Battery builder A123 Systems that won $249 million federal grant files for bankruptcy

Justin Hyde
Motoramic
Yahoo! Autos
10/16/2012

No company has embodied Washington’s hope for an American-built electric vehicle business like A123 Systems. The Massachusetts-based company was supposed to become the leading home-grown supplier of lithium-ion batteries for automakers in the United States and around the world — fueled in part by a $249 million grant from the Obama administration. Today, A123 Systems filed for bankruptcy, saying much of its assets would be sold after losing $857 million over the past several years. Here’s why it failed.

…President Barack Obama hailed A123 with Chief Executive David Vieux [sic; spelled Vieau] for its plans to create 2,000 jobs by 2012. A123 also won $125 million in grants and tax credits from Michigan state officials for building plants there. I was in the audience covering the event, and walked out of the White House while talking to two new A123 employees — both grateful engineers who had lost jobs in the recession and spent months e-mailing resumes with few responses…

…But A123 was never able to turn the promise of its creation by MIT students and faculty into real-world products. It lost out on supplying batteries for the Chevrolet Volt to South Korea’s LG Chem, with General Motors executives at the time citing the more established firm as a safer bet. A123 did eventually win a GM contract for batteries in the upcoming Chevrolet Spark EV, but that wasn’t expected to be a high-volume model.

A123’s biggest bet lay with Fisker Automotive, and when the Fisker Karma suffered a series of launch delays and sales far below expectations, A123’s finances began to take a hit. The company also had to spend $66 million on a recall of its Karma battery packs in 2011 due to a charging defect. While it tried to find other uses for its batteries outside the auto industry, none came close to generating the kind of revenue a major automotive supply contract might.

Since that Rose Garden speech, American have proven far less excited about electric vehicles than what the Obama administration expected…

Read the entire article at Yahoo! Autos

Related: Electric car battery maker A123 Systems, of Obama-stimulus fame, files for bankruptcy

…As an avid free-trader, I have zero problems with a foreign company that sees an opportunity exploring the possibility of investing in an ailing company — Americans don’t have much interest in buying electric cars, but maybe China has a demand where we don’t — but it’s kind of tragically hilarious that the Obama administration so often touts their renewable-energy “investments” as avenues towards making us “energy-independent” and more competitive with China. What’s more, President Obama, DOE Secretary Chu, and then-Michigan Governor Jennifer Granholm all hailed A123 specifically as an innovator helping to bring about the future green economy of their utopian (dystopian?) visions. 63,000 jobs? Not so much…

Clean-energy Obama crony A123 announces debt default; Update: files for bankruptcy

After Bankruptcy of A123 Systems, Fisker Keeps Calm and Carries On

A123 Systems Wins Court Approval of Bankruptcy Loan

A123 Systems Inc. (AONE), the U.S. electric-car battery maker that filed for bankruptcy this week, won court approval to borrow as much as $15.5 million from Johnson Controls Inc. while it prepares to sell its assets.

U.S. Bankruptcy Judge Kevin Carey approved the interim financing at a hearing today in Wilmington, Delaware, after Johnson Controls cut the interest rate to 13.5 percent from 15 percent following talks held during a break. A123 is scheduled to return to court Oct. 30 to seek approval of the remainder of the $72.5 million loan…

Comments are closed.

Categories