Cobasys - a joint venture between Chevron Technology Ventures (NYSE: CVX) and Energy Conversion Devices (NASDAQ: ENER) - today announced it has signed a memorandum of understanding with A123Systems to develop, manufacture, sell, and service lithium ion energy storage systems for hybrid electric vehicle (HEV) applications.

The agreement will include joint development, marketing and supply of A123Systems nanophosphate lithium batteries and Cobasys systems integration and manufacturing of battery systems for HEV markets.

Cobasys' own NiMH-based battery systems had been criticized for their heavy weight.

Under the agreement, Cobasys will act as the lead supplier, providing technical assistance and expertise for the design and development of battery system products including packaging, thermal management, wiring, electronics and control algorithms. Cobasys will help develop the requirements and specifications to meet the integration needs of customers and partners and will provide the validation testing of fully integrated lithium battery systems.

A123Systems will manufacture and supply its nanophosphate lithium ion cells and technology.

"The agreement to unite Cobasys system expertise with A123Systems lithium technology further exemplifies our vision to be recognized as the world's most admired energy storage integration solutions company," said Thomas S. Neslage, Cobasys President & CEO.

The pairing will complement Cobasys' strong current production battery system product offerings with A123Systems lithium technology, giving customers expanded choices for hybrid electric vehicle programs, the companies said in a statement.

Cobasys designs, manufactures and integrates advanced battery system solutions for transportation markets, including Hybrid Electric Vehicles (HEV), Electric Vehicles (EV) and 36/42 Volt applications and to stationary markets, including Back-Up power supply systems for Uninterruptible Power Supply (UPS), Telecom and Distributed Generation markets.

A123Systems has become one of the world's largest suppliers of high-power lithium-ion batteries. Based on the company's patented nanophosphate technology, the batteries deliver previously unattainable levels of power, safety and life.