US: October 23, 2008


NISKAYUNA - General Electric Co is stepping up its investment in developing new battery technologies for autos as it looks to increase its role in electrifying cars -- one of the key strategies to boost autos' fuel efficiency.


The US conglomerate has raised its investment in A123 Systems Inc, a developer of batteries for hybrid cars and other electric devices, to $55 million, and is working with US automaker Chrysler to secure government funding to develop a system to electrify larger passenger vehicles.

"The trend toward electrification is pressing and inevitable," said Mark Little, senior vice president and director of GE's global research centre in Niskayuna, New York.

GE is working with Chrysler to get $10 million in funding from the US Department of Energy to produce a system that would incorporate both the lithium-ion battery technology automakers are focusing on for the next generation of hybrid and electric autos expected in the next few years, Little said on Wednesday. That $10 million in funding, if approved, would be matched by GE and Chrysler.

The drive to shift cars from relying on gasoline for the bulk of their power to being electric-powered, which would reduce their emissions of carbon dioxide, faces a major challenge in the slowing world economy.

Recession fears have taken oil and gasoline prices down from summertime record highs -- easing one of the pressures that had piqued consumer interest in electric cars and hybrids.

"It'll probably be softened somewhat as oil prices come back down to earth," Little said of consumer interest in electrified vehicles. Still, he argued, a slow transition from gasoline vehicles to electric cars may be more realistic.

"We don't have the supply chain to go straight to electric vehicles," he said.

GE also said it had invested an additional $30 million in A123, giving it a 9 percent stake in the Watertown, Massachusetts-based company.

GE made the investment in May, ahead of A123's filing for a $175 million initial public offering. A123 has not yet set a date or pricing range for its IPO.

A123, working with Germany's Continental AG, is in the running to supply next-generation lithium-ion batteries to General Motors Corp for the forthcoming Chevy Volt, a plug-in car the No. 1 US automaker aims to begin selling in 2010. Compact Power, a unit of South Korea's LG Chem Ltd, is the other contestant in that race.

(Editing by Dave Zimmerman and Brian Moss)


Story by Scott Malone


REUTERS NEWS SERVICE