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  (Source: Bloomberg)
The EV battery maker is selling all assets to Johnson Controls for $125 million

It's official: electric vehicle (EV) battery maker A123 Systems has filed for bankruptcy.
 
Earlier today, it was reported that A123 Systems was missing loan payments and may look into bankruptcy protection. That "may" turned into a quick "will," as the lithium-ion battery maker has officially agreed to sell its automotive business assets to Johnson Controls -- a company that optimizes energy efficiencies in car batteries, buildings and electronics.
 
As part of the agreement, A123 will sell all of the following to Johnson Controls: automotive business assets including automotive products, technology and customer contracts; its cathode powder manufacturing facilities in China; its facilities in Livonia and Romulus, Michigan, and A123's equity interest in Shanghai Advanced Traction Battery Systems Co. The total transaction is worth $125 million.
 
Johnson Controls, however, will license certain grid, government and commercial businesses back to A123, and will allow A123 to participate in discussions concerning alternatives for these businesses.
 
"We believe the asset purchase agreement with Johnson Controls, coupled with a Chapter 11 filing, is in the best interests of A123 and its stakeholders at this time," said David Vieau, CEO of A123 Systems. "We determined not to move forward with the previously announced Wanxiang agreement as a result of unanticipated and significant challenges to its completion. Since disclosing the Wanxiang agreement, we have simultaneously been evaluating contingencies, and we are pleased that Johnson Controls recognizes the inherent value of our automotive technology and automotive business assets. 
 
"We are also pleased that we have received indications of interest that recognize the value of our grid and commercial businesses. We are encouraged by the significant interest we have received, as multiple parties have submitted proposals for these businesses. As we move through this transaction process, we expect to continue operating and working with customers and suppliers."  
 
A123 Systems and all of its U.S. subsidiaries filed voluntary petitions today for reorganization under Chapter 11. A123 will receive $72.5 million in "debtor in possession" financing from Johnson Controls to help continue operations. 
 
"Our interest in A123 Systems is consistent with our long-term growth strategies and overall commitment to the development of the advanced battery industry," said Alex Molinaroli, president of Johnson Controls. "Requirements for more energy efficient vehicles continue to increase, which is driving automotive manufacturers to pursue new technologies across a broad spectrum of powertrains and associated energy storage solutions. We believe that A123's automotive capabilities are a good complement to our existing portfolio and will further advance Johnson Controls' position as a market leader in this industry."
 
A123 Systems joins a list of other green companies that fell deep into the red and filed for bankruptcy. Back in September 2011, solar panel company Solyndra filed for bankruptcy after receiving a $535 million loan from the U.S. Department of Energy (DOE). In November, Beacon Power (maker of flywheels for grid efficiency) filed after receiving a $43 million loan guarantee from DOE in 2010. 
 
In January 2012, EV battery maker Ener1 filed for bankruptcy after its subsidiary, EnerDel, won a $118.5 million grant from DOE in 2009. 

In addition to these woes, A123 Systems itself suffered a huge kick earlier this year when it announced a $55 million battery replacement program for Fisker Automotive's Karma due to the vehicle's issues with the batteries' hose clamps. 
 
Republican presidential candidate Mitt Romney has been known for blasting the Obama administration's green efforts, such as EV makers Tesla and Fisker, and this latest bankruptcy may further fuel his fire. 

Source: Yahoo



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RE: Recall.
By Mint on 10/17/2012 12:53:06 AM , Rating: 2
A123 has batteries with specs that nobody else can match. Their problem is that they can't match the prices of people making simpler batteries.

A company with more capital will be able to do things like front the cost of these batteries and lease them out, giving their long-life batteries a cost advantage to their clients. Their new technology allowing for better operational temperature ranges will have more value in light of teething issues with cheaper batteries.

There's a good chance that Johnson Controls will turn this into a success story. They didn't pay $125 and take on their debt for nothing.


