Although grid sales are increasing, A123’s success will still depend largely on whether the new electric cars sell. So far, the signs don’t look good. Sales of the electric vehicles have been slower than automakers predicted, and GM recently announced it was temporarily halting production of the GM Volt due to lack of demand.
A123 will also face competition from other battery makers who will continue to improve their technology. But it says it will announce new technology this year that will help it compete.
One new market for A123 may prove a boost, however. A123 may benefit from selling more batteries for micro-hybrids, which use small batteries to assist a gasoline engine. Such cars are far less costly than electric vehicles and are therefore likely to sell in higher volumes.