The Truth About Cars » A123 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Wed, 23 Jul 2014 18:25:17 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » A123 Delaware Bankruptcy Judge Approves Sale Of Fisker Automotive to China’s Wanxiang Tue, 18 Feb 2014 17:50:27 +0000 800px-Fisker_Karma_2
Last week, Rueters reported that Wanxiang, a Chinese parts supplier, had won the bankruptcy auction for Fisker Automotive. The bid was valued around $149.2 million. The deal comes to close after a bidding war between Wanxiang and Hybrid LLC — a group who includes Richard Li, a Fisker investor and Hong Kong billionaire. In November, Fisker asked for Hybrid Technology LLC to purchase the bankrupt company for $25 million, but creditors objected the deal in November and brought Wanxiang into the case in December.

Today Delaware, U.S. Bankruptcy Judge Kevin Gross approved of the sale to Wanxiang. He stated that the auction “shows that a fair process is a good thing.”

The sale came after a 19 round biding war between Wanxiang and Hybrid Technology LLC, and includes the shuttered General Motors assembly plant that Fisker purchased in 2010. Bloomberg reports, “[the] offer includes $126.2 million in cash, plus equity and $8 million in assumed liabilities.”

Wanxiang also bought A123 Systems Inc. last year after its bankruptcy for $256.6 million. A123 produced the Fisker batteries, which Henrick Fisker attributed to the failure of Fisker after A123 went through bankruptcy in October of 2012, and exiting in March of 2013.


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Lutz And Chinese Offer One Penny On The Dollar For Fisker Thu, 23 May 2013 10:33:24 +0000 Bob Lutz  Picture courtesy

Fisker is worth around 200 Karmas at retail. “A team including former General Motors Co executive Bob Lutz and China’s largest parts maker is looking to buy Fisker Automotive for $20 million, a fraction of the “green” car company’s estimated worth almost a year and a half ago,” Reuters says.

Late 2011, Fisker told prospective investors that its total capitalization was “approaching” $2 billion, according to an investor document filing obtained by Reuters. If the bid is successful, Fisker would have officially lost 99 percent of its valuation over the course of  less than two years.

Fisker now owes the DOE some $171 million in loans. Another deal is in the works to buy out the DOE’s position in Fisker at a discount. The DOE had no comment.


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Reuters: Lutz To Help Chinese Buy Fisker On The Cheap Wed, 22 May 2013 16:49:42 +0000 VL Destino - Picture courtesy

When former TTAC Editor-in-Chief and now Editor emeritus Edward “Op-Ed” Niedermeyer wrote an op-ed in the Wall Street Journal and warned that GM’s center of gravity shifts more and more to China, GM’s  retired multi-role fighter Bob Lutz  reamed Ed via Fortune.  Now, Bob Lutz himself appears to be an accessory in a deal that transfers  U.S.  government-financed  technology to China for pennies on the dollar.  Says Deepa Seetharaman, in-house alternative drivetrain expert at the Reuters Detroit office,  in her in-depth article:

“VL Automotive and China’s Wanxiang Group are looking to gain control of Fisker through a prepackaged bankruptcy. This comes alongside a separate push by investors in Europe and Hong Kong, including billionaire Richard Li, to buy out the U.S. Department of Energy’s position in Fisker.”

Here are the players:

Fisker hasn’t made a car since last July, and hasn’t built many before. Fisker hired bankruptcy advisers after firing most of its workforce.

The U.S. Government awarded Fisker a US$529 million green-energy loan in 2010, of which Fisker collected nearly US$192 million until 2011. Then, he government froze the loan.

VL Automotive is a venture between  Bob Lutz and his partner, industrialist Gilbert Villarreal, hence the VL.  At the Detroit auto show this year, VL Automotive showcased a car called the VL Destino, “which combines the shell of a Fisker with the guts of a Chevrolet Corvette ZR1,” says Reuters. The car is said to cost around $180,000.

Wanxiang is China’s largest automotive components manufacturing company. Wanxiang successfully bid for Fisker’s battery supplier, A123 Systems after the company went bankrupt.. This week, a judge approved the bankruptcy plan for A123.

