General Motors Corporation (NYSE:GM) and A123 Systems, Inc. (NASDAQ:AONE) have struck a major partnership. General Motors is contracting electric vehicle battery components and packs with A123. As a result, A123 will be ramping up their employee count at their headquarters and at their office in Ann Arbor, Michigan. A123 currently has about 1,000 employees in Michigan.

A123 Systems, Inc. (NASDAQ:AONE), a developer and producer or advanced Nanophosphate lithium ion batteries has announced today that they have opened the largest lithium ion automotive battery production facility in North America. The new plant is located in Livonia, Michigan and they are expecting to expand manufacturing capabilities by up to 600MW hours per day.

Lithium ion battery maker A123 Systems has set their IPO terms. A123 Systems will be offering 25.68 million common shares at $8.50-$9.50 per share. Based on these shares and the price, A123 Systems would have an initial market cap of $954 million.

A123 has raised over $300 million from North Bridge Venture Partners, Qualcomm, Motorola, Procter & Gamble, Alliance Capital, Sequoia Capital, General Electric, CMEA Capital, OnPoint, FA Technology Ventures, Carruth Management, and MIT. A123 will also receive federal grants as promised by U.S. Vice President Joe Biden.

A123 won a major contract with General Motors to build lithium batteries for the Chevy Volt. (see first comment). Given A123′s rapid growth, business contracts, and government connections the company IPO will be one to watch out for.

U.S. Vice President Joe Biden was in Michigan earlier this week to announce over $1 billion in grants for companies developing batteries made for electric vehicles.  Michigan will get the largest portion of a $2.4 billion package in federal grants.  VP Joe Biden announced the grant at the NextEnergy facility in Detroit, Michigan.

The grant will be made through the U.S. Department of Energy out of a total $787 billion stimulus program that was approved by the Obama administration.  The stimulus grants will be split among about 50 projects across 25 states.  The biggest shares will be given to the state of Michigan and the state of Indiana.  About 11 Michigan manufacturing and research facilities itself will be receiving grants.

“We know that, even in the hardest times, against the toughest odds, we have never surrendered. We don’t give up,” said President Obama on a factory floor at an RV maker in northern Indiana.  “We don’t surrender our fates to chance. We have always endured. We have worked hard, and we have fought for our future.”

The big three automotive companies in Michigan will receive over $400 million to develop hybrid and electric vehicles along with batteries.  The following Michigan battery companies have been selected to receive about $850 million in grant money:
- A123 Systems in Romulus, MI
- LG Chem and Compact Power Inc. in Troy, MI
- KD Advanced Battery Manufacturing Group LLC
- Johnson-Controls-SAFT Advanced Power Solutions LLC
- Sakti3 in Ann Arbor, MI

All of the battery companies are expected to create 6,800 jobs within the next year to 18 months.  About 30,000 jobs can be created by 2020.

[via Crain's Detroit Business]