RE: Recall.
By Solandri on 10/17/2012 4:25:58 AM , Rating: 4
While I don't really have a problem with government subsidizing strategic technologies, there's a risk here you're glossing over: What if the accounting figures had been slightly different, and the well-run Johnson Controls had been driven out of business because of the competitive advantage given to the poorly-run A123 by government subsidies and loans?

Supply-side market subsidies like loan guarantees for A123 and Solyndra are a festering ground for cronyism, favoritism, and under the table deals. Demand-side market subsidies (such as subsidies for any solar panel installed on your house) don't suffer from this. They have their own problems as well, but on a whole I think they're a safer way to do this sort of thing.

If you want to directly fund development of a technology, just establish a government research division for it and fund that like we did with the Manhattan Project. Then give the technology away for businesses to use (or require the companies to pay royalties to the government for its use).


RE: Recall.
By Mint on 10/17/2012 5:29:34 AM , Rating: 1
A lot of companies competed for the loans, and it was done at a time when banks were scared of lending to anyone. The goal was domestic production, too, which is not something VC companies care about. Maybe a third party would have been more neutral, but maybe not.

The gov't is expecting to get back much more in interest than what they lose in default, and these companies obviously didn't get any better deals from other sources of capital or they would have taken them, so it's really win-win.

I support research funding, but the goal here was not fundamental research but rather the reduction of cost and acceleration of domestic production. That's not something a government research division can address well.


RE: Recall.
By EricMartello on 10/17/12, Rating: 0
RE: Recall.
By Mint on 10/18/2012 3:54:41 AM , Rating: 3
quote:
No, not really. Domestic energy production has purposefully been cut by Obama in an attempt to reduce the difference in prices between "conventional" energy and green energy.
Would you loonies please drop the conspiracy theories? If Obama wanted to cut oil production to please his buddies, he's doing a really crappy job given that oil production went up after a major decline under Bush.

If Obama wanted to make life easy for EV makers, he wouldn't have pushed for CAFE. Gas cars getting 50MPG is the last thing an EV maker wants to see from the competition.

Domestic energy production is down because demand is down and efficiency/productivity is up. Energy has very low price elasticity, so minor price changes barely change consumption at all. Besides, under Obama electricity prices have gone up slower than inflation (and far slower than under Bush), so I don't see what nonsense point you're trying to make anyway.


RE: Recall.
By EricMartello on 10/18/2012 10:59:32 AM , Rating: 1
quote:
Would you loonies please drop the conspiracy theories? If Obama wanted to cut oil production to please his buddies, he's doing a really crappy job given that oil production went up after a major decline under Bush.


Let's not refer my compensation for your lack of due diligence as being a conspiracy theory. The rise in US oil production is a product of Bush's policies not Obama's and these increases were due to private efforts outside of Obama's area of effect. The areas that Obama did have a say over - federal lands - have all but been cut off from oil production, forcing the US to import the oil at a higher price per barrel. This, plus Obama rejected the Keystone XL pipeline in what turns out to be a concerted effort to force a pricey, solution-less green energy agenda down Americans' throats.

Some interesting stats:

US Oil Consumption (barrels/day)
Source: eia.gov

2006: 20,687,418
2007: 20,680,378
2008: 19,497,964
2009: 18,771,400 <-- Gas prices at or below $2/gal.
2010: 19,180,126
2011: 18,835,469 <-- Gas prices approach $4/gal; never below $3/gal

According to Obama and the lefties that troll this site, the price of oil dropped to under $2 "because of the recession" yet this is not reflected in the actual demand.

The economy is arguably worse now than it was in 2009 by most measures and yet the price of oil has more than doubled. Why do you think that is? The reason is not only due to a lack of sufficient domestic production, but also due to the weakened buying power of the US dollar.

quote:
If Obama wanted to make life easy for EV makers, he wouldn't have pushed for CAFE. Gas cars getting 50MPG is the last thing an EV maker wants to see from the competition.