The government loan is in the way of selling Fisker. “Prospective buyers have been unwilling to assume the obligations spelled out in the loans,” sources told Reuters.

According to Reuters, a deal is being negotiated in which a Hong Kong finance group would buy out the government’s loan, most likely at a steep discount. Then the assets could be sold to Wanxiang and VL. Especially independent Chinese automakers need to export to fill their idle capacities. To be able to compete, they need foreign technology.


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A123 B456 System Bankruptcy Plan Approved Tue, 21 May 2013 16:54:11 +0000

B456 Systems, the lithium-ion battery maker formerly known as A123 Systems, won court approval for its bankruptcy plan. It gives unsecured creditors of the company about 65 cents for each dollar owed, Reuters says.

B456 had received a $249 million grant from the U.S. government. About half the money was never released. B456 received court approval to sell its automotive battery business and related assets to China’s Wanxiang Group.

B456 makes lithium-ion batteries for Fisker Automotive, BMW hybrid 3- and 5-Series cars, and General Motors Co’s all-electric Chevrolet Spark. The company filed for bankruptcy in October due to weaker-than-expected demand.

At least, they kept their humor when naming their new old company.

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Fisker May Follow A123 To China Fri, 15 Feb 2013 17:23:16 +0000

Reports by Bloomberg suggest that Fisker could sell up to an 85 percent stake to Chinese automaker Dongfeng. The automaker apparently bid $350 million for the beleaguered plug-in car maker, according to sources close to the company.

With a $200 million Department of Energy loan still outstanding, and a possible cash crunch looming mid-year, Fisker has been looking for a buyer. Company spokesman Roger Ormisher told Bloomberg

“The company has received detailed proposals from multiple parties in different continents, which are now being evaluated by the company and its advisers,”

If Fisker were to be sold to Dongfeng, the possibility exists that production of its vehicles would move from Finland to China, without the ex-GM factory in Delaware having ever produced any cars. Fisker’s battery supplier, A123 Systems, declared bankruptcy in 2012, and was sold to a Chinese firm.

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Bankrupt A123 Sold Off To China – Washington Says It’s Cool, Now What About Those 63,000 Jobs In Michigan? Tue, 29 Jan 2013 15:03:33 +0000


U.S. government funded and nonetheless bankrupt battery maker A123 will be Chinese. China’s Wanxiang emerged as the successful bidder in December. All the deal needed  was U.S. government approval. The deal has been approved, says Reuters.

According to the report, the U.S. government committee on foreign investment approved the sale. Some members of Congress and retired military leaders warned against transfer of sensitive technology to China. In blogging circles, the deal was pronounced as good as dead. It wasn’t.

Battery maker A123, hailed by Michigan Governor Jennifer Granholm as a contributor to “63,000 jobs,” praised by Senator Levin for hiring “thousands of employees by next year,” praised again by Senator Stabenow for creating “thousands of jobs for us in Michigan,” will power the creation of thousands of jobs in China instead.

A123 had received a $249 million grant from the U.S. government. Wanxiang did bid a similar amount, $257 million, and won against Johnson Controls.

Where are Obama, Granholm, Stabenow and Levin when no one really needs them?

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Surprise: U.S. Government Won’t Give Money To Chinese-Owned A123 Tue, 11 Dec 2012 13:38:09 +0000 Battery maker A123 was sold to China’s Wanxiang Group, but the company won’t come with more government money. The DOE won’t give A123 Systems Inc. the balance of a $249 million grant, a department official tells Reuters. Wanxiang, in the meantime, let it become known that it did not ask for the grant money, and that it did not anticipate receiving it.

The deal needs court and U.S. government approval. Court approval is more or less certain after Wanxiang outbid Johnson Controls. Approval by the Committee on Foreign Investment in the United States (CFIUS) is another matter. The U.S. government is under a lot of criticism for throwing good money after bad companies.

If the deal won’t get government approval, A123 would be put back on the auction block, whereupon Johnson Controls would be very interested in bidding again, Alex Molinari, president of Johnson Controls Power Solutions, told Reuters.

