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Boston Power moves ahead by moving to China

Lithium ion battery maker Boston Power lands $125 million and plans to move most of its operations to China to serve the burgeoning electric-vehicle market.

Battery maker Boston Power is shifting its operations to China to capitalize on the electric-vehicle market.

The Westborough, Mass.-based company today announced that it has raised $125 million from Chinese venture capital firm GSR Ventures as part of an expansion into China. In addition to the private equity, the company is receiving grants, low-interest loans, and other incentives from the Chinese government, which will lead to construction of a large-scale battery manufacturing plant.

Boston Power's lithium ion battery cells will be strung together to make larger battery packs for EVs. Martin LaMonica/CNET

By the end of next year, the 400-megawatt-hour-per-year plant will be capable of making enough lithium ion batteries for about 10,000 all-electric cars a year, according to company founder, former CEO, and board member Christina Lampe-Onnerud. The company expects to announce its first Chinese auto manufacturing customer in the comings months which will make both electric cars and trucks, she said.

As part of the change, Boston Power will also open an EV battery research and development center in Beijing to work in conjunction with the factory. It plans to hire hundreds of people in China in the coming months, including a new CEO and CFO located there. Technology development of the battery cell components will remain in Massachusetts, but the company will shift multiple positions to China and cut its U.S. staff by 35 percent, Lampe-Onnerud said.

"China is becoming the No. 1 market in clean tech, specifically in electric vehicles," said Lampe-Onnerud. "It's the combination of financial support from the government, very eager and aggressive Chinese investors, and the fact that it's the biggest market in the world."

Boston Power already manufactures long-lasting laptop batteries in China, but the funding, which will be followed by more expansion capital, will shift the company's primary product focus to electric vehicles.

The company's batteries are well-suited for EVs because of the good driving range and fast charge time they offer, Lampe-Onnerud said. The batteries have also received environmental awards for the materials used in production.

The move to China is a dramatic change in direction for the company which two years ago had applied for stimulus money to convert a warehouse into a state-of-the art battery manufacturing plant in Massachusetts. The company had to scrap that plan after it failed to secure enough money to build domestically.

Boston Power founder Christina Lampe-Onnerud at the company's research facility in Massachusetts. Martin LaMonica/CNET

Seven months ago, it brought in a new CEO. But with the infusion of money, the company will be bringing in new management. The company has raised $193 million to date.

In the past few weeks, there have been a few articles warning that rapid global expansion of lithium ion battery production will cause a glut of batteries in a few years, which could lead to problems for U.S.-based companies.

Lampe-Onnerud said the U.S. has not figured out the right policies to bulk up manufacturing in the U.S. "We have to set 20-year or 50-year policies for businesses to run with it and trust the market. Right now, the U.S. is pretty murky," she said.