Massachusetts battery maker A123Systems said yesterday that it would work with General Motors (NYSE: GM [1]) to develop batteries for the car maker's new Chevrolet Volt electric vehicle.

The new batteries will use A123System's Nanophosphate battery chemistry for use in GM's electric drive E-Flex system.

The Detroit automaker first showed off its E-Flex architecture this year in the Chevy Volt concept car.

In April, A123Systems' batteries made the news when The KillaCycle, the world's fastest electric vehicle, broke the world record again using lithium-ion batteries from A123Systems (see Motorcycle powered by A123Systems sets new world speed record [2]).

Earlier this year, GM awarded contracts for advanced development of battery packs to Michigan-based Compact Power, a subsidiary of Korean battery maker LG Chem, and to Continental Automotive Systems, a unit of Germany's Continental.

Compact Power will use battery cells developed by its parent company, while Continental will use the cells being co-developed by GM and A123Systems.

GM's hybrid models now in production include the GM diesel hybrid electric system for large city buses, the Saturn Vue and Saturn Aura Green Line hybrid models and the Chevy Malibu hybrid.

Founded in 2001, A123Systems' Nanophosphate technology is based on a nanoscale material originally developed at the Massachusetts Institute of Technology.

The company has raised over $100 million in private funding to date.

Investors include Alliance Bernstein, FA Technology Ventures, North Bridge Venture Partners, Sequoia Capital, YankeeTek and others.