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China’s Wanxiang Successful Bidder For Government-Backed A123 Sun, 09 Dec 2012 14:40:21 +0000

Wanxiang Group, China’s largest maker of auto parts won the auction for A123 Systems, Reuters says. The maker of batteries for electric cars was funded partly with U.S. government money, but went bankrupt nonetheless.

Investment banker Lazard Freres told Reuters that Wanxiang’s bid of about $260 million was better than a joint bid of Johnson Controls and Japan’s NEC.

Wanxiang supplies auto parts to many of China’s largest automakers. Wanxiang generates about $1 billion in revenue in the United States by supplying parts to GM and Ford Motor Co and has bought or invested in more than 20 U.S. companies, many of them in bankruptcy.

The sale must be approved by Delaware Bankruptcy Court judge Kevin Carey at a hearing scheduled for Tuesday. It also needs the approval of the Committee on Foreign Investment in the United States.

A213 also supplies the U.S. military, and there is opposition to a Chinese company having access to sensitive technologies being used the U.S. military.

However, the part of A123′s business that works with the U.S. Defense Department went to another unidentified bidder, a source told Reuters.

Quite interestingly, the $260 million are just a little more than the $249 million grant A123 has received from the U.S. government. It is not clear whether the grant can be transferred to a new owner.  Even more interestingly, A123 can still draw $120 million under various government grants, court records say.

A123 supplies batteries to Fisker. Fisker stopped production saying it needs to wait until the new owner of A123 has been determined.

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Siemens and NEC Added to List of A123 Buyers Thu, 06 Dec 2012 20:42:35 +0000 In the bankruptcy auction for EV battery maker A123 that begins today, Reuters is reporting that NEC of Japan and Siemens of Germany are going to join China’s Wangxiang and Wisconsin’s Johnson Controls in bidding for the entire company.

In addition to those trying to buy the company in toto there are also reported to be a number of interests looking to salvage individual pieces of the battery company, like its brand new but well underutilized factory in Holland, Michigan. If either NEC, Siemens or Wangxiang wins the auction they would probably still need the approbation of the Committee on Foreign Investment in the United States. The U.S. government has also indicated that it will have to approve any purchase that involves transferring the $249 million Dept. of Energy grant that A123 was given. All of the bodies that have to give their approval are in the executive branch, so politics may enter into the decision. The Pope is also a Roman Catholic and bears indeed defecate in the woods. National security is a part of the equation as well because A123 has at least one contract for the Pentagon that is classified. All of that seems to favor the one domestic bidder, Johnson Controls.

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Fisker Runs Out Of Batteries, Stops Karma Production Fri, 30 Nov 2012 06:18:43 +0000

Fisker put production of its Karma plug-in hybrid on hold. Reason: It is running out of batteries. Bankrupt battery manufacturer A123 Systems has cut its output.

According to a Reuters report, Fisker has enough lithium-ion batteries on hand in case an owner needs a replacement, but that’s it.

A123 will be auctioned-off on December 6, and Fisker hopes to receive more clarity and hopefully batteries from the new owners.

Johnson Controls and China’s Wanxiang Group seem to be the main bidders. Other interested parties may be NEC of Japan and Germany’s Siemens. Says Reuters:

“The U.S. government said this week that A123 could not be sold without its consent. Fisker and A123 have both received funding under a federal program designed to create an advanced vehicle manufacturing base in the United States.”

The Chinese government already approved the purchase on A123 by Wanxiang.

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A123 Wants to Void Contract with Fisker, Fisker Says That Would Disrupt “Ongoing Business” Thu, 01 Nov 2012 17:08:51 +0000 A123 Battery Pack for Fisker Karma Image courtesy of A123. Not exactly your standard AA cells.

