The contract builds on an existing contract between the two companies which resulted in shared expertise at battery cell level. A123 will now collaborate with GM to develop calibrations and software controls for new units ahead of their production.

GM said it had tested the manufacturer’s Nanoohosphate lithium ion units at its Global Battery Systems laboratory (pictured) in Warren Michigan. The carmaker has yet to announce which vehicles will feature systems developed as part of the contract.

Micky Bly, GM’s executive director – Global Electrical Systems, Infotainment and Electrification said: ‘GM is committed to offering a full line of electrified vehicles – each of which calls for different battery specifications.

‘We work with a variety of battery developers and A123’s advanced Nanophosphate lithium ion technology offers ideal performance capabilities for a future electrified vehicle application.’

Following the announcement, A123's share price jumped instantly as markets opened today according to the NASDAQ and continued to rise through the morning.