China's Wanxiang Successful Bidder For Government-Backed A123

Bertel Schmitt
by Bertel Schmitt
china s wanxiang successful bidder for government backed a123

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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  • SCE to AUX SCE to AUX on Dec 09, 2012

    I'm surprised. I guess Wanxiang sees something of value (ie, a way to make money from this) that I don't. Good for them; this may actually bode well for the EV market. Incidentally, I don't know how you can spin off the military portion of the business to a different owner and expect it to work. There are economies of scale by keeping it under one roof which evaporate this way, whether we're talking about only the technology or the mfg as well. The US military will now be paying more for whatever A123 had been selling them.

    • See 4 previous
    • Corntrollio Corntrollio on Dec 10, 2012

      @highdesertcat Somehow I don't believe you. Someone doth protest too much. But ironic that you're basically a ward of the government, by your own admission. If you can't solve the problem, become part of it.

  • Inside Looking Out Inside Looking Out on Dec 09, 2012

    I have two observations regarding the subject. First China today is what America used to be 100 years ago - i.e. dynamic and fast growing economic juggernaut capable of overproducing any other nation in the world. Rockefeller, Morgan, Carnegie and etc were richest people in entire world. American companies were biggest and richest. World was under assault from American companies. Of course fast growth comes at the price and cannot be sustained for extended period of time - it wears down national will to take risk and innovate at same rate. Today America is stagnant economy which shrinks or at best grows 2% a year and many American prefer welfare to taking risk or simply working hard. Reelection of Obama for second term despite failure of his economic policy is symbolic for current state of affairs in America. China is the new America - they work hard, innovate, take risk and deserve to be #1 nation in the world and buy whatever companies they can afford around the world. No need to panic though they will wear out over time like everyone else and become just other stagnant economy like Europe and America. You have to be happy that there is still nations in the world willing to take risk and advance humanity. Second observation is that A123 may be already outdated technology. It did not succeed for reason even despite free money from taxpayers. May be there is already scientist somewhere in the world most likely in China or Israel who is on his way to reinvent how electricity is stored in light weight and efficient way and who will create whole new industry. So A123 may be is just irrelevant. Chinese have too much money (like Ford in 90s) and that's it.

  • Corntrollio Corntrollio on Dec 10, 2012

    One part of the article I'd quibble with based on other reports. The DOE apparently made it quite clear to bidders that no one could draw down the other $116K of the loan that hadn't been drawn down yet:,0,6706352.story

  • Lynn Ellsworth Lynn Ellsworth on Dec 10, 2012

    Geez, all this government talk. Batteries are heavy, even lithium batteries, and special licenses and packaging are required. Shippers are still afraid of lithium even though the new cells are far safer than the few, several years ago, with contamination problems. Having plants around the world for a battery manufacturer makes good sense and buying a bankrupt manufacturer and getting the trained workforce also makes good sense. Our tax dollars trained some Americans and now it looks like they will be working.