In another sign of interest in more powerful batteries and the companies that make them, A123Systems on Monday said it closed a $30-million round of private equity funding.

GE, Alliance Capital Management, and FA Technology Ventures were new investors in the startup. Previous investors Motorola, Qualcomm, North Bridge Venture Partners, Sequoia Capital, Massachusetts Institute of Technology, OnPoint, YankeeTek, and A123Systems Chairman Desh Deshpande also participated in the financing.

At Sequoia Capital, A123Systems’ funding comes from Michael Moritz’ portfolio. Mr. Moritz, recently named as the top venture capitalist on the Forbes Midas list, previously invested in Google, Yahoo, and PayPal.

Including this round, A123Systems has raised $62 million. The company says it will use the money to increase manufacturing capacity, to support its customer base, to grow sales, and to develop batteries for hybrid-electric vehicles and other markets.

“It gives us the capital that we need to expand our product offerings and manufacturing capacity into a whole series of new applications,” CEO David Vieau said.

A123Systems came out of stealth mode in November, when it announced an agreement to provide lithium-ion batteries for a line of Black & Decker power tools expected to launch this year, and said it had raised $32 million in venture capital (See Battery Pumps Up Power Tools).

Tinkering With the Chemistry

Lithium-ion batteries are commonly used in phones and laptops, and usually include a carbon-based anode, which is the part where the electrical current enters, and a lithium-cobaltide-based cathode, which is where the current exits.

A123Systems uses a nanotech material called doped nano-phosphate, in place of lithium cobaltide, at the cathode.

Lithium-ion cells can provide the same energy as nickel-metal-hydride batteries with 20 to 30 percent less weight, so they are attractive to companies who want to make more powerful, lighter, or longer-lasting cordless power tools.

But traditional lithium-ions dispense small amounts of power over longer periods of time, and power tools require higher amounts of power over shorter amounts of time. Cordless tools typically require about 600 watts over 20 minutes, compared with the 30 watts over three hours required by the average notebook PC, Mr. Vieau said.

A Powerful Trend

After about a decade of development, higher-power batteries are just beginning to roll out of the labs. E-One Moli Energy’s lithium-ion battery came out last year when Milwaukee Electric Tools introduced its line of 28-volt lithium-ion-based tools.

Also last year, Makita launched a series of 18-volt lithium-ion-based tools in the United States, and Tokyo’s Max launched a lithium-ion-powered hammer drill in Japan.

A123Systems claims its batteries are safer than traditional lithium-ions, provide five times as much power, and have a cycle life of up to 10 times longer. “Cycle life” refers to the number of times a battery can be recharged.

The tradeoff is in energy, or the length of time the battery lasts between charges. Mr. Vieau said the battery provides about 40 percent less energy when compared to a standard laptop lithium-ion.

While A123Systems faces competition from companies like Sanyo, Sony, LG Electronics, E-One Moli, and Valence, a Red Herring 100 company, Mr. Vieau said A123Systems’ technology compares “very favorably” to all those offerings.

“Power, safety, and life—it’s that combination,” he said. “Some claim higher safety, but low cycle life, or claim pretty good power, but the safety is not so good, or the cycle life is not so good. We have a unique feature set that is very well-suited to these applications.”

A123Systems has not released specifications for its battery.

“Nobody’s seen their cells, to the best of my knowledge, except for Black & Decker DeWALT,” said Blair Tweten, manager of sales and marketing at E-One Moli Energy.“There’s not a lot of information on the company. I don’t believe someone like Black & Decker would have chosen them if it wasn’t a good cell, but nobody has been able to test the cell; I don’t know of anyone else getting samples.”

But overall, Mr. Tweten said A123Systems’ announcement is good news.

“We’re happy to see other manufacturers entering the high-power power-tools market,” he said. “It establishes that the market is there.”

On the Road to Hybrids

Aside from power tools, high-power batteries could eventually end up in hybrid vehicles. Like power tools, hybrids require high power and less energy density. Replacing nickel-metal-hybride batteries with lithium-ions could result in better mileage.

“The level of interest and excitement surrounding A123Systems clearly illustrates the momentum behind creating a new generation of batteries that will promote the development of clean technology applications,” said Mark Huang, senior vice president of GE Commercial Finance for Technology Lending.

Mr. Vieau said A123Systems is already in early stage discussions in the hybrid market, as its technology has shown good performance in preliminary testing for hybrid protocol. He expects it will take four to five years to integrate the company’s lithium-ions into hybrid vehicles. In the meantime, he said A123Systems batteries could also go into military applications, as well as in aircraft, scooters, and lawn and garden appliances.