I'd call dumping a large portion of $90 billion toward electric vehicles and battery companies "making life easier" for EV makers. The new CAFE standards are unrealistic, and while they may dictate seemingly high fuel economy across the board, the actual fuel economy target is based on the size of a vehicle...larger vehicles have lower standards...so you are not going to see a 50 MPG F150 in 2014.

The new CAFE standards are little more than a tax in disguise; because even with larger vehicles having relaxed MPG standards, Obama knows most of them will not be able to hit the mark and will have to pay fees for their vehicles that do not hit the mark. This means companies like Ford and Chevy are going to have to raise prices on their best-selling vehicles...which...lo and behold...makes overpriced EVs look more appealing. Suddenly that $40K Volt seems a lot more "reasonable" when the Camry is $45K because of the CAFE penalties.

quote:
Domestic energy production is down because demand is down and efficiency/productivity is up.


Absolutely false. Energy consumption in terms of fossil fuels has been largely consistent over the last 5 years; efficiency remains a minimal contributor. It's not like people are suddenly ditching their $6,000 oil heaters for $30,000 geothermal systems.

quote:
Energy has very low price elasticity, so minor price changes barely change consumption at all.


Price elasticity...you mean "volatility". Not really sure what you're trying to get at here because the price of a commodity is the relationship between supply and demand. Gas at $1.86 in 2009 going to over $4 in 2012 is a huge 215% price increase DESPITE consistent demand and increased (foreign) production.

quote:
Besides, under Obama electricity prices have gone up slower than inflation (and far slower than under Bush), so I don't see what nonsense point you're trying to make anyway.


Wrong again. Electricity prices were lower and consistent under Bush's 2 terms than they have been under Obama...especially now that many of the utility companies have been unbound from price limits set in place by many states.

Energy costs have skyrocketed across the board under Obama and we're not any greener now than we were 10 years ago, nor are we heading in that direction.


RE: Recall.
By Mint on 10/19/2012 3:35:31 PM , Rating: 2
quote:
The economy is arguably worse now than it was in 2009 by most measures and yet the price of oil has more than doubled. Why do you think that is? The reason is not only due to a lack of sufficient domestic production, but also due to the weakened buying power of the US dollar.

You and most Republicans are so freakin clueless about the oil market.

If it was the US dollar's fault (which, BTW, is the same ~0.77 Euros it was when Obama took office), you would be able to name currencies where the price of oil went down instead. Everyone is paying more for oil than in early 2009.

This is a global commodity so looking at the US is pointless, and most importantly production is not done in a competitive market since half of it is controlled by a cartel. Because oil demand has such low price elasticity, OPEC can set prices to whatever they want by adjusting their output.

That's what happened in 2009. The recession started, demand went down, so price dropped like a rock (due to the inelasticity). You're curious why prices rose again so quickly without a recovery? It's because OPEC cut their output.

They are in complete control of oil prices. If you waved a magic wand and increased US oil production by 50% tomorrow, oil would drop to $50/bbl in the short term. However, OPEC would merely have to cut 10% production to raise the price back to $90/bbl in a few months, which is clearly a beneficial tradeoff for them.

The only way to reduce gas prices in the US is to nationalize the oil companies and make them sell oil at break even prices. Otherwise, they will always sell oil at the global market price that OPEC has chosen.

quote:
Wrong again. Electricity prices were lower and consistent under Bush's 2 terms than they have been under Obama
Look at facts instead of making up statements. It's not that hard to google.
http://smartgridresearch.org/wp-content/uploads/20...
Prices went up in the 2000's, then flattened out since 2008.

A bad energy policy would have continued the upward trend, not bending it flat and pointing it down in 2012.


RE: Recall.
By EricMartello on 10/19/2012 4:39:22 PM , Rating: 2
quote:
You and most Republicans are so freakin clueless about the oil market.


