Nanophosphate-based lithium-ion batteries for EV and PHEV applications

1. Nanophosphate-based lithium-ion batteries for EV and PHEV applications Andy Chu, Ph.D. A123Systems Watertown MA

2. Status of the performance and cycle life of your present products/proto-type batteries and projected near-term (5-10 years) improvements • Current and planned demonstration vehicle projects and test data • Cost (to an OEM) projections for high volume production of your batteries • Discussion of any related safety issues with your batteries • Your vision of how your batteries can be used in BEVs and PHEVs in the near-term. This was the suggested agenda. Will modify or delete this slide. Time slot given: 20 minutes.

3. About A123Systems • A123Systems founded in 2001. • Headquarters in Watertown, MA. • Operate 100,000 s.f. of dedicated space with facilities in Ann Arbor (Materials R&D center), China, Korea and Taiwan. • ~200 employees worldwide. 40 Masters/PhD level, ~100 operations/production. • Production contracts with multiple Fortune 500 customers in excess $100M, including: power tools, aerospace, and medical applications. • The company has raised $62M in financing to date from investors including:

4. Management team • David Vieau (CEO and President): Former VP of BD and Marketing for American Power Conversion (NASDAQ: APCC), the world leader in UPS systems • Ed Bednarcik (VP and GM of Pack and Systems):Former VP Global Sales at American Power Conversion, VP/GM for $1B+ product division at APC. • Grace Chang (VP of Manufacturing): 20 year battery career, co-founder and director of production of E-One Moli • Prof. Yet-Ming Chiang (Founder): Co-Founder of American Superconductor (NASDAQ: AMSC) and MIT Professor • Ric Fulop (Founder and VP BD and Marketing):Founder of 4 venture backed startups in semiconductors, software and wireless communications • Lou Golato (VP of Operations): 30 semiconductor ops career, most recently VP Ops with Unitrode (acq. by Texas Instruments). • Guy Hudson (VP Sales):15 year career in sales and management with Sanyo, world leader in rechargeable batteries • Dr. Bart Riley (Founder and VP R&D):Leader in developing world’s first High Temperature Superconductor wire products at American Superconductor • Mike Rubino (CFO):CFO of: Maker (IPO, acq. Conexant), Telephotonics (acq. DuPont), Agile (acq. Lucent), BICC (acq. 3COM) • Outside directors and investors* • Desh Deshpande (Chairman of A123Systems): Chairman of Cascade (NASDAQ: CSCC) and Sycamore (NASDAQ: SCMR) • Paul Jacobs, President and CEO of Qualcomm • Jeff McCarthy, General Partner, NorthBridge • Michael Moritz, General Partner, Sequoia Capital* • Howard Anderson, Prof. MIT Sloan School of Mgmt.*

5. + Li + Li - e - e + Li - e + 10 micron Li <0.1 micron Core technology behind A123’s high power chemistry A123 doped nanophosphate Oxide-based Li Ion (conventional technology) Better battery enabled by new nano-materials (Nature Materials, 2002) Conventional Li-ion diffusion: large particle size = poor rate capability Nano particle size = extremely fast diffusion, high rate using intrinsically stable material Dopant increases electrical conductivity several orders of magnitude

6. Data obtained by major automaker: Discharge Ragone Test at 25°C 20 min 8 min 5 min 3.5 min 2.5 min A123 Proprietary Information

7. Ragone plots of leading HEV batteries 20 min 8 min 5 min 3.5 min 2.5 min

8. Limitations of current battery technology Not just cells, but entire system including safety controls Need 1000’s of deep discharge cycles, plus 100,000’s shallow HEV cycles High energy metal oxide lithium-ion chemistries suffer from poor abuse tolerance Most high energy batteries can only be charged slowly (hours) • Cost • Life • Safety, abuse tolerance • Fast-charge capability

9. Advantages of A123’s battery technology Leverage existing high-volume production, fewer safety controls needed Excellent deep-discharge cycle life, even at elevated temperatures No thermal runaway High-energy battery can be fully-charged in <15 minutes • Cost • Life • Safety, abuse tolerance • Fast-charge capability Cost Life Safety

