Despite an investment from a Chinese automaker a few months ago, the Michigan based battery maker A123 Systems has filed for bankruptcy. USA Today reported yesterday that “A123 Systems, a lithium-ion battery maker which received a $249.1 million grant from the U.S. government in 2009, filed for bankruptcy protection Tuesday in Delaware.”
Included in the USA Today story was mention of the “$465 million lifeline from Chinese auto-parts maker Wanxiang Group.” Despite this increased liquidity, the company was unable to stem the tide of hemorrhaging cash. The paper went on to claim that “Overcapacity and Americans’ reluctance to buy more plug-in hybrid electric vehicles … hurt the advanced car battery industry.”
The battery maker joins a growing list of companies that received stimulus funds but have filed for bankruptcy in the past year. In addition to political wrangling, the common theme seems to be a cheap influx of Chinese competition. This time last year, several American solar companies filed a trade suit against the Chinese, arguing that the Chinese government has unfairly subsidized and caused the price of solar panels to drop precipitously. While A123 Systems was in the battery production business, the large government loan and bankruptcy yield an association with the solar companies that have failed.
According to USA Today, Johnson Controls, who agreed more than three years ago to supply Ford with 5,000 batteries annually for their plug-in hybrid, “says it plans to pay $125 million to acquire A123′s automotive-related assets.”