Keep saying that but you've offered nothing to support that notion. You have yet to postulate something that is both factually accurate and relevant.

quote:
If it was the US dollar's fault (which, BTW, is the same ~0.77 Euros it was when Obama took office), you would be able to name currencies where the price of oil went down instead. Everyone is paying more for oil than in early 2009.


What? This makes no sense. If the people selling us oil want to jack up the prices because they PERCEIVE the dollar to be a losing proposition then the prices can increase REGARDLESS of what the currencies trade for on the forex market.

Oh, and way to ignore the fact that the US demand for oil has essentially been the same in 2008 up to now. You've done nothing to explain why you "believe" gas prices are up.

quote:
This is a global commodity so looking at the US is pointless, and most importantly production is not done in a competitive market since half of it is controlled by a cartel.


No, it's not pointless...but it is worth noting that GLOBAL demand for oil was just as consistent during that time frame so whether we look at US or Global consumption the facts remain unchanged. You're completely avoiding the points I made and are trying to talk around them like you have a clue - which you obviously don't.

quote:
Because oil demand has such low price elasticity, OPEC can set prices to whatever they want by adjusting their output.


Brilliant point...except that OPEC's production has about 35 million barrels/day since 2005 up to now - in other words, you're wrong.

US oil demand has been consistent for the last 5 years...fluctuations in the price are a result of deliberate meddling because if it was strictly supply-n-demand we'd still be paying gas prices below $3/gal and more than likely below $2/gal.

quote:
That's what happened in 2009. The recession started, demand went down, so price dropped like a rock (due to the inelasticity). You're curious why prices rose again so quickly without a recovery? It's because OPEC cut their output.


No, that's not what happened. I posted the US oil demand for 2009; global demand was about the same and OPEC's output was - you guessed it - the same. It did not drop because of the recession and if you're buying into that BS you should probably just stop posting.

quote:
The only way to reduce gas prices in the US is to nationalize the oil companies and make them sell oil at break even prices. Otherwise, they will always sell oil at the global market price that OPEC has chosen.


At long last the socialist speaks...and you say I'm pushing a conspiracy theory. There are so many gaping holes in your logic that I would believe you if you told me you are Swiss.

quote:
Look at facts instead of making up statements. It's not that hard to google. Prices went up in the 2000's, then flattened out since 2008.


Don't talk about facts, bro. You wouldn't know what a fact is if it smacked you in the face.

http://www.eia.gov/electricity/annual/html/table7....

Electricity was around 8 cents per kWh until 2005 when it jumped up due to deregulation and expiry of rate caps - both of which were supposed to drive rates down by allowing more competition. That didn't happen...but now that electricity produced by conventional plants is getting more expensive the prices of expensive "green" energy like wind and solar appear more palatable.

Strikingly similar automotive market manipulation ploy to get people to buy into impractical green energy.

Oh, and by the way, average electric rates were lower under Bush than they are currently under Obama. That's 11 cents per kWh today vs 8 cents under Bush - 38% more expensive today.

quote:
A bad energy policy would have continued the upward trend, not bending it flat and pointing it down in 2012.


There's no doubt that Obama's green-focused energy policy is bad. He wants to artificially close the the price difference between conventional and green energy by manipulating the market with policies that drive the costs of conventional energy up, all to force adoption of green energy by consumers.

The data for 2012 is incomplete and with 2011 being the latest accurate data available the kWh price is sitting at 11.8 cents for residential rates - what most people are paying.

http://www.eia.gov/beta/enerdat/#/topic/7?agg=0,1&...


RE: Recall.
By Mint on 10/22/2012 3:14:22 PM , Rating: 2
quote:
but it is worth noting that GLOBAL demand for oil was just as consistent during that time frame so whether we look at US or Global consumption the facts remain unchanged.
Dead wrong:
https://www.google.com/search?hl=en&safe=off&q=glo...

quote:
Brilliant point...except that OPEC's production has about 35 million barrels/day since 2005 up to now - in other words, you're wrong.
Dead wrong again:
https://www.google.com/search?hl=en&safe=off&q=ope...

