Earlier Tuesday, A123 Systems (AONE) announced a new advance in the company's automobile battery technology. The announcement of the "nanophosphate EXT" sent shares of A123 Systems up as more than 50% on Tuesday.

The stock closed up nearly 52% to $1.58.

Spokesman Dan Borgasano stated that the new technology allows the company's lithium-ion batteries to operate in lower temperatures. Previously, lead acid was the only vehicle battery chemical that could perform in a low-temperature environment.

Borgasano stated that the batteries have an opportunity to serve the micro-hybrid market, while noting that automobile manufacturers are expected to produce 39 million micro-hybrids annually by 2017.

A micro-hybrid vehicle is different from a traditional hybrid. When a micro-hybrid comes to a stop at an intersection, the combustion engine shuts off. The car relies on batteries to keep the air-conditioning, radio and electronics running until the driver hits the accelerator. When the driver accelerates, the electric portion of the car kick-starts the engine.

Borgasano stated that the new batteries will be used by a prominent German automaker in the future, although he declined to name the company specifically.

The batteries cost around $250 more than competing advanced lead-acid batteries. However, the new batteries have a financial break-even point of about three years. A123 Systems' new batteries are lighter weight, use less fuel and last longer than current advanced lead-acid batteries. The company's new batteries last around seven years, in comparison to the 18-to-24 month life cycle for current advanced lead acid batteries.

With regards to competitor imitation concerns, Borgasano says A123 Systems has patents pending on most of the components of the new battery.

Despite the strong rally this morning, shares of A123 Systems are still negative year-to-date. The company has reported adjusted losses per share below analyst expectations in each of the previous five quarters.

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