts Institute of Technology.

Todd Wallack can be reached at twallack@globe.com.