Battery Maker A123 Systems Files For Bankruptcy

After a difficult year and much lower-than-expected sales of electric vehicles, battery maker A123 Systems has filed for Chapter 11 bankruptcy protection in Delaware. The company has agreed to sell its remaining automotive assets to Johnson Controls. Let the game of political football over the $249 million green energy loan A123 received in 2010 begin.

Though it comes as no surprise given the very slow advancement of the electric vehicle market, it is yet another blow to the Obama Administration. Green energy grants and loans have become a favorite target of right-wing politicians and pundits, and A123 System’s failure despite a low-interest, $249 million government loan is sure to give Presidential candidate Mitt Romney plenty of ammo in the closing weeks of election season.

A123 Systems provides batteries for numerous electric vehicles, among them the Fisker Karma and the Th!nk City. Alas, these (and other) electric vehicles sold in such low volumes that A123 has not been able to turn a single dime of profit, and one-off vehicles that run A123 batteries like the KillaCycle aren’t going to keep the company alive.

Perhaps what hurt A1213 the most though was losing the contract to provide batteries for the Chevy Volt. While A123 was slated to provide batteries for the Chevy Spark EV, GM has yet to comment on how the bankruptcy filings will affect that deal.

Thankfully the company buying A123, Johnson Controls, is a Wisconsin-based technology company that has also received Federal loans and grants. This is capitalism-in-action, as companies that can’t cut it are bought up by those that can. Expect other small battery operations to also get gobbled up by the big dogs. Hopefully Johnson Controls can turn around A123’s faltering battery business. But don’t hold your breath…

Source: Forbes

Christopher DeMorro

A writer and gearhead who loves all things automotive, from hybrids to HEMIs, can be found wrenching or writing- or else, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.