A123 Systems LLC plans to build a $40 million headquarters in Novi, Mich., even as it prepares to wind down lithium-ion battery cell production.
The new facility, located on a 32-acre site, will house a 150,000-square-foot campus including its corporate headquarters, more laboratory space and a battery assembly plant, the company said April 3 in a news release. Construction is expected to begin in the third quarter of this year with a completion date by the end of 2018.
The investment comes at the expense of its cell production plant in another Detroit suburb, Romulus, which will close as a result of the new build, CEO Jason Forcier said. The Romulus plant has a production capacity of 4 million battery cells, but produced fewer than 1 million annually, he said.
"The Romulus campus just isn't needed anymore as there isn't any sustainable volumes in the North America market," Forcier said. "The North American market just hasn't taken off [for electric vehicles] like they have in China and Europe."
The closing of the Romulus plant will result in the loss of 200 manufacturing jobs, Forcier said. However, A123 anticipates hiring more engineers, adding to the remaining 400 employees. As engineers are more expensive than the contracted labor, A123's payroll is expected to rise by $10 million after the the closing of the Romulus plant.
A123 will continue to manufacture low-voltage lithium-ion starter batteries and large cell batteries for Karma Automotive — formerly Fisker Automotive, which is controlled the same parent as A123, China's Wanxiang Group.
Forcier said the investment is a doubling down on its engineering and testing capabilities, which it will in-source when the Novi location is completed in 2019.
A123's Livonia headquarters and the Romulus plant were leases set to expire in 2019, triggering the move, Forcier said.
The Novi location is supported by a tax abatement from the city of Novi. A state tax abatement tied to the property is expected in the future, Forcier said.
A123 is expected to generate revenue of $500 million this year and exceed $1 billion in 2019, Forcier said.
The company broke even for the first time in its short history in 2015.
Founded in 2001 out of materials developed at the Massachusetts Institute of Technology in Cambridge, Mass., A123 spun out of the university in 2005, announcing a new fast-charging lithium-ion battery based on revolutionary chemistries of nanophosphate materials.
The U.S. Department of Energy awarded A123 a $249 million grant via the American Reinvestment and Recovery Act in 2009. It also received $125 million from Michigan's 21st Century Jobs Fund.
A123 spent $300 million to retrofit a plant in Livonia — the former home to Technicolor Inc., which vacated the building more than a decade ago.
The plant, the largest lithium-ion plant in North America, produced a prismatic cell, a thin lithium-ion battery around the size of a license plate, for use in battery packs in plug-in hybrid and electric vehicles. An electric vehicle battery pack requires around 400 cells. Prismatic cells contain polymer film at the core and typically use engineering thermoplastics for their surrounding structural frames.
But electrification never materialized on a mass scale and the company sank.
The company filed Chapter 11 bankruptcy on Oct. 16, 2012, with A123 owing millions of dollars to hundreds of debtors, including the cities of Livonia, Novi and Romulus. At the time, A123 held $376 million in debts with about $459.8 million in assets.
Wanxiang acquired A123 out of bankruptcy with a $256.6 million bid and has funded the supplier back to black in recent years.