Evidence of poor judgement, no knowledge, wasteful spending. But it did make the 6:00 news on the front lawn. Is it Nov 6th yet?
As a recipient of $249 million in grants from the Obama administration, the company's bankruptcy will no doubt become another embarrassment heading into the November elections. Republicans have already battered the Obama administration for investing $535 million in solar panel maker Solyndra, only to see the company fail just two years after receiving the loan. The company shut its doors and fired all its workers in August 2011.
The battery maker was supposed to be a shining example of what could happen In April 2010, Obama welcomed the A123 CEO, David Vieau, to the Rose Garden to talk about how clean energy investments would help grow the economy. A123 had promised it would hire 3,000 workers in Michigan by the end of 2012, and open three new plants.
But the company has struggled in the past year after a costly recall put it back in the spotlight. The battery maker was forced to recall batteries used in the Fisker Karma electric car at a cost of $51.6 million, and that forced the company to halt production at its Michigan plant.
this is EXACTLY why many of us prefer govt stay out of business .... electric vehicles are still at least
a decade away from being a signifigant factor in the energy patch .... you can't speed these things
along , but can throw away a lot of money at false starts .....
less regulation and clear tax programs ... wind'em up and let'em go ...g
Government-backed battery-maker A123 Systems Inc., under mounting political pressure from federal lawmakers concerned about U.S. technology flowing to foreign competitors, backed out of an agreement Tuesday that would have ceded control of the company to a Chinese firm.
Instead, A123 filed for Chapter 11 bankruptcy protection in a prepackaged deal that would hand over control to Milwaukee-based Johnson Controls Inc. in a transaction valued at $125 million. China-based Wanxiang Group Inc., which has its U.S. operations in Elgin, had agreed to invest up to $465 million in A123 in exchange for 80 percent of the company.
At least one battery expert hailed the deal as a win for the United States, while Republicans pounced on the company's bankruptcy as another failure in the Obama administration's efforts to prop up the electric vehicle industry.
The Wanxiang deal was alive as of Monday, when Massachusetts-based A123 made a filing with the Securities and Exchange Commission related to the transaction. What caused the deal to unravel wasn't disclosed by the parties involved.
Wanxiang America Corp. President Pin Ni said Tuesday that his company's interests and goals remain unchanged. David Vieau, chief executive of A123, said only that the company "determined not to move forward" with the Wanxiang agreement due to "unanticipated and significant challenges to its completion."
Analysts say holders of A123 debt could raise objections to the Johnson Controls deal in bankruptcy court if Wanxiang is still interested in moving forward because the Chinese firm's offer for A123 was significantly higher.
With the acquisition of A123, Johnson will acquire the battery-maker's two Michigan manufacturing facilities — recipients of a $249.1 million grant from the Department of Energy — along with the rest of the company's automotive business. The company said the plants would have enough cash with an initial $72.5 million infusion from Johnson Controls to maintain operations throughout the process.
Michael Lew, an analyst for New York-based Needham and Co. who follows A123, said the acquisition is a great fit for Johnson Controls, which already operates a battery manufacturing plant in Michigan. The company would gain big-name customers such as Fisker Automotive, Daimler AG and General Motors. At the same time, technology owned by A123 that helps recharge batteries during braking without stressing the battery could supplement Johnson Control's battery lines, he said.
"This is probably America's best shot at establishing a lithium-ion industry in the United States," said Lew.
Other government-backed battery-makers also have wound up in bankruptcy court. Like A123, Ener1 received an Energy Department grant to make lithium-ion batteries for plug-in electric cars. It expanded its plant in Indiana and forged a deal with Think Global, a Norwegian company with an idled electric vehicle plant in Elkhart, Ind.
Both sides of the red-blue divide had touted the federal infusion, including Indiana Gov. Mitch Daniels, a Republican, and Vice President Joe Biden, a Democrat.
But in January, Ener1 filed for bankruptcy.
It emerged a few months later under the control of one of its directors, Russian investor Boris Zingarevich, who provided financing to rescue the company out of bankruptcy.
Johnson Controls did not respond to emailed questions and declined a request for an interview, saying that the process was in its early stages and the company would be unable to provide further details.
"Johnson Controls' interest in A123 is consistent with its long-term commitment to being a market leader in the advanced battery industry with a robust portfolio of energy storage technologies and solutions that will best support the full range of energy efficient vehicles today and in the future," the company said in a statement.
U.S. Sens. Chuck Grassley of Iowa and John Thune of South Dakota, both Republicans, said in statements Tuesday that the Department of Energy has failed to explain how A123 came to be the target of a Chinese takeover.
"A123 is yet another example of President Obama gambling with taxpayer dollars and picking winners and losers in the green energy world," Thune said. "…We will continue our oversight to ensure more taxpayer dollars aren't wasted going forward."
The Obama camp countered that acquisition by Johnson Controls means American workers employed by A123 will be able to continue to work for an American-owned business rather than for a foreign competitor.