Boston-Power, Lithium-Ion Batteries and China’s Magnetic Pull

A privately held, advanced-battery maker has taken another step along it’s capital-intensive path to profitability, one that kind of mirrors current machinations in the global rare earths space.

Boston-Power Inc. raised $30 million this week from U.S., European and – yes – Chinese investors, as it continues to develop lithium-ion battery cells, blocks, modules and systems for electric and hybrid vehicles, notebook computers and other products.

And while the company’s head office is just outside Boston in sleepy Westboro, Massachusetts, the funding will be sent over to China, where it’s building a manufacturing center , a project that has already received $125 million in Chinese government funding and incentives to expand in China.

The Liyang-based center, just outside Shanghai, should be completed by the end of 2012, produce 400 megawatt hours of battery cells annually and employ hundreds of workers.

It is also developing a technology center in Beijing that should be running in the next six to 12 months. 

“The money is very focused on growing the next chapter of the company in China, but I believe the company has an opportunity to make an impact in more than China,” Boston-Power founder and International Chairman Christina Lampe-Önnerud (pictured) said this week in an interview with telegram.com

To date, Boston-Power has raised about $360 million since being founded in 2005.

Here’s one disparaging comment in response to the telegram.com story this week: “$360m in funding in six years and they still can’t get this “company” off the ground? They are in the wrong business. How many lithium-ion battery manufacturers are already in Red China?”

Forbes Magazine published an article back in September titled Boston-Power: A Rising Star or the Next Solyndra? (Solyndra being the US government-funded solar-panel maker, which declared bankruptcy earlier this year.)

“The company—like a number of other companies that got established in the early years of green tech—is currently in the midst of the difficult transition from being an interesting science experiment to acting as a sustainable commercial enterprise,” according to the Forbes article. “The $125 million—a combination of incentives, loans and money–will help the company build a factory in China capable of producing 400 megawatt hour worth of batteries a year by the end of 2012. A deal with an auto manufacturer may be unfurled soon.”

The Forbes article goes on, saying that Boston-Power has inked contracts with large companies, but mostly for token projects. Saab, the troubled Swedish carmaker, is its biggest announced car customer.

“The bright spot has been a deal to supply batteries for a line of business notebooks from Asus, a contract manufacturer that graduated to a brand name in PCs a few years ago,” according to the story.

But then there’s this little caveat: “Other warning signs. Drop-in CEO Kevin Schmid, who took over the company in February, the CFO and a few other execs recently left Boston-Power.

Also: The company laid off 30 workers at its Westboro office in recent months, leaving about 50 workers there. 

Whatever the case may be, most market watchers believe the company will eventually be a takeover target if it can manage to derisk the manufacturing process, establish a client base and go public – if a potential suitor even lets Boston-Power get that far.