Battery Maker A123 Systems Acquired by Chinese Firm for $260M
December 10, 2012 8:10 AM
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Congress isn't too sure about the outcome
finally has a new owner after its auction this past weekend, but Congress isn't too happy about the outcome.
Chinese firm Wanxiang Group won the auction for A123 Systems on Saturday for about $260 million. This has concerned certain members of Congress, who said that A123's contracts with the U.S. Department of Defense are at stake.
"I am very concerned by Wanxiang's acquisition of A123," said Rep. Bill Huizenga (R-Zeeland). "A123 maintains several contracts with the Department of Defense and given the thin line between Wanxiang and the Chinese Government, I am concerned about the Government of China having access to sensitive technologies being used by our military forces."
However, Wanxiang doesn't have full access to A123's technology. Part of A123 was also sold to Illinois-based Navitas Systems LLC, which will hold the DOD contracts for $2.2 million.
Back in mid-October,
A123 Systems officially filed for bankruptcy
and agreed to sell its automotive business assets to Johnson Controls -- a company that optimizes energy efficiencies in car batteries, buildings and electronics.
Before that, A123 was missing its loan payments. It had received $249.1 million in grants from the U.S. government in 2009 to develop green, electric car batteries. It was discovered that the U.S. government gave A123
a $1 million grant
the day it filed for bankruptcy.
A123 Systems suffered a huge kick earlier this year when it announced a $55 million battery replacement program for Fisker Automotive's Karma. The vehicle had issues with the batteries' hose clamps.
A123 Systems joins a list of other green companies that filed for bankruptcy after receiving government loans and grants. 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,
(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.
The U.S. Bankruptcy Court in Delaware will hold a hearing on the result of the A123 Systems auction on Tuesday, December 11.
The Detroit News
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RE: What Could Go Wrong?
12/11/2012 2:30:12 AM
Why would anyone buy from A123 by this point? They went bankrupt because they couldn't compete and companies turned to Korean and Japanese sources. Nissan went with NEC, GM chose LG, Mitsubishi's cells are sourced from Toshiba, and Tesla works with Panasonic. A123 had a whole bunch of automotive contracts lined up but no one followed through apart from Fisker, who aimed to sell 15000 cars in 2012 but sold less than 2000.
Lithium is mainly produced in Chile and Argentina, and nickel is mined in Russia, Canada, and Australia. Very few, if any, raw materials in Li-ion batteries are sourced from China.
When it comes down to it, the main cause of concern are the loss of technologies that A123 developed.
"I want people to see my movies in the best formats possible. For [Paramount] to deny people who have Blu-ray sucks!" -- Movie Director Michael Bay
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