Your loose definition of "about" is inadequate. This is a highly inelastic good. The DOE did a study in the mid 2000's and predicted a 5% reduction in supply will triple prices. That's how addicted the world is to oil. It DID cut 2M+ bbl/day of production at the end of 2008:
http://money.cnn.com/2008/12/17/markets/oil/index....
Once swollen inventories (from the recession) dried up and speculators got a handle on what the new equilibrium would be, price went back up again.

OPEC could raise the price even higher, but they want to keep it right at the point where the world gets off it at a snails pace.

quote:
Don't talk about facts, bro. You wouldn't know what a fact is if it smacked you in the face.

http://www.eia.gov/electricity/annual/html/table7....
Your own link disproves your theory about Obama, because it's the same source data my link was from. Prices have dropped slightly since Bush's last year, which is actually a drop when inflation is taken into account.

How can you blame Obama for price rises that happened under Bush? Oh, that's right, it's the core m.o. of today's conservatives.

FWIW, I am anti-wind and anti-solar (at least beyond minimal construction to explore cost reductions in manufacturing). However, natural gas prices dropped with improvements in fracking, and much to the dismay of environmentalists Obama did nothing to stop its use. Natural gas moguls are the driving force behind wind adoption and coal regulations (which I support, but not for AGW reasons) because wind cannot grow without gas growth to fill in the gaps. It's too costly/damaging to ramp coal that fast, and nuclear is baseload only.


RE: Recall.
By EricMartello on 10/23/2012 6:20:04 PM , Rating: 2
quote:
Dead wrong:

Dead wrong again:


The stats are also available on EIA.gov and the stats support the fact that global oil demand and consumption remained steady over the last decade. You can pull an obama on me and say it's wrong til you're blue in the face but...it's a fact.

quote:
OPEC could raise the price even higher, but they want to keep it right at the point where the world gets off it at a snails pace.


Sorry but we've already established the fact that OPEC's production has been consistent throughout the recession and before. We've also cut imports of fuel by roughly 12% since 2008, which further undermines your whole OPEC theory. The volatility of oil prices has more to do with the futures market than with OPEC playing games with the prices of oil when they have little or no reason to do so. That, and the fact that the domestic oil production we have in place was initiated under Bush; Obama did not cancel what Bush started in terms of private domestic production but he did not add to it, which contributes to higher prices. Romney made this point during the second debate quite effectively.

quote:
Your own link disproves your theory about Obama, because it's the same source data my link was from. Prices have dropped slightly since Bush's last year, which is actually a drop when inflation is taken into account.


No, not really. Your link magically includes data from 2012 which has not been published by the EIA yet. That means your 2012 data is speculative at best.

Fuel prices averaged less under Bush's two terms than they have under Obama's single term, PLUS inflation now is greater than it was from 2000-2008 since QE1 (printing money out of thin air and putting it into banking system) was not instituted until 09/2008. Incidentally, fuel prices dropped sharply below $100/barrel at that very same time. What this means, in a nutshell, is that $4/gal under Obama would be like $6/gal under Bush due to the TRUE effects of inflation and the buying power of the dollar being roughly 40% weaker.

You can gauge the actual buying power of the dollar by looking at precious metal prices. Gold was under $800/oz in 2008 and it's $1,700 and change now - more than double. Don't tell me you're going to believe the fed's claim that inflation is 2% per year - more like 10% per year at least.

quote:
FWIW, I am anti-wind and anti-solar (at least beyond minimal construction to explore cost reductions in manufacturing). However, natural gas prices dropped with improvements in fracking, and much to the dismay of environmentalists Obama did nothing to stop its use. Natural gas moguls are the driving force behind wind adoption and coal regulations (which I support, but not for AGW reasons) because wind cannot grow without gas growth to fill in the gaps. It's too costly/damaging to ramp coal that fast, and nuclear is baseload only.