While Johnson Controls and China’s Wanxiang Group have competing bids to acquire the assets of advanced battery maker and Fisker supplier A123, a more serious battle is occurring in U.S. Bankruptcy Court in Delaware between the startup automaker and what is arguably its most important vendor. A123 wants the bankruptcy judge to void its contracts including those for supplying batteries to Fisker. That could stop production of Fisker’s only car, the Karma. A123 says that the existing contract with Fisker is burdensome and that the amount they are getting paid for those batteries is below market value. Fisker attorneys, in a filing with the court, have challenged A123 and said that “Fisker’s ongoing business and operations will be severely disrupted and harmed” if the court voids the contract. The pas de deux between the two companies may be spinning into a danse macabre. Twenty five percent of A123′s revenue comes from its deal with Fisker, while A123 is Fisker’s sole supplier of the lithium-ion batteries it needs to make the extended range EV Karma. There is no way that Fisker can find a supplier who can engineer a replacement battery pack quickly enough to keep the Karma in production. Electric vehicle batteries are not like AA cells that you can pick up at the corner store. While there are standard lithium ion battery formats, the Tesla Roadster is the only high profile EV that uses standard format Li-Ion cells. All other electric cars, including Fiskers, use cells specifically designed and engineered for them. The Fisker 20 kWh battery pack manufactured by A123 is made up of 315 individual Li-ion cells.

A123 image

Of course this is about money. One reason why A123 is in bankruptcy court in the first place is because of the financial hit the company took due to a recall of defective batteries supplied to Fisker. Since the companies are interdependent, my guess is that if the judge does throw out the contract, a new one will be cut, either between A123 and Fisker, or between whichever company, Johnson or Wanxiang, ends up owning A123′s battery factories.

With such an important vendor in bankruptcy court, Fisker is between a rock and something that would peg a Rockwell tester.

According to Fisker attorneys, “ the rejection of the Fisker contract represents an immediate threat of significant disruption and harm to Fisker’s business, with a corresponding negative impact on Fisker’s lenders, suppliers, customers and investors.” One of those lenders, of course, is the United States Treasury, American taxpayers having loaned Fisker almost 200 million dollars.

Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can dig deeper at Cars In Depth. If the 3D thing freaks you out, don’t worry, all the photo and video players in use at the site have mono options. Thanks for reading– RJS


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Fisker Asks For More Time With A123 Mon, 29 Oct 2012 13:00:29 +0000

Fisker is asking a bankruptcy judge to delay an asset sale related to beleaguered battery maker A123 Systems.

Bloomberg reports that Fisker filed an “emergency motion” to challenge the proceedings. A proposed asset sale would see Johnson Controls Inc. purchase the automotive assets of A123, including plants in Michigan and China, with JCI also looking to acquire further assets. According to court papers filed in Delaware , Gregg Galardi, an attorney for Fisker claimed that

“A hurried sale process will be damaging to the estates and deprive creditors of value that may be realized through higher and better offers…The best interests of the estates, however, are not well served through a hasty and unfair sale process designed to ensure that JCI is the ultimate purchaser.”

Other parties, including the University of Montreal and Massachusetts Clean Energy Technology Center (which was created under 2008′s Green Jobs Act and loaned money to Fisker) filed separate objections to the asset sale.

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The Chinese Still Want A123 Thu, 18 Oct 2012 02:00:06 +0000

When we reported that battery maker A123 had filed for bankruptcy, a lot of people thought that Johnson Controls is in control, and that Chinese Wanxiang is out. No and no, writes Reuters star car reporter Norihiko Shirouzu. Wanxiang still wants A123, and Johnson Controls is just one bidder in a Chapter 11 process, says Reuters.

China’s Wanxing had offered $465 million for all of A123. A123  agreed to sell its automotive operations, including two factories in Michigan, for $125 million to Johnson Controls. That “deal could be countered by other offers that would be more beneficial to A123′s creditors,” Jefferies analyst Peter Nesvold said in a research note. “Wanxiang is the most likely other participant in this process, and we are not aware of other suitors at this time.” A123’s creditors most likely would prefer someone who pays $465 million for all of A123 instead of someone who pays $125 million for a part of the company, with no takers for the rest.

In August, Wanxiang had announced its intentions to take over A123. The Chinese company immediately gave A123 a $22.5 million loan, including a cash advance of $12.5 million. Wanxiang offered more money, based on a list of requirements, including approval from the Committee of Foreign Investment and the Chinese government, as well as the absence of any default. “Shortly before filing for bankruptcy, it became apparent that A123 would fall short of some of those conditions,” Reuters remarks dryly. The bankruptcy tripped another circuit breaker.

