A123 Systems and SAIC Motor to Expand Partnership to Meet Increasing Demand for Lithium Ion Battery Technology in China

WALTHAM, Mass., March 2, 2012 (GLOBE NEWSWIRE) -- A123 Systems (Nasdaq:AONE), a developer and manufacturer of advanced Nanophosphate® lithium iron phosphate batteries and systems, today announced the planned expansion of its partnership with SAIC Motor Corporation Limited (SAIC Motor), the largest automaker in China. This announcement builds on the existing partnership between A123 and SAIC Motor that was established in 2009 with the formation of Advanced Traction Battery Systems (ATBS), a battery pack joint venture (JV) company. Under a new framework agreement, A123 and SAIC Motor are carrying out a feasibility study to define the business plan and required investment for a jointly developed battery manufacturing facility in China. The proposed manufacturing facility is expected to serve the local market, with an initial focus on transportation, enabling A123 to more quickly and cost-effectively meet increasing demand for advanced lithium ion battery technology.

"Since the formation of ATBS, A123 has proven to be a strong partner for SAIC, including as the supplier of lithium ion battery systems for three of our electric vehicles—the Roewe 750 hybrid electric sedan, the Roewe 550 plug-in hybrid electric sedan and the Roewe E50 battery electric vehicle," said Chen Zhixin, executive vice president of SAIC Motor Corp. "We believe there is significant opportunity for A123's technology across several different markets in China, so expanding our partnership should provide SAIC with an even broader opportunity to benefit from the increasing demand for advanced lithium iron phosphate battery solutions."

SAIC Motor is the leader in the Chinese auto market and holds the country's top market share when considering the output of its joint ventures with General Motors and Volkswagen among others. In 2011, SAIC Motor's total vehicle production exceeded 4 million vehicles for the first time.

In support of ATBS, SAIC and A123 are evaluating the feasibility of a manufacturing JV to build a coating and cell assembly facility in China that will produce A123's 20Ah prismatic cells, which is expected to create a cost advantage for A123's technology in the Chinese market. Additionally, this is expected to substantially increase the local content of systems produced by the A123/SAIC partnership, helping to qualify the output for a variety of incentives and other financial support under China's New Energy Initiative. SAIC Motor and A123 expect that the definitive agreements setting forth the terms and conditions regarding the proposed joint manufacturing facility and its operations will be negotiated and completed by the end of September 2012.

"Through our partnership with SAIC Motor, A123 has made significant progress in entering China's passenger and commercial vehicle segments," said Jason Forcier, vice president of the Automotive Solutions Group at A123 Systems. "In the automotive industry, it is advantageous to establish manufacturing operations in close proximity to the customer base, so we believe ramping up a manufacturing facility in China will help us bring our solutions to market more quickly and cost-effectively to capitalize on increasing demand."

About A123 Systems

A123 Systems, Inc. (Nasdaq:AONE) is a leading developer and manufacturer of advanced lithium ion batteries and energy storage systems for transportation, electric grid and commercial applications. The company's proprietary Nanophosphate® lithium iron phosphate technology is built on novel nanoscale materials initially developed at the Massachusetts Institute of Technology and is designed to deliver high power and energy density, increased safety and extended life. A123 leverages breakthrough technology, high-quality manufacturing and expert systems integration capabilities to deliver innovative solutions that enable customers to bring next-generation products to market. For additional information please visit www.a123systems.com.

The A123 Systems, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6600

Safe Harbor Disclosure

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks, uncertainties and other factors, including statements with respect to the planned establishment of a battery cell production facility in China, opportunities and demand for lithium iron phosphate battery solutions in China, the expected benefits of having local battery cell production in China, the expected demand for cells and battery packs to be supplied by the joint facility, the market for alternative-energy in China, and final agreement by the parties on the definitive terms and conditions of the business arrangements. Among the factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: delays in the execution of definitive documentation with respect to the transactions contemplated by the framework agreement or failure by the parties to agree on the final terms and conditions of the business arrangements contemplated by the framework agreement, delays in customer and market demand for and adoption of lithium ion battery solutions in China, delays in the development of A123's products and technology, adverse economic conditions in general and adverse economic conditions specifically affecting the markets in which A123 and SAIC Motor operate and other risks detailed in A123 Systems' 10-Q for the quarter ended September 30, 2011 and other publicly available filings with the Securities and Exchange Commission. All forward-looking statements reflect A123's expectations only as of the date of this release and should not be relied upon as reflecting A123's views, expectations or beliefs at any date subsequent to the date of this release.

CONTACT: A123 Systems PR Contact:

         A123 Systems

         Dan Borgasano

         617-972-3471

         dborgasano@a123systems.com

         

         Edelman

         Courtney Kessler

         212-277-3720

         courtney.kessler@edelman.com

         

         A123 Systems IR Contact:

         ICR, LLC

         Garo Toomajanian

         617-972-3450

         ir@a123systems.com



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