In Ironic Twist, A123 Bankruptcy Shows Value of Electric Car Technology

, former deputy director, Clean Vehicles | October 31, 2012, 8:55 am EDT
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Lost in the noise of the news of battery maker A123’s bankruptcy filing is an ongoing fight over who will get their hands on A123’s battery technology and manufacturing capacity. If clean tech like electric vehicle batteries was such a bad bet, as naysayers have tried to claim, you’d think nobody would touch the assets with a 10-foot pole. But, the naysayers are wrong.

Not one, but two companies are vying for control of battery assets

The competition over the assets of battery maker A123 is good news for the manufacturing jobs in the U.S.

Wisconsin’s Johnson Controls Inc. and China’s Wanxiang have been making bids and/or threatening legal action as they jockey for position in the race to snatch up the assets of A123. Those assets include battery technologies, and some contracts, for hybrid and electric vehicles, U.S. military applications, electric grid/backup power storage, and replacements for lead-acid batteries in a wide variety of other applications. A123 also has U.S. research and manufacturing facilities in Michigan, Massachusetts, and Missouri.

Wanxiang had been looking to invest in A123 as far back as August, but that effort ruffled feathers due to the risk of losing valuable intellectual capital to China, not to mention the A123 military contracts. Johnson Controls then stepped in around the time of the A123 bankruptcy, which appears to be the catalyst for financial and legal wrangling that is far beyond my expertise to follow.

A bargain for all the right reasons

Whoever gets the assets, it will be a bargain for all the right reasons. These companies would not be fighting to get ahold of A123’s technology and factories if they were worthless. They know better than to throw good money after bad.

Instead, they realize that electric cars are charging forward, as I noted in the National Journal’s blog last week. With triple the sales of last year and a promising future thanks to long-sighted investors and smart policies like government support for clean tech and California’s Zero Emissions Vehicle program, electric cars can move us closer to a Half the Oil future.

Photo credit: A123 Systems

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  • Alexander, you make an important point. Clearly battery and wind technology show significant progress and companies in China are very eager to get their hands on it. This is exactly why we need federal support to bring and keep high-tech energy business here in the U.S. We should be exporting battery and wind turbine hardware to China, not risking losing it because we did not have the foresight to make the right investments and stick with them until they deliver.

    I hope you have as much confidence in our nation as I do because I firmly believe that we can and will win the clean technology race against any other nation. We just have to invest to make it happen.

    • Merritt B.

      I doubt China is paying to purchase the technology — they’ve never hesitated to pirate or purloin technology or intellectual property and it is unlikely they are making an exception in this case. Make no mistake, Chinese have their eye on the plum and that is our lavish subsidy of developers, manufacturers and marketers of these sorts of products. Now our free-handed grants and misguided giveaways will funnel to China via their new “American” companies. Never underestimate the sheer business genius of the Chinese — they happily received our outsourced jobs, they cheerfully exported product into our markets, they systematically purchased most of our debt and now they will grow even fatter with US taxpayer cash thrown wildly with the intention of spurring green technology and the false hope of stimulating our own economy. China is conquering us without firing a shot. And ideologues like those at UCS cheer them on!

  • Alexander

    Always a silver lining, eh?

    Oh well, this promising battery technology (purchased for pennies on the dollar) will dovetail nicely with communist China’s incomparable solar panel technology to assure Chinese dominance over the green industry…and receipt of all the public money we generously keep pouring into it. What a relief it will finally be when our generous grants and subsidies flow to a competent foreign economic superpower who will not embarrass us by going bankrupt. Industry press releases will be so much easier to write then!