10. Why power tools are important for HEV • Even by 2015 Power Tool volume is expected to be >2X the volume of HEV • Power tool market provides A123Systems with economies of scale in HEV and other high-power applications • A123Systems is the exclusive supplier to the largest share player in power tools Cost Life Safety

11. PHEV requires deep-discharge cycling at moderate rate Possible PHEV specs (minimum): 300V, 30kW Translates to 100A per cell. If 25Ah cell, discharge rate = 4C (15 minute discharge) 60kW, 500V  120AIf 30Ah cell, discharge rate = 4C A123 cells on 10A-10A (4C-4C), 100% DOD cyclingCell temperature: 65 and 100 °C Although energy is still main focus, PHEV applications are not low rate! 65 ˚C • Two solutions: • Larger battery (reduce C-rate) More EV-range, more costly • Battery with power capability Most commercial Li-ion are low power Higher-rate cycling reduces cycle life • A123 offers designers a choice 100 ˚C Cost Life Safety

12. A123Systems demonstrates superior cycle life during deep-discharge cycling at 60ºC Commercially-available high power batteries Cost Life Safety

13. Calendar lifeStorage at 50% SOC @ 23,38,45 °C Cost Life Safety A123 Proprietary Information

14. Lithium Ion Abuse Tolerance (or lack thereof!) Originates with the Active Materials and in the Charged State a) LiCoO2 b) LiFePO4 O P Li+ deintercalation upon charging O Fe2+Fe3+ (stable) Co3+Co4+ (unstable!) Li+ deintercalation upon charging LiCoO2 and its nickel-containing derivatives used as the positive electrode in lithium-ion batteries experience an oxidation of Co3+ to unstable Co4+ (or Ni3+ to unstable Ni4+) as Li+ ions are removed from the lattice upon charging. In contrast, a phosphate-based cathode such as LiFePO4 undergoes oxidation of Fe2+ to the stable Fe3+ state, resulting in a safer, fault-tolerant cell chemistry. Cost Life Safety

15. Comparison: Conventional vs. A123 Nanophosphate Technology Thermal runaway accompanied by flame and explosion Conventional Li-ion cell phosphate cell Sandia National Lab test chamber Comparison of conventional lithium-ion battery exhibiting thermal runaway followed by flaming and explosion, with intrinsically safer phosphate-based lithium ion cells. (Test data performed at Sandia National Laboratory on full-size cylindrical cells. Charged cells are instrumented with thermocouples and heated at constant rate to seek thermal events.) Cost Life Safety

16. Balance between energy and power Tradeoff between battery and engine (ICE) exists on continuum A123’s current M1 product balances energy and power – good for power tools, bus/truck HEV, other power applications that require energy A123 is developing higher-power technology optimized for power-assist HEV If auto industry moves to charge-depleting hybrids, A123 is well-positioned Internal Combustion Engine (ICE) Engine Power S-caps Micro (start-stop) hybrid Mild hybrid Charge-sustaining, strong hybrid ESS Heavy-duty truck, bus HEV Charge-depleting PHEV E Battery A123 energy Energy Electric vehicle

17. What drives the decision for A123? Q: Why develop a PHEV battery? A: To make money Satisfy investors Attract top people National interest Three areas which will help battery developers: • Market demandOEM commitment to develop PHEV productsNRE to pay for development costsCustomers who are willing to pay for PHEVs (corporate fleets) • Government assistance (federal, state, local)Examples: DoE-USABC funding, NYSERDA initiative, tax credits • Ability to sell same cell to other customers A123 Proprietary Information

18. Conclusion A123’s technology is well-suited for PHEV applications and through partnerships we are already working in this area. Development of PHEV must make economic sense for battery companies to pursue this as a business. The Arsenal on the Charles One Kingsbury Ave Watertown MA, 02472 Main Office Phone: 617-778-5700 Main Office Fax: 617-778-5749 www. A123systems.com