A123 Systems, Obama-backed Battery Maker, in Bankruptcy
A123 Systems (AONE), the battery manufacturer for electric cars backed by the Obama administration, filed for bankruptcy today after it failed to make debt payment earlier this week.
The Waltham, Mass.-based company, which manufactured advanced lithium ion batteries for transportation, electric grid, telecom and commercial markets, has failed to show a profit in its 11-year history, and lost $83 million in the second quarter.
Though the company announced a contract with $450 million with China's Wanxiang Group Corp. last year, the deal was eventually abandoned.
The company's Chapter 11 filing can largely be attributed to the lack of enthusiasm for electric cars in the U.S. The industry sold just 50,000 electric cars through September.
The bankruptcy filing may lead to further criticism of Obama's funding of alternative energy companies. In August 2009, A123 Systems received a $249 million grant from the U.S. Department of Energy.
The failure of A123 Systems follows the highly-publicized bankruptcy filing of solar power company Solyndra LLC, which was also supported by the Obama administration. Solyndra received a $535 million U.S. Energy Department loan guarantee before going bankrupt.
A123 Systems has contracts to make batteries for General Motors Co., BMW AG and Fisker Automotive. On the day of its initial public offering in 2009 It traded at over $20 per share. Today it is hovering around $.06 per share.
Johnson Controls (JCI) will receive all of A123's automotive assets, including lithium-ion battery technology, products and customer contacts, according to the Associated Press, and will also take over the company's factories in Michigan and China.