Shanghai Auto Teams With A123

SHANGHAI, China — Shanghai Automotive Industry Corp. (SAIC) said it will form a $20-million venture with U.S.-based A123 Systems to jointly develop batteries and systems for green vehicles in China.

The Shanghai Advanced Traction Battery Systems Co., which is 51-percent owned by SAIC, will focus on developing, manufacturing and selling complete vehicle battery systems for use in hybrid cars, electric vehicles, heavy-duty trucks and bus applications in China.

A123 Systems is a manufacturer of lithium-ion batteries, which it will supply to SAIC and other Chinese carmakers for use in "new energy" vehicles. Founded in 2001, A123 is based in Watertown, Massachusetts, and uses lithium-ion technology developed originally at MIT.

"The electrification of the global automobile industry is irreversible," said Chen Hong, president of SAIC. "We should grab the opportunity and make sufficient preparation for fundamental changes."

SAIC, the Chinese partner of General Motors and Volkswagen, earlier announced it would source hybrid technologies from Delphi and has also reportedly agreed to buy lithium-ion batteries from BYD Auto, a Chinese battery and electric-car maker backed by U.S. billionaire Warren Buffett.

SAIC plans to begin marketing a series of new-energy vehicles next year, including the Roewe 750 mild hybrid, the Roewe 550 plug-in hybrid and its own self-developed electric car.

Earlier this year, SAIC invested $300 million in a new-energy subsidiary to develop power and control systems to be used in its future green vehicles.

Inside Line says: SAIC wants access to the latest technology, including systems developed in North America. — Vivian Jin, Correspondent