Lithium-ion car battery maker A123 Systems Inc on Tuesday raised the estimated price of its initial public offering by 23 percent and now expects proceeds of about $276 million.

A123 estimated it will sell 25.7 million shares at $10 to $11.50 apiece, according to a filing with the U.S. Securities and Exchange Commission. The original price range was $8 to $9.50.

The IPO is set to price on Wednesday and start trade on Nasdaq the following day,

The A123 IPO comes amid a flurry of eight deals this week and is likely to test how much risk IPO investors are ready to take on. It will be the first IPO this year by a company never to have made a profit.

Still, A123's revenue nearly doubled to $42.9 million in the first half of 2009 compared with the year-earlier period. But the company recorded a loss of $40.7 million, due in part to high research and development costs.

A123, founded by scientists linked to the Massachusetts Institute of Technology, develops batteries and battery systems for hybrid electric vehicles, plug-in hybrid electric vehicles, and electric vehicles and works with such carmakers as BMW, Chrysler and General Motors Co.

A123 began selling its products commercially in 2006 and now has about 1,700 employees, according to the filing. It first filed for its IPO in August 2008.

According to the updated filing, the Massachusetts-based company expects net proceeds from the IPO of $247.7 million and will use the funds to expand its manufacturing capacity and possibly acquire other companies.

Of the 25.7 million shares being sold, 2.6 percent are being offered by existing shareholders.

The IPO is being managed by Morgan Stanley and Goldman Sachs. (Reporting by Phil Wahba; editing by John Wallace)

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