Troy, Mich.-based Compact Power announced that it signed a $12.9 million contract to develop batteries for plug-in hybrid-electric vehicles for the United States Advanced Battery Consortium, USABC.

The consortium is part of the United States Council for Automotive Research and comprises the Big Three U.S. automakers.

The agreement, which starts this month, is for a 27-month period. Compact Power said it will make the batteries for 10-mile range PHEVs using high energy and high power manganese-spinel cathode chemistry.

"Our combined efforts are leading the way toward establishing lithium-ion as a viable battery technology for powering hybrid-electric vehicles in North America while, at the same time, safeguarding the environment," said Prabhakar Patil, CEO of Compact Power.

Compact Power, part of Korea's LG Group, makes lithium-ion batteries for automotive hybrid electric vehicles and the non-automotive commercial and military markets.

"Importantly, the work we are undertaking with this new contract is very complimentary to the work we are doing with General Motors [1] on the Volt, E-Flex development program, which tells us we are on the right track with our technology."

USABC is working on the development of electrochemical energy storage technologies that support commercialization of fuel cell, hybrid and electric vehicles.

The consortium has a cooperative agreement with the U.S. Department of Energy for research and development of battery technologies.