Why: Lithium-ion batteries make electric cars possible at mass-market prices.

Key innovation: Nanostructured electrodes result in lithium batteries more durable and safer than those in cell phones and laptops.

Technology:

A123 develops and manufactures lithium-ion batteries that are safer than those in mobile phones and laptops and use less expensive elements. The materials are structured at the nanoscale in a way that enables them to charge and discharge quickly, making them well suited for use in electric vehicles and in electrical-grid storage.

Market:

A123 started off by selling batteries for use in rechargeable power tools, but it has recently made a major push into electric vehicles. Its first contract for the vehicle market was to supply the battery packs for electric buses, and commercial-vehicle makers have been its largest customers to date. Fisker has selected A123 to supply battery packs for its luxury electric cars.

Strategy:

Last fall, with funding from the U.S. Department of Energy, A123 opened a new manufacturing plant in Michigan; it’s the largest lithion-ion battery plant in the United States. The company is also active in the emerging market for grid storage and has become the world’s largest provider of lithium-ion batteries to electrical-grid operators.

Challenges and Next Steps:

A123 has established a niche in the commercial-vehicles market but has yet to land a contract with a major passenger-car maker, having been beaten out for the Chevy Volt contract by larger competitor LG Chem. It is not yet clear whether lithium-ion batteries will remain the best choice for the electric-vehicle market: other companies are pursuing alternative chemistries such as nickel–metal hydride and liquid lithium-ion.