US lithium-ion battery maker A123 Systems Inc. (NASDAQ: AONE) has definitely had a rough year. Shares are down about -72%, making it the worst performer out of US battery makers like EnerSys (NYSE: ENS), Exide Technologies Inc. (NASDAQ: XIDE), and Johnson Controls Inc. (NYSE: JCI). A123 has even performed more poorly than capacitor maker Maxwell Technologies Inc. (NASDAQ: MXWL), another competitor in the race for a piece of the green car market.
Today, A123 announced a new battery technology it calls Nanophosphate EXT, which the company says eliminates the need for costly and heavy temperature-control equipment on batteries for hybrid and micro-hybrid electric vehicles. All-electric cars like the Chevy Volt from General Motors Co. (NYSE: GM), the all-electric version of the Prius from Toyota Motor Corp. (NYSE: TM) the Leaf from Nissan Motor Co. Ltd. (OTC: NSANY), the Focus Electric from Ford Motor Co. (NYSE: F), and the vehicles from Tesla Motors Inc. (NASDAQ: TSLA) get a generic wave in the company’s press announcement, but the micro-hybrid market is what A123 is targeting. Johnson Controls and Maxwell are among the key players here.
Micro-hybrid is a fancy new name for cars that incorporate new stop-start technology that shuts off a car’s engine when the car is stopped and restarts it automatically when the driver steps on the gas again. A123, Exide, and Johnson are all making batteries that can absorb this kind of punishment, while Maxwell is attacking the problem with what the company calls ultra-capacitors. Either system improves gasoline mileage by anywhere from 5%-10%.
The global market for micro-hybrid vehicles is expected to swell to more than 39 million vehicles by 2017, and the energy storage devices market is expected to reach $6.9 billion according to A123. The advantages micro-hybrids hold over all-electric technology, for example, are no requirement for special charging stations, far less use of scarce resources like lithium, and much lower cost. From a car-makers point of view, the possible impact on sales is negligible from micro-hybrids because the technology is both cheap and nearly invisible to buyers who don’t have to adapt to a whole new kind of car.
A123 shares have jumped 50% just before noon today, to $1.56 in a 52-week range of $0.82-$5.91. Share prices have been hit hard by a recall of defective battery packs and an explosion in a lab that was testing one of the company’s battery packs. More than 16 million shares have traded hands so far this morning, about 8x normal volume.
Paul Ausick
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