China Firm to Buy Control of U.S.-Backed Battery Maker .
China has offered several incentives to boost the development of electric and gasoline-electric hybrid cars, including subsidies. It has said it will introduce a series of incentives to support their development, including asking cities to provide owners of the vehicles preference on parking fees, battery-charging fees and road tolls. In new regulations late last year it also shifted purchase requirements for some government employees to encourage them to buy such vehicles.
Still, development has been slow. Notably, BYD Co., 1211.HK +0.42%an auto maker and electric-car company partially owned by U.S. investor Warren Buffett's investment vehicle, has stumbled as its traditional gasoline-powered car business has weakened, reducing resources it could use to build electric cars. BYD also faced doubts in May after an electric-powered BYD taxi caught fire during an accident in the southern Chinese city of Shenzhen; investigators didn't find any design flaws in the vehicle, however, according to a report earlier this month in the state-run Xinhua news agency.
The preliminary pact with Wanxiang Group, one of the largest auto components makers in China, would substantially strengthen A123's presence in China's growing electric vehicle and grid-scale energy-storage projects, it said.
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.
For the latest quarter, A123 reported a loss of $82.9 million, or 56 cents a share, compared with a year-earlier loss of $55.4 million, or 44 cents a share. The latest period included a net $11.3 million in write-downs for fair-value impacts and its investment in luxury electric-auto maker Fisker Automotive.