SALON

Tuesday, Oct 16, 2012 7:30 PM UTC

Battery maker A123 files for bankruptcy protection

By

Topics: From the Wires,

Battery maker A123 files for bankruptcy protectionFILE- In this April 30, 2010, file photo, from right, A123 Systems, President and Chief Executive Officer David Vieau, A123 Systems electrical engineer James Fenton and A123 Systems design engineer Antonio Biundo, stand next to President Barack Obama, as he speaks in the Rose Garden of the White House in Washington. Short of cash and hurting from slow sales of electric cars, battery maker A123 Systems Inc. sent its U.S. operations into bankruptcy protection on Tuesday, Oct. 16, 2012, and quickly sold its automotive assets. The filing is likely to stoke the debate in Washington over the Obama administration’s funding of alternative energy companies. In 2009, A123 got a $249 million Department of Energy grant to help it build U.S. factories. Republicans have accused Obama of wasting stimulus money on the companies after the failure of politically connected and now-bankrupt solar power company Solyndra LLC, which left taxpayers on the hook for $528 million. (AP Photo/Haraz N. Ghanbari, File)(Credit: AP)

DETROIT (AP) — After years of struggling with weak sales and mounting losses, electric-car battery maker A123 Systems filed for bankruptcy protection and reached a deal to sell its automotive assets Tuesday.

Auto parts maker Johnson Controls will pay $125 million for A123′s auto business, which includes two Michigan factories and the lithium-ion battery technology used in cars like the Fisker Karma and upcoming Chevrolet Spark.

A123′s demise as an independent business reflects the problems of the electric-car industry. Americans have been slow to buy the vehicles because they’re expensive, and many models have limited range and can run out of power on longer trips. Lackluster sales of EVs and batteries left A123 Systems Inc. with huge losses and a plunging market value.

The company’s stock price, which traded for more than $20 on the day of its initial public offering in 2009, fell to 6 cents in late-day trading Tuesday.

The bankruptcy filing also spawned more Republican criticism of the Obama administration, which used stimulus money to support alternative energy businesses including A123 Inc., electric-car companies, and solar-panel maker Solyndra LLC.

Under Tuesday’s deal, Johnson Controls will get A123′s lithium-ion battery technology, other products and customer contacts. It will also take over A123′s two Michigan factories, cathode ray factories in China and an equity interest in a Chinese battery company.

The Michigan plants, in the Detroit suburbs of Livonia and Romulus, were paid for with the help of a $249 million government grant from stimulus funds. Johnson Controls plans to keep the factories running but said it was too early to give details about A123 employees or customers.

Alex Molinaroli, president of Johnson Controls’ Power Solutions division, said the A123 deal will advance JCI’s battery technology.

A123 said it expects to continue operations as it moves toward the sale to Johnson Controls. The company also said it is in talks to sell its grid, commercial, government and other operations that weren’t purchased by Johnson Controls.

The Waltham, Mass.-based A123 is supplying batteries for the new all-electric Chevrolet Spark subcompact from General Motors Co., as well as Fisker’s Karma. Fisker has sold about 1,000 of the cars this year, while the electric Spark goes on sale in 2013. A123 also has contracts to make batteries for BMW AG.

A123 has struggled for several years, and ran into serious trouble this spring after a costly recall of its batteries.

The company warned that it might not be able to stay in business unless it got more financing, and just two months ago, it announced a $450 million lifeline from Chinese auto parts maker Wanxiang Group Corp. But A123 said Tuesday that the deal has been scrapped.

Republicans argue that grants and loans to alternative energy companies like A123 were a waste of stimulus money. They point out that Solyndra, a politically connected and now-bankrupt company, left taxpayers on the hook for $528 million after it failed to repay a government loan.

Democrats counter by saying the losses were expected when Congress created the high-risk program, which is intended to boost cutting-edge projects that would have trouble getting private financing. They say the “vast majority” of companies that received loans are still expected to pay them back in full, with interest.

Andrea Saul, spokeswoman for Republican Mitt Romney’s campaign, said in an e-mail that the bankruptcy is “yet another failure for the President’s disastrous strategy of gambling away billions of taxpayer dollars on a strategy of government-led growth that simply does not work.”

But A123′s government grant was never supposed to repaid. The company had to match the money as it was used. So far it has received $132 million of the grant, Energy Department spokeswoman Jen Stutsman said.

The company also got a $6 million research grant in 2007 under the Bush administration, she said. The department said in a statement that it’s common for firms to consolidate as a new industry grows and matures.

A123 subsidiaries outside the U.S. were not included in the bankruptcy filing.

____

AP Auto Writer Bree J. Fowler contributed to this report from New York.

More Tom Krisher.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
    Credit: AP/LM Otero

  • Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center in Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
    Credit: AP/Matt Rourke

  • A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
    Credit: AP/Jenny Aicher

  • Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
    Credit: AP/Molly Riley

  • Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
    Credit: AP/J. Scott Applewhite

  • Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
    Credit: AP/Carolyn Kaster

  • O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
    Credit: AP/Las Vegas Review-Journal/Jeff Scheid

  • Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
    Credit: AP/NASA/Chris Hadfield

  • When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
    Credit: AP/Jacquelyn Martin

  • A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
    Credit: AP/The Duluth News-Tribune/Clint Austin

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 1 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

follow salon

Most Read

Popular on Reddit

links from salon.com

From Around the Web

Presented by Scribol
listener_new_rect The Listener: So long, Sookie Stackhouse

Recommendations