WATERTOWN, MA --- A123Systems said it has submitted an application to a U.S. Department of Energy program to qualify for $1.84 billion in direct loans to help construct manufacturing facilities for lithium ion batteries in the United States.

If A123's application under the department's Advanced Technology Vehicles Manufacturing Incentive Program is approved, this program would enable the company to dramatically expand production capacity in the United States. Full production volumes are designed to supply battery systems for 5 million hybrid vehicles or half a million plug-in electric vehicles per year by 2013.

"We're entering an exciting new phase for the automotive industry where we increase the electrification of vehicles, reducing consumption of gasoline through advanced batteries," said David Vieau, A123Systems president and CEO. "This new facility would greatly accelerate this change and help ensure that the American economy replaces its dependence on foreign oil with reliance on advanced, homegrown batteries."

At full operation, A123 expects the combined plants would occupy as much as 7 million square feet and create over 14,000 jobs. These plants would produce battery cells and systems to meet the needs of A123's broad automotive customer portfolio, which currently includes over seven vehicle manufacturers and 19 vehicle models ranging from HEVs (hybrid electric vehicles) to EVs (electric vehicles).

"Chrysler's commitment to E-drive industry leadership has led us to a strategic relationship with U.S.-based A123Systems as one of our key suppliers supporting production development of ENVI electric vehicles," said Lou Rhodes, vice president of advanced engineering for Chrysler LLC and president of ENVI. "Chrysler strongly encourages the efforts of A123Systems to develop and mass produce energy storage systems in the United States."

General Motors also supports A123's efforts to beef up its manufacturing operations in the U.S.

"At GM, we see the development of vehicles powered by electricity as key to the transformation of our industry. And advanced battery technology is at the heart of this transformation," said Bob Lutz, GM vice chairman of global product development. "A123's proposal to manufacture advanced battery cells and packs right here in the United States is a positive development for our industry and the nation."

A123 was born out of the research labs of the Massachusetts Institute of Technology and was funded initially with a $100,000 grant from the U.S. Department of Energy in 2001. Existing A123 customers include AES, BAE Systems, Black and Decker, Cessna, Chrysler LLC, General Motors, Project Better Place, and Th!nk.