Reuters also remarks that “A123 Systems, which won a $249 million U.S. government grant in 2009 for jump-starting its business” wanted to sell to Johnson Controls, which is “another recipient of federal green subsidies.”

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A123 Files For Bankruptcy, Johnson Controls To Take Over Tue, 16 Oct 2012 20:22:55 +0000

Reuters reports that battery maker A123 Systems is filing to bankruptcy protection in Delaware.

The company has received cash infusions from China earlier this summer, and its financial situation has been precarious, to say the least. Political controversies were also part and parcel of the story, as with any green energy project today, and A123 received a $249 million dollar grant from the Obama administration in 2009. A123 supplied battery technology to Fisker and General Motors.


Johnson Controls will be purchasing the remnants of A123, while providing $72.5 million in funding to help A123 continue operations as it goes through bankruptcy proceedings.

Crain’s Detroit Business is reporting that

Under the deal, the Waltham, Mass-based A123 will pay to license technology its own grid, commercial and government technologies from JCI.

Presumably, A123′s brand will carry on under the JCI empire. That won’t do much for the beleaguered battery company, which apparently posted 14 consecutive losing quarters, and has $376 million in debt versus $459.8 million in assets. In the filing, A123 noted

“The company may not have sufficient cash to fund operations and may need to seek the protections provided under the U.S. Bankruptcy Code…No assurance can be given that the company will be able to avoid restructuring, reorganization, or a bankruptcy filing.”

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Automakers Worried About A123 Deal, Stabenow And Levin Silent, No Phonecalls From The President Fri, 17 Aug 2012 09:20:20 +0000

U.S. Senators long have warned of an exodus of American know-how to China. Last year, Michigan Senators Debbie Stabenow and Carl Levin complained to United States Trade Representative Ron Kirk about another attempt by China ”to illegally gain an unfair advantage over the U.S. automobile industry that will cost our country jobs. The United States must respond strongly to stand up for American businesses and working families.”

A year later, the exodus is in full swing, and it starts to hurt. This time, it pains automakers to see how Chinese companies are getting their hands on taxpayer-funded secrets.

Battery maker A123, hailed by Michigan Governor Jennifer Granholm as a contributor to “63,000 jobs,” praised by Senator Levin for hiring “thousands of employees by next year,” praised again by Senator Stabenow for creating “thousands of jobs for us in Michigan,” will power the creation of thousands of jobs in China.

Two years ago, this video was posted on Youtube, complete with an allegedly impromptu telephone call, President Obama congratulated A123 “on this tremendous milestone” of being “the first American factory to start high volume production of advanced vehicle batteries.” Two years, a $249 million grant from the Obama administration, a $135 grant and tax credit from the State of Michigan later, A123 is just about out of money, and being rescued by the Chinese. China’s Wanxiang Group wants to pay $465 million for A123, a move that “may help China unlock the secrets to critical and advanced green-car technologies,” as Reuters writes in a thorough analysis of the deal.

Author Norihiko Shirouzu talked to “engineering chiefs from two global auto makers,” (he names GM and Toyota in the lede, but does not connect the names to the unnamed sources) who “expressed concern at the prospect that A123 could lose control of its fiercely guarded battery design and manufacturing know-how. They are particularly worried that Wanxiang might shift part of A123′s research and development activities to China.”

Said one Chief Engineer to Reuters:

“I don’t care if A123 manufactures more battery cells and packs in China. That wouldn’t jeopardize its technological advantage. But showing what’s inside their black box … the technology that makes those battery cells packed with energy, to its Chinese investor, which has its own battery business, is completely another matter.”

The secret sauce of A123’s batteries is iron-phosphate, a chemical that makes sometimes violently flammable lithium-ion battery much safer. Iron-phosphate is also used in batteries made by China’s BYD, a fact mentioned by Shirouzu three years ago, when he was still writing for the Wall Street Journal. There had been a low level intellectual property conflict between A123 ever since. There were reports that A123 was looking to sue BYD over the batteries, but apparently, A123 soon had more pressing problems.

Wanxiang, says Reuters, profited from the troubles of the U.S. auto industry, “having bought up distressed parts makers over the past decade. It formed a joint venture which bought and turned around Driveline Systems, an axle maker in Illinois, and has taken over parts operations from Ford Motor Co, among others in the U.S. Midwest.”

