SAN FRANCISCO - Lithium-ion battery maker A123 Systems is increasing its focus on the automotive market, creating a new business unit led by a former auto parts executive.

A123 said on Friday it has created two business units, one called the automotive solutions group which will focus on the transportation market, and another that will work on cell design and development.

The auto group will work with automakers and major suppliers to provide battery systems for hybrid, plug-in hybrid and electric vehicle technology, the company said.

The two new units will operate alongside A123's Energy Solutions Group, which develops battery systems for the electric grid and consumer product markets.

A123, founded by scientists linked to the Massachusetts Institute of Technology (MIT), is working with German luxury carmaker BMW, U.S. automaker Chrysler and France-based Renault. It also has relationships with suppliers like Delphi and Magna Steyr.

The Watertown, Massachusetts-based company, which has a history of losses, enjoyed a successful initial public offering in September with the price of its shares jumping 50 percent on their first day of trading.

But investor concerns have surfaced after A123's major customer, Chrysler, said last week it would dismantle its team working on electric vehicles and fold its plans into Fiat SpA.

A123, in an effort to allay concerns, has said it was in various stages of talks with seven different passenger car customers.

(Reporting by Poornima Gupta, editing by Matthew Lewis)