Submitted by EnergyTechStocks.com

As automakers respond to rising gasoline prices by rushing to turn out gas-electric hybrid models, companies developing lithium-ion batteries that can store more energy are attracting a lot of investor attention. Receiving far less attention are companies that build the packs and the associated power electronics, in particular, Germany’s Continental AG, which looks like it could be a really big winner.

Mercedes-Benz recently announced what it described as a critical technological breakthrough. “The Stuttgart-based automaker is the world’s first manufacturer to have succeeded in adapting lithium-ion technology to the demanding requirements of automotive applications,” the company said in a statement. By as early as mid-2009, Mercedes plans to sell an S-Class hybrid with a lithium-ion battery pack from Continental. “This marks an important breakthrough for Continental as supplier of battery systems,” the company said in a statement.

Continental is “a force to be reckoned with,” according to Michael Millikin, who runs the authoritative web site Green Car Congress. “In addition to their Mercedes contract, they are one of the suppliers of the (Chevrolet) Volt pack, with A123 Systems providing the cells,” Millikin told EnergyTechStocks.com, adding, “Big automakers like dealing with big suppliers that understand the dynamics of automotive production.”

To be sure, Mercedes, not Continental, grabbed the headlines when the new hybrid S-Class vehicle was announced. According to Reuters, the automaker said “the main advantages of its newly developed lithium-ion battery were its very compact dimensions and far superior performance relative to conventional nickel-metal hybrid batteries, such as those powering the Toyota Prius.”

But investors should remember that without Continental, neither Mercedes nor General Motors would be as well-positioned as they are for the coming era of electrified transportation.

(For more on companies developing the lithium-ion batteries that will go into packs made by companies like Continental, see:

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