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Lithium-ion battery maker A123 Systems Inc. (AONE) posted a wider first-quarter loss Tuesday and missed analysts’ expectations as costs exceeded revenue amid efforts to grow with the global electric-vehicle market.

Separately, A123 announced Tuesday an agreement with industrial manufacturer Eaton Corp. (ETN) to supply battery systems for a plug-in hybrid electric version of Ford Motor Co.’s (F) medium-duty F550 truck. The program was awarded a $45 million grant by the U.S. Department of Energy.

A123 currently makes dell latitude 600m battery for hybrid buses made by Daimler AG (DAI, DAI.XE) and U.K. defense contractor BAE Systems (BA.LN), but the company’s main focus is the passenger- vehicle market, said David Vieau, chief executive officer.

“There’s been a tremendous upsurge in activity in the last six to 12 months,” Vieau said in an interview.

A123 is producing dell u4783 battery systems for Chinese auto maker Shanghai Automotive Industry Corp. as part of a joint venture that will produce dell GD761 laptop battery battery systems for plug-in hybrid and all-electric vehicles. The company also is working with BMW AG (BMW.XE) on a hybrid-electric vehicle due on the market in late 2012, and with U.S. start-up Fisker Automotive on its Karma plug-in hybrid luxury sedan, due out early next year.

A123 recently signed an agreement to develop new-generation battery cells for a top auto maker, Vieau said, although he declined to name the company or provide details due to a confidentiality agreement.

“We typically can’t announce customer names and projects,” he said.

Shares were off 5.5% to $9.60 in after-hours trading. The company’s stock has been volatile since its September initial public offering as A123′s fortunes are seen rising or falling with the electric-vehicle market, which analysts predict will start rolling in 2012. So far this year, the stock has lost about half of its value.

While the company participates in a segment of the auto industry that is new and growing, it’s unclear how much of that market A123′s technology will capture as it battles larger rivals with years of experience in making batteries.

Vieau said spending money now, to nail down market share for 2012 when the electric-vehicle market gets going, is a good use of resources.

“It’s evident we’re spending more money on global expansion and increasing our burn rate here, while we do the scale up,” Vieau said. “We belive it’s the right time for the company to make investment in this business.”

On Tuesday, A123 posted a loss of $29 million, or 28 cents a share, compared a loss of $18.7 million, or $2.02 a share, a year ago, when there were just 9.3 million outstanding shares. The number of outstanding shares has since jumped to 103.6 million.

Revenue grew 5.4% to $24.5 million.

Analysts surveyed by Thomson Reuters expected a loss of 22 cents a share on revenue of $25 million.

Total costs climbed 24% to $26.5 million.

A123 said construction of a new factory in Michigan will expand its production capacity by 200 megawatt-hours to 760 megawatt-hours. A123, with about 1,600 employees, already has manufacturing plants in China and Korea, and is present in a total of 10 countries.