Why U.S. battery maker Boston-Power is moving to China

Boston-Power once dreamed of building a battery factory in the United States. Now it plans to reduce its U.S. operations and expand in China.
Written by Kirsten Korosec, Contributor

Boston-Power once aspired to build a 455,000-square-foot lithium ion battery factory near its Westborough, Mass., headquarters. Now, two years after it failed to land a $100 million Energy Department grant, the company has announced plans to cut its U.S. operations by 35 percent and expand in China.

Boston-Power's move to China is hardly unique. A stream of companies have expanded or moved overseas because their execs and investors recognize what perhaps U.S. lawmakers have not: China is investing heavily to build a globally dominant cleantech industry.

In other words, it's where the money -- and market -- is. Boston-Power, for example, announced it raised $125 million in new funding from a combination of private equity investment led by GSR Ventures and government incentives from China.

The money will be used scale up manufacturing and shift the company's focus towards electric vehicles. Boston-Power plans to establish a research and development and electric vehicle battery engineering facility. The company also plans to build a manufacturing plant capable of producing 400 megawatt hours of lithium ion battery cells -- or 18 million units of the lithium-ion cells -- annually by the end of 2012.

Boston-Power has developed two kind of lithium-ion cells, one geared for EVs and utility applications, the other suited for notebooks and  portable power devices. Both share a common design and can easily be arrange into blocks, modules, packs and systems to be used in a variety of products. The company already makes a long-lasting laptop battery in China.

Boston-Power's expansion plans mark a shift in the company's business model and it's clearly gunning for the electric vehicle market, no small feat considering the amount of competition in the space.

The company, which touts  the high energy density and long life of its battery, has made some headway into the market. Saab unveiled an electric vehicle this summer that contained a Boston-Power battery system. And earlier this month, Boston-Power announced it was working with Protean Electric to supply battery systems for two new advanced BRABUS vehicles based on the Mercedes Benz E-Class.

Still, Boston-Power faces considerable headwinds in a market where it will go up against larger, well-established companies like LG Chem and Sony.

Photo: Flickr user peruisay, CC 2.0

This post was originally published on Smartplanet.com

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