• MSNBC/AP, Friday, August 10, 2007 12 PM

General Motors has signed a deal with A123 Systems to develop nanophosphate lithium-ion batteries--which are currently used in cordless power tools--for use in its automobiles. The agreement could propel it ahead of Toyota in the race to bring plug-in hybrid and electric cars to market, says GM vice chairman Bob Lutz.

Problems with lithium-ion technology has forced Toyota to back away from plans to roll out the vehicles between 2008 and 2010. Lutz says the lithium-ion battery being discussed by GM is safer and manages heat better than the technology Toyota was using. He also hopes to be first to market with a pure electric vehicle that has a piston engine as an emergency backup, similar to the Chevrolet Volt prototype that the company unveiled at the North American International Auto Show in Detroit in January.

A123 expects to have the batteries, which would be flat and similar in appearance but larger than those that power cell phones, ready for GM to test in vehicles by October. GM still hopes to have electrically powered vehicles on the market by the end of 2010.

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