A123 to Supply Batteries for Fisker Auto

A123 Systems saw its shares rise Thursday after it agreed to supply batteries for electric cars built by Fisker Automotive and to invest up to $23 million in the start-up automaker.
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WATERTOWN, Mass. (

TheStreet

) --

A123 Systems

(AONE)

, a maker of advanced lithium ion batteries, saw its shares rise Thursday after it agreed to supply batteries for electric cars built by

Fisker Automotive

and to invest up to $23 million in the start-up automaker.

Under the agreement, A123 will supply battery systems for Fisker's Karma plug-in hybrid electric vehicle that is scheduled for launch later this year.

The Karma will have a range of 50 full-electric miles on a charge of A123's lithium ion battery system and a total range of 300 miles, the company said.

The Karma will be available for about $87,900 while a more affordable sedan version will cost about $48,000, according to the

Wall Street Journal

.

The partnership between the two companies reflects the efforts of the U.S. government to encourage the development of electric vehicles, the

Journal

reports. A123 received $249 million in grant money from the U.S. while Fisker received $529 million in a federal loan program to build plug-in hybrid cars.

"The federal money has been a catalyst," said David Vieau, president and CEO of A123.

A123 said it plans to expand its battery-assembly plant in Livonia, Mich., to raise capacity enough to produce 320,000 hybrid-vehicle battery systems and more than 24,000 plug-in hybrid systems a year.

A123's $23 million investment in Fisker is made up of $13 million in cash and $10 million in common stock.

Shares of A123 closed Thursday at $20.40, up 35 cents, or 1.75%.