Boston-Power Inc. announced today that it has raised $125 million in new venture and Chinese government financing as part of a major corporate shakeup that will lead to the construction of a lithium-ion battery factory in China.
The Westborough, Mass.-based company said the new equity round is led by Beijing-based GSR Ventures and joined by existing investors Oak Investment Partners and Foundation Asset Management. The Chinese government has offered the company grants, low-interest loans, tax incentives and other financial inducements to construct a factory in Beijing that will have 400 megawatt hours of capacity.
Boston-Power founder Christina Lampe-Onnerud declined to offer the specifics of the financing, but said the company has raised $317 million in equity capital to date.
As part of the new funding, GSR Managing Director Sonny Wu will become chairman of the board, replacing Lampe-Onnerud, who will now assume the title of international chairman. Also departing is chief executive Keith Schmid, brought on earlier this year, and Chief Financial Officer Steve Byram.
The company will search for a new CEO and CFO to be based in China.
The news of Boston-Power’s shift to China comes as controversy continues to swirl around the bankruptcy of Fremont, Calif.-based solar company Solyndra, which received a $535 million Department of Energy loan guarantee and more than $1 billion in venture capital. It illustrates the intense competition China is waging to attract green-tech jobs and technologies of the future — and the huge challenges facing promising startups as they scale manufacturing and product development.
Boston-Power had applied, but failed to win a DOE loan guarantee. That led it to turn to China.
At a time when “jobs” has become the No. 1 issue being debated in Congress, Boston-Power expects to create hundreds of jobs in China with its first factory and the construction of an R&D and engineering center, Lampe-Onnerud said in an interview. The company will eliminate 30 positions in Massachusetts, but plans to keep R&D and technology development operations in the state.
“We are getting an enormous benefit for deploying manufacturing in China,” she said. “Plus the customer base is there,” as the company expands its electric car battery business.
China is making a strong financial commitment to cleantech, and Boston-Power will be at the epicenter of Beijing’s attempt to establish itself as the world’s center, she added.
Boston-Power, like fellow lithium-ion battery upstarts A123 Systems and EnerDel, offers a high-performance battery it hopes will give it an advantage over traditional manufacturing powerhouses Sony, Panasonic and LG Chem.
But with much of the company’s business still with notebook manufacturers, such as Hewlett-Packard and ASUS, the company has found scaling production to be too expensive.
While the company is working on auto designs with Saab, it has clearly found new opportunities and new money in China.
Past Boston-Power investors GGV Capital, Gabriel Venture Partners and Venrock Associates will have an opportunity to join the round in a later tranche, a company spokesman said.