Future Unclear For Bankrupt A123 Battery Firm As Rescuers Maneuver

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A123 Systems Employees Perform Quality Check on a Lithium-Ion Battery Pack  [source: A123 Systems]

A123 Systems Employees Perform Quality Check on a Lithium-Ion Battery Pack [source: A123 Systems]

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Bankrupt battery maker A123 Systems could finally be on the verge of successfully securing a loan from a Chinese auto parts maker.

The company will discuss with bankruptcy courts to secure approval for a loan from Wanxiang Group Corp.

A123 became bankrupt after a $465 million rescue deal from the Chinese company fell through, with A123 unable to meet some of the terms of the companies' agreement.

Wanxiang would have owned 80 percent of the struggling firm, which supplies batteries for Fisker, BMW, and the upcoming Chevrolet Spark EV.

As Reuters reports, an interim debtor-in-possession (DIP) loan from auto parts supplier Johnson Controls has been withdrawn to enable the Wanxiang loan to proceed. Johnson Controls has said it will still maintain its $125 million bid for A123's automotive assets.

However, a replacement DIP loan from Wanxiang could put the Chinese company at an advantage over Johnson Controls.

Fisker, who objected to the $125 million bid from Johnson Controls, should also be better served should the Chinese bid succeed. The luxury carmaker was responsible for 26 percent of A123's income in 2011, and its battery recall over faulty cells has been partly responsible for A123's downfall.

The main stumbling block to Wanxiang could be gaining approval from both the Committee of Foreign Investment in the U.S, and the Government of China, before the deal goes ahead.

If that goes well, then only a challenge from Johnson Controls over assets would stand in the way of the loan.

For A123 and its stakeholders, a resolution can't come too soon.


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Comments (8)
  1. This battery news is kinda boring. Too bad GCR failed to report so far on a recent very interesting battery breakthrough announcement by Calbattery, regarding a new type of silicon-graphene batteries anode that could push energy density to 500 WH/KG and drop prices to $175/KWH.

    This announcement should have attracted your attention because:
    -Company is a finalist in the Dept of Energy's 2012 Start UP America's Next Top Energy Innovator challenge.
    -It's based on a breakthrough developed at reputable Argonne National Labs
    -The company says it is now in the process of fast-tracking commercialization
    -which sounds feasible because this could serve as a graphite anode 'drop-in' replacement material for anodes

    Good new is news too you know..

  2. People who are interested in this development will find a very good report on it here:


  3. @Chris O: I suspect you may have missed this story in your eagerness to comment on GCR's shortcomings:

  4. Sorry John, though the story you link to also has graphene in it, it isn't the same story....

    A general story about the vague possibility of future use of graphene foam in *cathodes* and a concrete breakthrough of using silicon graphene in *anodes*, with real perspective of short term commercialisation are two completely different stories.

    Too bad you deleted my link rather than read the story it referred to or you would have realized that.

    And yes, the total lack of interest for this fascinating development is a shortcoming indeed...

  5. ...of course if what I took to mean "a total lack of interest" really is the result of being distracted by the consequences of hurricane Sandy (you are a (part time?)resident of New York according to your resume...) than I apologize for that remark.

  6. What A123 lacks is automotive process controls knowledge. Johnson Controls understands this as well as any top Tier 1 automotive supplier and they understand batteries very well. Wanxiang does not understand QC, since very few in China do. I think for A123's future, they need JCI's expertise. Wanxiang will not know what to do with the technology.

  7. You are giving JCI too much credits...

    This is solely based on my experience dealing with them at work.

  8. The A123 EXT, if it lives up to it's testing and specs, will be a good cell. Good luck to JCI to produce it. It doesn't need to be managed by the top-heavy and high-cost R&D of A123. A123's story is ragged and problematic. They should not have built those Fisker (and other) packs from homogenized cells but rather used cells from one welding machine so as for less loss if something should have gone wrong in the production. 25% loss is far better than 100% loss of system packs (they have 4 welding machines).

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