Today, Reuters writes in a separate report that the A123 deal has closed:

“A123 Systems said the planned investment includes an initial credit extension of $25 million that it expects to receive this week. The rest coming through a mix of convertible notes and bridge finance with warrants, as certain conditions are met. The line of credit would help A123 keep making batteries for electric and hybrid cars. Last month, the company said it was left with only 5 months of cash. If all the warrants and notes are later converted to shares, Wanxiang will own 80 percent of the firm, A123 said in a statement. The agreement follows the non-binding memorandum of understanding that A123 signed last week.”

No protests were heard from Senators Stabenow and Levin against their baby A123 going to China. Stabenow, who used to complain that “China’s “New Energy Vehicles” plan will harm American companies and workers, cost Michigan jobs,” now chose to focus on the farm bill, and the funding of harbors.

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“I will not cede the wind or solar or battery industry to China.” Ooops. Never Mind Fri, 10 Aug 2012 18:20:29 +0000

In his 2012 State of the Union address, President Barack Obama said this to critics of his lavish green technology initiative:

“I will not cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here. “

Instead, battery manufacturers first get financed by double-green government handouts, then they are ceded. Says Reuters:

“A123 Systems Inc on Wednesday became the second U.S. government-backed battery maker this year to go overseas for a lifeline – and it turned to China. Auto parts supplier Wanxiang Group will take a controlling interest and invest $450 million in the Massachusetts-based battery maker, which faced running out of cash by the year-end.

Earlier this year, Ener1 Inc, another battery maker that received a government green technology grant, emerged from Chapter 11 bankruptcy under the control of Russian investor Boris Zingarevich. New York-based Ener1 is also a joint-venture partner in China with a Wanxiang subsidiary.”

Reuters says the government-supported boondoggle that is now handed to the Chinese for further exploitation was a pipe dream at best, or a giant lie at worst:

“ A123 promised to create 38,000 U.S. jobs, including 5,900 at its own plants. A123 said on Thursday it has 1,300 workers.

Theodore O’Neill, a former equities analyst with Wunderlich Securities, said A123 “built a factory that’s big enough to meet demand that’s probably not going to materialize until 2020 … They built it much larger than the market turned out to need.”  

In what appears to be the Fast And Furious of government boondoggles, the battery industry is first propped up with government money, then the technology is sold to China.

What’s more, the enemy already seems to have lost interest in the game. Shortly after the state of the union address, it was reported that China will “put an end to blind expansion in industries such as solar energy and wind power” and instead focus on old standbys such as nuclear and shale gas.”

Batteries of course are agnostic to where the juice comes from.  Obama’s adversaries are less cavalier.  “Once again it appears the Department of Energy and the Obama administration have failed to secure sensitive taxpayer-funded intellectual property from being transferred to a foreign adversary, which raises serious national security issues,” said    Rep. Cliff Stearns. Stearns is a Florida Republican and chairman of the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations.


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A123 Becomes Chinese – Faster Than Imagined Wed, 08 Aug 2012 13:29:57 +0000

Troubled battery maker A123 is getting another lifeline. This time, from China. Wanxiang Group  will invest as much as $450 million in the company, says Reuters. Wanxiang, one of the largest Chinese auto component makers.  A123 will soon be Chinese.

A123, which received a $249 million grant from the Obama administration as part of a program to develop advanced lithium-ion batteries, said last month that it only had four or five months until its money would run out. A123, which had big plans for the EV industry, reported a second-quarter net loss of $82.9 million on $17 million revenues. Does not sound like the best business. Wanxiang seems to have a different perspective. Says the Wall Street Journal:

“The proposed agreement includes plans for Wanxiang to obtain convertible notes and warrants that if fully exercised could give it an 80% stake in A123. The deal is expected to close by year’s end.”

When we reported about AS123’s cash crunch, TTAC correspondent Jellodyne said:

“Romney would have closed ‘em down, sold the parts (to overseas companies) and bought the batteries from China. That’s just good business sense.”

