A123Systems Receives $40 Million Investment to Expand Product Portfolio and Scale Manufacturing of Hybrid and Plug-In Hybrid Batteries.

Procter & Gamble's Duracell and A123Systems Collaborate on Future Products

WATERTOWN, Mass. -- A123Systems, one of the world's leading suppliers of high-power lithium-ion batteries, today announced it has completed a $40 million round of funding, bringing the total capital invested in the company to $102 million.

A123Systems will use these funds to scale its technology development and manufacturing capacity for plug-in hybrid electric vehicle (PHEV) batteries, as well as to support the fast growing demand in the power tool, hybrid electric vehicle (HEV) and consumer applications markets.

"As our doped nanophosphate technology continues to deliver superior power, safety and life, we're experiencing tremendous growth and interest from companies across a vast array of industries looking to innovate new and existing products," said David Vieau, CEO and President of A123Systems.

This latest round was led by General Electric Commercial Finance which is significantly increasing its investment in A123Systems. Also participating is new investor The Procter & Gamble Company (NYSE: PG), the world's leading consumer goods company and a leading manufacturer of consumer batteries through its brand Duracell; prior investors are also participating including Alliance Capital, FA Technology Ventures, North Bridge Venture Partners, Sequoia Capital, OnPoint, the Massachusetts Institute of Technology, Motorola, Qualcomm, and Desh Deshpande, the company's board chairman.

"As the worldwide leader in the battery category, we constantly evaluate emerging technology for its potential to deliver benefits to consumers," said Mark Bertolami, VP, Global Marketing and General Manager, North America, Duracell. "Our investment in A123Systems coupled with our companies' joint development activities is intended to further strengthen Duracell's position in the consumer portable power space. This move also reinforces P&G's commitment to partner with innovative companies to gain access to new technologies."

"A123Systems has met or surpassed its key development and performance milestones," said James Kim, Vice President, GE Global Media & Communications. "The company's latest wins - focused on Plug-In Hybrid and Hybrid Electric Vehicles - are particularly exciting given current global environmental challenges," added Mark Huang, Senior Vice President, GE Energy Financial Services.

This funding adds to A123Systems' strong momentum with major customer wins and partnerships in the power tool and automotive industries. Most recently, A123Systems announced it will supply batteries to General Motors for the Saturn Vue Green Line plug-in hybrid development program, the world's first commercial program of its kind by a major automaker.

A123Systems continues to expand its fast growing power tool battery business with Black & Decker Corporation, the world's largest manufacturer of cordless tools, where the company is helping drive the transition from nickel cadmium technology to doped nanophosphate lithium-ion technology.

A123Systems is also working with GE to develop systems for the hybrid bus market and recently received a $15 million development contract for next generation HEV batteries by the U.S. Department of Energy and the United States Advanced Battery Consortium (USABC), an organization composed of DaimlerChrysler Corporation, Ford Motor Company and General Motors Corporation.

About A123Systems

A123Systems has quickly become one of the World's leading suppliers of high-power lithium-ion batteries. Based on the company's patented nanophosphate technology, the batteries deliver previously unattainable levels of power, safety and life. Applicable to a wide range of industries, A123Systems' products allow OEMs expanded flexibility in system design, removing many traditional technology constraints. Founded in 2001, A123Systems' proprietary nanoscale electrode technology is built on initial developments from the Massachusetts Institute of Technology. For additional please visit www.a123systems.com.