A123 Systems holds an important position in two crucial parts of the value chain, as a major
battery cell/pack player and a leader in cell components. The heart of the battery is the cell,
which is composed of four major components: anodes, cathodes, separators, and electrolyte
solution. Among the four most popular chemistries for the cathode, A123 has carved out a niche
in lithium phosphate. This proprietary battery design, rooted in nanotechnology, currently has
less energy and power density than other types, but it has a major advantage in that it is
considered much safer, with a lower potential incidence of “thermal runaway reactions”
(Kanellos, 2010a).
Based on A123’s impressive ability to win contracts, despite competing with larger, more
established players, the company is well positioned to grow and become a leader in the
automotive battery industry. Its automotive customers already include BAE, Eaton, Fisker,
Navistar, and Shanghai Automotive Industry Corporation (SAIC) (A123 Systems, 2010).
According to Deutsche Bank, A123 could potentially capture a 10% market share of the lithiumion
battery market (Deutsche Bank, 2009).