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Your Tax Dollars At Stake: Battery Maker A123 Running Out Of Runway Sat, 07 Jul 2012 14:03:22 +0000  

The irrational electrification exuberance  claims another victim: Battery maker A123 Systems Inc is running out of money. A lot of it is your money. Says Reuters:

The company, which received a $249 million grant from the Obama administration as part of a program to develop advanced lithium-ion batteries, said in documents filed with U.S. regulators that it “expects to have approximately four to five months of cash to support its ongoing operations” based on its recent monthly spending average.”

Reuters views A123′s issues as “a reminder of the struggles for a U.S. electric-vehicle industry still in its infancy and dealing with lower-than-projected demand.”

The wire service calls President Barack Obama’s goal of getting 1 million battery-powered vehicles on the road by 2015 “a target that is looking increasingly unrealistic.”

America’s best-selling plug-ins, the Volt, the plug-in Prius and the Nissan Leaf jointly sold 2,990 units in June. They were out-sold by a small sports car targeted at drifters, the Toyobaru hachi-roku, which sold 3,502 units in June.


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A123 Systems Recalling Battery Packs Used In Fisker Karma, Other Cars Mon, 26 Mar 2012 16:35:04 +0000

A123 Systems will be replacing battery packs built at their Livonia, Michigan plant that contain prismatic cells – the same type used in the Fisker Karma. The recall is estimated to cost A123 about $55 million. The defective batteries are linked to the recent problems experienced by Fisker Karma owners, according to A123 CEO David Vieau.

The Karma is the single largest customer of prismatic cells from the Livonia plant. Green Car Reports claims that other cells built in China for different applications are not affected. John Voelcker of Green Car Reports describes the problem as

“…defect [that] was traced to a miscalibration in an automatic welding machine at the plant, which resulted in a misaligned component was not detected visually.

When the cells were compressed, interference could be created although the cells functioned properly at first. A123 says the defect does not cause a safety issue, and has had no reports of any safety concerns in any of the products.”

Vieau said that A123 will have to adjust their fundraising strategy to pay for the recall, but was forthcoming about accepting responsibility for the matter. “We make no excuses and we accept full responsibility for this action,” he said.

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Fiat/Chrysler EV Program Loses Battery Supplier A123 Fri, 13 Aug 2010 16:07:09 +0000

Just weeks before Chrysler filed for bankruptcy last year, it announced a battery partnership with A123 Systems, which would have provided Lithium-ion batteries for Chrysler’s ENVI lineup of EV vapor. Needless to say, the ENVI program disappeared after bankruptcy, but A123 stuck around and was rewarded with the supply contract for Chrysler’s only prospective EV project, th Fiat 500 EV. Now, the Freep reports that A123 has withdrawn from the Fiat 500 EV project, and its CEO tells Bloomberg that

a competing vendor had been willing to take the business at a lower price and that the program had been “significantly diminished.”

It’s not clear if A123 was upset with a reduction in  planned Fiat 500 EV volume, or if the partnership’s downgrade from a “full line” of ENVI EVs to the 500 EV project represented the unwanted volume reduction. In any case, Chrysler CEO still planns on selling 56k EVs per year by 2014, and it’s strange that A123 would give up that long-term volume opportunity. But, according to A123, another automaker has more serious plans to grow EV volume, and A123 will be concentrating on that partnership. What program is that? Where does this leave the Fiat 500 EV? Is A123 in even more trouble than Chrysler? As usual with EV programs, there are more questions here than answers…

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Fisker Parts Ways With Ener1, Hooks Up With A123 Fri, 15 Jan 2010 15:51:12 +0000 What lies beneath?

Battery firm Ener1/EnerDel, which recently brought the EV firm Th!ink back from bankruptcy, has lost the battery contract for Fisker’s Karma luxury EV. According to Schaeffersresearch, Ener1 “decided it would be better pursuing higher-volume battery supply deals when larger automakers begin rolling out their versions of electric cars.” Says Ener1 CEO  Charles Gassenheimer, “we have some capacity constraints on our side. We’re interested in high volume programs in the future.” The public story is that due to Ener1′s Th!nk tie-up, Fisker’s October sales roll-out was too much, too soon. The real story illustrates the complicated relationships emerging between EV firms and battery suppliers.

