A123 Systems has signed a production agreement with Navistar to supply lithium ion battery systems for electric vehicles (EVs) for the Navistar-Modec EV Alliance, a joint venture in the UK.

According to the supply agreement, which builds upon an earlier development agreement that was announced in March, A123 will manufacture battery systems for the eStar electric delivery vehicle at its Livonia, Michigan facility.

A number of vehicles have already been shipped to Federal Express as part of the earlier development agreement.

The work is partially funded by American Recovery and Reinvestment Act (ARRA) funding, administered by the US Department of Energy.

The vehicle will be assembled in Wakarusa, Indiana, and is scheduled for launch in mid-2010.

“A123’s battery pack will enable the Navistar electric vehicle to travel a distance of approximately 100 miles on pure electricity before needing to be recharged. The battery pack will be capable of a rapid charge rate and will have a charge time dependent on the power of the charging system applied,” the company claimed.