A123 Systems to Supply Lithium Ion Battery Packs to BAE Systems for HybriDrive(R) Series Hybrid Electric Propulsion System

WALTHAM, Mass., July 19, 2012 (GLOBE NEWSWIRE) -- A123 Systems (Nasdaq:AONE), a developer and manufacturer of advanced Nanophosphate® lithium ion phosphate batteries and systems, today announced an agreement with BAE Systems, a leading provider and developer of hybrid electric technologies, that expands the companies' long-standing relationship. Under the terms of the new agreement, A123 will supply lithium ion battery packs based on the company's prismatic cells to BAE for its HybriDrive® Series propulsion system. The new design is initially expected to be deployed on city transit busses, and as part of the new agreement, A123 will also supply lithium ion battery packs for additional versions of BAE's HybriDrive system for other commercial applications.

A123's battery packs are currently deployed in BAE HybriDrive systems on nearly 3,000 buses globally that have amassed more than 300 million service miles to date. The current HybriDrive system utilizes battery packs based on A123's cylindrical cells, but under the new agreement, A123 will deliver packs featuring the company's prismatic cells to satisfy BAE's requirements for a more compact and economical solution. The agreement also formalizes the terms of a previously announced customer warranty campaign through which A123 and BAE Systems are sharing in a program to retrofit and upgrade battery packs on hybrid busses in the field.

"We believe that our programs with BAE Systems have served as validation of our Nanophosphate battery technology as a dependable solution for hybrid bus applications, which has helped establish A123 as the leading provider of lithium ion battery systems for the heavy vehicle market," said Jason Forcier, vice president of the Automotive Solutions Group at A123. "We believe that our selection as the lithium ion battery supplier for BAE's HybriDrive Series propulsion system for city transit buses and other commercial vehicle applications serves as further validation of our core technology while also emphasizing A123's ability to develop cells and systems that meet customers evolving technical requirements."

About A123 Systems

A123 Systems, Inc. (Nasdaq:AONE) is a leading developer and manufacturer of advanced lithium ion batteries and energy storage systems for transportation, electric grid and commercial applications. The company's proprietary Nanophosphate® lithium ion phosphate technology is built on novel nanoscale materials initially developed at the Massachusetts Institute of Technology and is designed to deliver high power and energy density and extended life. A123 leverages breakthrough technology, high-quality manufacturing and expert systems integration capabilities to deliver innovative solutions that enable customers to bring next-generation products to market. For additional information please visit www.a123systems.com.

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Safe Harbor Disclosure

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks, uncertainties and other factors, including statements with respect to the expected expansion of the A123-BAE Systems relationship to include commercial vehicle applications in addition to transit buses, the expected use of A123's battery packs on BAE Systems' next-generation HybriDrive series propulsion systems, the expected timing for delivery of A123's prismatic battery cells to BAE Systems and their anticipated benefits, the ability of such prismatic cells to meet BAE Systems' requirements, A123's expectation to continue working closely with BAE Systems in the future, the expected demand for A123's and BAE Systems' products, the anticipated expansion of BAE Systems' hybrid electric solutions, and the market for alternative-energy transportation in commercial transportation applications. Among the factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: delays in customer and market demand for and adoption of BAE Systems' hybrid electric solutions, delays in the development, availability and delivery of A123's products, delays in the development of BAE Systems' products, delays in the scale-up, revalidation and increased efficiency of A123's manufacturing capacity, delays in A123's manufacturing ramp, the potential for manufacturing defects, any failure of A123's prismatic cells to achieve their expected performance, capabilities, benefits, cost reductions and technical advantages, adverse economic conditions in general and adverse economic conditions specifically affecting the markets in which A123 and BAE Systems operate and other risks detailed in A123 Systems' 10-Q for the quarter ended March 31, 2012 and other publicly available filings with the Securities and Exchange Commission. All forward-looking statements reflect A123's expectations only as of the date of this release and should not be relied upon as reflecting A123's views, expectations or beliefs at any date subsequent to the date of this release.

CONTACT: A123 Systems PR Contact:

         A123 Systems

         Dan Borgasano




         A123 Systems IR Contact:

         ICR, LLC

         Garo Toomajanian



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