Chrysler has selected U.S. battery maker A123Systems as its supplier for the company's upcoming line of electric and plug-in hybrid vehicles. This announcement could help to turn around a company on the brink as well as revive Michigan's auto industry.

Agreeing to buy batteries from A123 is significant on many levels:

-- Chrysler has been late to the game in hybrids and EVs, and naming a battery supplier for its upcoming electric vehicles (including the Dodge Circuit EV, Jeep Wrangler EV, Jeep Patriot EV, Chrysler Town & Country EV) is an indication that it might actually meet its 2010 date for shipping production vehicles.

-- A123Systems isn't just the first battery supplier alphabetically, it's also the first American battery company named as a partner by a major electric vehicle OEM. The DOE (and taxpayers) have pumped in billions of dollars into U.S. research in advanced batteries (USABC), but with little to show for it. Now the program has more legitimacy.

-- Chrysler is in the middle of tough negotiations with the Obama administration for funding and other aid to move away from the brink of disaster. This announcement is great PR for enable Chrysler to avoid bankruptcy. A123Systems says it will manufacture the batteries in Michigan, so you better believe that Governor Granholm will be arguing on Chrysler's behalf. Michigan desperately needs automotive jobs, so shunning Chrysler would be hard for Obama to swallow.

-- It legitimizes A123''s nanophosphate lithium ion battery technology. The technology is purported to be safer, cheaper and more durable than lithium ion alternatives.

Could EVs save Chrysler? Unlike GM, Nissan, Mitsubishi and others, the company hasn't been out front in talking up all new PHEV/EV designs, instead focusing on offering electric versions of its existing models. The company is betting that consumers might feel more comfortable with electrified models of known brands. Whether this is smart or not remains to be seen.