A123 says new battery technology to make EVs cheaper

By A. Ananthalakshmi

(Reuters) - A123 Systems Inc said it has developed a new technology that allows lithium ion batteries to function in extreme temperatures, eliminating the need for separate heating and cooling systems and potentially making electric vehicles (EVs) cheaper.

The development of Nanophosphate EXT, as the technology is called, could potentially increase the adoption of the struggling company's rechargeable batteries, analysts said.

Shares of the company shot up 61 percent to $1.67 on Tuesday on the Nasdaq. Nearly 26 million shares of the company were traded by 1730 GMT, 17 times their ten-day average volume.

A123 said the ability to work in a wider range of temperatures and the lower costs will create new opportunities for its products in the transportation and telecommunications markets.

The high cost of lithium ion batteries has held back their large-scale adoption.

The heating or cooling systems account for 10 to 20 percent of the total cost of the lithium ion battery, said Stifel Nicolaus analyst Jeff Osborne, citing the Electric Power Research Institute.

"A123 has struggled to-date to execute as a volume manufacturer and make the significant reductions in its manufacturing cost structure that will allow the company to sell its products at a profit," Osborne said.

The company's announcement comes just days after it said there was "substantial doubt" about its viability as a business and warned of steep losses due to the recall of defective batteries.