A123 research note on Form S-1 9/9

1. According to A.T. Kearney, the global lithium-ion battery market for automotive
application in HEVs, PHEVs, and EVs is estimated to be $31.9 million in 2009. A.T.
Kearney projects that this market will grow to approximately $21.8 billion by
2015 and $74.1 billion by 2020, based on a moderate drive for change influenced
by increasing governmental regulation, emerging powertrain technology, changing
consumer demand and OEM product strategies toward more fuel efficient vehicles.

Note: Let us suppose A123 can survive and occupy 1/20 market of the Li-ion battery
market for various EVs. So the revenue of A123 should be around $1 billion in 2015.
It is just close to the current market value at its IPO price

2. A123 recently developed an ultra high power battery for Mercedes-Benz
HighPerformanceEngines for use by the Vodafone McLaren Mercedes team that
provides more than ten times the watts/kilogram, or w/kg, as compared
to a standard Prius battery.

3. During the year ended December 31, 2008, 18%, 76%, and 6% of our product
revenue was derived from sales in the transportation, consumer, and electric grid
markets, respectively. In the first half of 2009, 70% of our product revenue was
derived from sales in the transportation market and 30% was derived from sales
in the consumer market. In addition, we do not anticipate receiving any more
revenue in 2009 from Mercedes-Ben HighPerformanceEngines.


Note: The revenue from consumer part reduced significantly in this year due to
the financial crisis. But revenue from the transportation is boosted by 3-4 times
this year.

4. Under the DOE Battery Initiative, we will be required to spend up to one dollar
of our own funds for every incentive dollar we receive, and we expect we will be
required to spend one dollar of our own funds for every four dollars we borrow
under the ATVM Program. ($249.1 million grant award under the DOE Battery
Initiative + possible $235 million under the ATVM Program)

5.Based on data from IHS Global Insight, we estimate that the number of HEV,
PHEV and EV models with an annual production run of at least 20,000 vehicles
will grow from 19 models in 2009 to over 150 models in 2014 and over 200
models in 2019.

6. a) In April 2009, we entered into a supply agreement with Chrysler to develop
and supply prismatic battery systems for use in Chrysler's ENVI electric vehicle
program across several vehicle platforms and models. Under our agreement
with Chrysler, Chrysler may issue purchase orders to us for battery systems
to be used in Chrysler's designated electric vehicle production programs based
on forecasted planning volumes at the unit prices and warranty terms included
in the agreement. There are no volume guarantees or minimum volume
commitments under this agreement.


b) Under our May 2008 joint development contract with BMW, we developed
lithium-ion batteries for use in HEV battery systems. We subsequently entered
into a warranty agreement with BMW in May 2009 for HEV batteries that we
expect BMW to purchase from us, and we are negotiating a supply agreement
with BMW which will provide the terms and conditions under which BMW may
purchase HEV batteries from us.


c) we have entered into a development agreement with SAIC to develop battery
systems for a mass-produced SAIC HEV in China.


d) We are also currently negotiating development agreements with Delphi to
develop a demonstration battery system for an EV and a battery system for a PHEV


e) Our March 2009 supply agreement with Magna Steyr provides for an initial
seven-year term during which Magna Steyr may order batteries from us based
on a monthly forecasts over a rolling three-month period.


f) Under our supply agreement with Better Place, which we entered into in
September 2008, Better Place has ordered prototype battery systems at
agreed pricing and warranty terms.


g) In the heavy-duty vehicle market, we are supplying battery systems to
BAE Systems pursuant to a May 2007 development and supply contract.
BAE Systems is initially using our battery systems in its HybriDrive propulsion
system, which is currently being deployed in Daimler's Orion VII hybrid electric buses.


h) We have also been selected by, and are currently negotiating a contract with,
Daimler to supply battery systems for use in systems developed by Daimler's
EvoBus subsidiary.


i) We have developed multi-megawatt battery systems for AES capable of
performing ancillary electric grid services, including standby reserve capacity
and frequency regulation services


j) Southern California Edison wants A123 systems to build the world's biggest
lithium-ion grid storage battery, and it's asking the Department of Energy for
$25 million to help.


k) We have entered into license and materials supply agreements with Gillette
pursuant to which we granted Gillette an exclusive license to certain of our
technology and are supplying materials to Gillette for use in their consumer
products (excluding power tools and certain other consumer products).

l) Black & Decker has developed a number of product lines using our batteries.

8. Our primary manufacturing facilities are located in Changzhou, China in an
export processing zone. We produce our prismatic batteries at our facilities in
Korea and Chanchun, China. We also have the capability to manufacture and
assemble low volume, high value-add battery modules and systems at our
energy solutions group facility in Hopkinton, Massachusetts. We produce our
specialty cylindrical batteries for Mercedes-Benz HighPerformanceEngines
at our Watertown, Massachusetts R&D facility.

The first phase of this expansion is taking place in Livonia, Michigan, where
we intend to produce prismatic and cylindrical cells and systems
using the same processes and equipment we currently use in our
Asian factories.


9. If either or both of the lawsuits are reactivated, we expect that they could
take as much as two years or more to reach trial, if at all.


Keywords: A123 Systems, AONE , Li-ion battery , Li Phosphate, IPO , future

A123: IPO in 9/24

A123 Systems (AONE) , the leader among the Li-ion battery developers, finally
made the last step toward its IPO in NASDAQ. The price of a share is
$13.5 with a volume 25.68million shares. Its market cap will be around
$1 billion as the number of total shares is around 150 million. Interestingly,
A123 announced the IPO at 8:08 a.m. on Aug. 8, 2008, and announced its terms
on 09/09/09, apparently it played with the luck numbers 8 and 9 in Chinese
numerology.

It is for sure that the IPO of A123 will be one of the main focus in venture captials.
We have to ask many questions before we jump into the buying force of
A123 Systems at the week of 09/21/2009.

1) Is A123 Systems IPO price $13.5 cheap enough?

Answer: 50% yes/50% no. Given the fact that it has increased

50% for IPO price in two times adjustment. The open price quickly

rush to my former estimation: $18-$20 :-(

2) Is A123 Systems a loser as GM choose LG chemical for its Volt?

Answer: No. Volt is just one of many electric car models, which will appear
in nearest future. It is still too early to talk about winners and losers in this
indutry given the Li-ion battery market is still waiting to be boosted in future.
What A123 Systems needs to do is to reduce the cost of its fancy batteries
effectively in future by massive production to win the battle. That's the usage
of IPO capitals. Of course, one has to admit A123 lost a titanic battle and

added more future uncertainty as it lost the big contract with GM.

3) Does the future of A123 Systems only rely on the electical cars?

Answer: No. It should be more accurate to claim that the future of A123 Systems
relies on the boost of clean energy market in future. A123 Systems
is very active in the energy store grid battery systems, which is crucial
for exploiting solar and wind energy. You should notice recent news that
Southern California Edison wants A123 Systems to build the world's biggest
lithium-ion grid storage battery.


4) Is it too risk to buy A123 Systems?

Answer: 50% Yes/50% No. If you read my post, buy shares of A123 Systems
and lose money, please do not complain me as I also would lose,too.

Keywords: A123 Systems, AONE , IPO , Li-ion battery , Li Iron Phosphate, Li Polymers