“We have been testing several batteries over the last year and EnerDel was one of them,” Heinrik Fisker tells The Detroit Free Press. “The main thing was timing.” Actually, the main thing might well have been money. The WSJ reports that A123 Systems has replaced Ener1 as the supplier of lithium-ion batteries to Fisker’s Karma, making Fisker the second automaker to hook up with the battery startup after China’s SAIC. But this deal wasn’t like any other supply contract: A123 is investing $23m into Fisker, and partnering with its development of a next-generation EV known as “Project Nina.”

“The federal money has been a catalyst,” says A123 President and CEO David Vieau. Fisker received $529m in DOE loans to retool the Delaware plant where it plans on building its Project Nina sedan, while A123 has received $249m in DOE grants. A123′s investment reportedly helps Fisker meet the equity and US parts-sourcing-percentage requirements of its loan. In addition to investing $13m cash and $10m in stock into Fisker, A123 will also have to up production at its plant in Livonia, MI.

But what does it get out of the deal? According to Earth2Tech,

A123 will also have a chance to get more involved in the process of developing a vehicle start to finish than it has in the past, and potentially more than some competitors are able to do with other automakers

That could be a an important component to A123′s strategy, as it lost the Volt contract and has seen its Chrysler contract reduced as the ENVI program went underground. The only downside: Fisker’s still a bit of a fly-by-night. If the Karma launches as planned this October, logs solid sales and avoids scandal, Fisker could become an EV player… after all, they’re ahead of Tesla in that they’ve lined up their own factory. Still, it’s a big jump from the Valmet contract-built $90k luxury car to a Volt-esque $45k Project Nina sedan… and once upon a time it seemed that A123 could compete with the Asian manufacturers for established OEM EV battery business. But hey, you do what you can with what you have, right?

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Shunned Volt Battery Maker Joins Forces With China Sat, 19 Dec 2009 07:40:36 +0000 Eastpower! Picture courtesy

After a two year neck-and-neck race between battery makers LG Chem and A123, GM awarded its Volt contract to Lucky Goldstar – make that LG Chem, or rather their subsidiary Compact Power: Now the Lucky Guys are waiting for the thing to hit the road in large quantities. A123 was widely regarded as the far better technology, the Koreans most likely were cheaper – we’ll most likely never know.

Now, A123 cut a possibly much bigger and more lucrative deal. A123 is forming a joint venture with China’s top carmaker SAIC to build and sell battery systems for electric vehicles in the world’s largest auto market, and possibly beyond.

According to Reuters, A123′s joint venture with SAIC would build complete vehicle traction battery systems for hybrid electric, pure electric passenger vehicles, and heavy-duty truck and buses in China.

Jason Forcier, who leads A123′s automotive division, wants “to be basically the market leader in China, both in the truck and passenger car market.” With someone like SAIC, this is virtually guaranteed.

Quite oddly, SAIC is also the joint venture partner of GM in China.

With A123, China received leading edge technology, and they will bring the cost down. “Cost is the real driver in this market,” Forcier said. Together with SAIC, he wants to bring down the cost of batteries by as much as 35 percent in the next few years.

Currently, the cost of battery systems for electric vehicles or plug-in hybrids can range from about $8,000 to $15,000.

The venture will be called Shanghai Advanced Traction Battery Systems Co, owned 51 percent by SAIC and 49 percent by A123.

In the short term, the Chinese bus market is seen as an attractive segment for the company, given the government support for electric-powered buses. The passenger car market is much more lucrative in the long term, Forcier thinks. China is serious with electric vehicles, a solution thought to solve the smog problem and the dependency on foreign oil. China has coal and nuclear power in abundance.

A123, founded by scientists linked to MIT, is currently working with BMW, Daimler, and Renault. A123 also has relationships with suppliers like Delphi and Magna Steyr.

First job of the JV between A123 and SAIC will be to develop batteries for the hybrid Roewe 750 sedan and a plug-in hybrid version of the Roewe 550. They should hit the market in 2012.

If the Volt ever makes it to China, you can bet your sweet derriere that it will be powered by batteries Made-in-Shanghai.

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