The basic point is that we have established technology to process and harvest energy from resources like natural gas, coal, oil AND nuclear. We should not be ignoring these to artificially force an adoption of unproven, expensive and unreliable "green alternatives".

If I was going to put money on an alternative fuel it would be biodiesel. Why? Because it integrates almost effortlessly with existing vehicles and infrastructure, and there is a degree of flexibility as to what materials can be used to produce it. Basically, any biological waste material can work. Biodiesel can also power consumer, commercial and industrial engines as effectively as gasoline or standard diesel.


RE: Recall.
By FITCamaro on 10/17/2012 7:30:06 AM , Rating: 2
http://www.findlaw.com/casecode/constitution/

Please point out to me where in this document it says the federal government has the power to play venture capitalist.

Fun fact, the Bill of Rights was passed because the Anti-Federalists said they wouldn't agree to ratify it unless there was stronger language protecting against the government overstepping its authority. The Bill of Rights has a preamble, just as the Constitution does, that explains its purpose. It states:

"THE Conventions of a number of the States, having at the time of their adopting the Constitution, expressed a desire, in order to prevent misconstruction or abuse of its powers, that further declaratory and restrictive clauses should be added: And as extending the ground of public confidence in the Government, will best ensure the beneficent ends of its institution."

Jefferson's opinion on the Constitution (bear in mind he did not help write it nor was he involved in the debates for or against it since he was in France). But he was an Anti-Federalist:

"On every question of construction [of the Constitution], let us carry ourselves back to the time when the Constitution was adopted, recollect the spirit manifested in the debates, and instead of trying what meaning may be squeezed out of the text, or invented against it, conform to the probable one in which it was passed."

Madison on the type of government action you see to be for:

"If Congress can employ money indefinitely to the general welfare, and are the sole and supreme judges of the general welfare, they may take the care of religion into their own hands; they may appoint teachers in every State, county and parish and pay them out of their public treasury; they may take into their own hands the education of children, establishing in like manner schools throughout the Union; they may assume the provision of the poor; they may undertake the regulation of all roads other than post-roads; in short, every thing, from the highest object of state legislation down to the most minute object of police, would be thrown under the power of Congress. ... Were the power of Congress to be established in the latitude contended for, it would subvert the very foundations, and transmute the very nature of the limited Government established by the people of America." --James Madison

So now honestly give me an argument that the founders meant anything other than what they said. Or that they intended for the Constitution to be "living and breathing".

"Whensoever the General Government assumes undelegated powers, its acts are unauthoritative, void, and of no force." — Thomas Jefferson


RE: Recall.
By gamerk2 on 10/17/2012 7:50:54 AM , Rating: 2
And Federalists HATED the Bill of Rights, because they (correctly, as it turned out) reasoned that if you put in writing what rights the people had, that would be used as an argument to limit peoples rights to JUST what was written. In effect, the Bill of Rights does nothing but limit peoples individual rights.

I also note that if the anti-Federalists had their way, we'd still be under the Articles of Confederation.


RE: Recall.
By FITCamaro on 10/17/2012 9:13:49 AM , Rating: 1
What the hell are you talking about.

quote:
The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.


The 9th amendment specifically states that not all rights are defined in the Constitution and that you have more. States just needed to further define them to codify the rights they felt that also needed to be guaranteed to their citizens. They couldn't possibly have listed every single right. They specifically listed the ones that were most important to them. And the 9th amendment was

Yes some feared what you said, but that's exactly why the 9th Amendment was added. And it goes hand in hand with the 10th amendment. Madison himself put it in there.


RE: Recall.
By Reclaimer77 on 10/17/2012 1:25:23 PM , Rating: 2
Wow!! Just..my goodness. Where did you get this stuff? You clearly don't know the most basic aspects of the Constitution!

Stop posting.


RE: Recall.
By mdogs444 on 10/18/2012 8:44:44 AM , Rating: 2
He sounds like Obama, who said he hated the constitution because it said what the government could not do to you as opposed to what it must do for you.


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