WALTHAM, Mass., Aug. 8 (UPI) -- A123 Systems, a U.S. battery developer, said it signed a non-binding memorandum of understanding with Wanxiang Group of China for strategic investment.
In the memorandum signed Wednesday, Wanxiang agreed it would invest up to $450 million in A123, the U.S. government-backed manufacturer of advanced batteries for electric vehicles, said in a release.
Wanxiang's proposed investment in A123 would create the capital structure needed for the Waltham, Mass.-based company to continue growing its core businesses. Aligning with Wanxiang also is expected to substantially strengthen A123's access to the growing vehicle electrification and grid-scale energy storage markets in China, the company said.
A123 Systems, which received $380 million in government aid to create 3,000 jobs in Michigan, late last year announced declining orders forced it to lay off employees.
"Today's announcement is the first step toward solidifying a strategic agreement that we believe would remove the uncertainty regarding A123's financial situation," said David Vieau, A123's chief executive officer. "A substantial capital investment from Wanxiang would not only provide financial stability to A123 as we continue to grow, but it would also align us with a large, successful global brand in the automotive and cleantech industries."
Wanxiang Group and its related companies have more than $13 billion in revenue and more than 45,000 employees across its global businesses, including equipment and automotive parts manufacturing, clean energy, financial services, agricultural products, natural resources and real estate.