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Battery maker for electric cars retools

Valence lines up a partner for battery manufacturing but says it's losing interest in notebooks

Valence Technology won't go it alone.

The company, which is angling to sell lithium ion battery markets to vehicle makers, has signed a licensing deal with Lishen Battery Stock Co. to help it gets its batteries quicker to market, said CEO Bob Kanode in a recent interview with News.com

Under the deal, Valence will sell its lithium powder to Lishen. Lishen in turn make battery cells out of the material and sell them back to Valence. Valence will then take the cells and make battery packs that it will sell for use in electric cars, military vehicles or boats.

Lishen will also try to sell the battery cells to other manufacturers. In these deals, Valence will earn revenue from the sale of the chemicals to Lishen but also a royalty on the battery cells sold to third parties.

The deal will effectively allow Valence to concentrate on its strengths, said Kanode, who joined the company back in March in an effort to start commercializing its products. Valence has a strong background in battery chemistry, he said. "We also have a lot of microcontroller technology for controlling battery packs," he said. It just doesn't have much experience in the middle part of making cells.

Competition is also getting warm in the lithium ion battery market. Both A123 Systems and Tesla Motors are marketing their batteries to car makers. A123 can count General Motors as an investor and customer.

Valence's biggest 'name' customer, by contrast, is Segway. Nonetheless, Kanode says a number of organizations are tinkering with its batteries and batteries from other companies. The market thus should be big enough for more than one manufacturer, he speculated.

"There are 80 different companies out there testing batteries. This isn't just benchmark testing," he said. "The testing can take one to two years."

Kanode, though, indicated that Valence will back out of trying to compete in the notebook battery market, something it had its eye on earlier. Notebook manufacturers want lithium cobalt batteries. Valence specializes in lithium phosphate.

"Lithium cobalt for cell size will give you more energy," he said. "But by definition, lithium cobalt will never be safe."