Electric Car Battery Maker Files For Bankruptcy

An electric car battery maker that President Obama touted as part of a vanguard of a new American electric car industry has filed for bankruptcy, the company announced on October 16. The company announced it was selling all of its automotive assets to Johnson Controls Inc. for approximately $125 million.

That move came as the fast-faltering A123 elected to nix an alternative deal with a Shanghai-based battery company, Shanghai Advanced Traction Battery Co., which was supposed to ease A123's cash flow crisis – but which also created a political stir considering the U.S. firm’s outstanding government loans.

The sale to JCI, one of the auto industry’s largest suppliers, should permit the now bankrupt battery maker to maintain deliveries to an assortment of automakers that includes the California start-up Fisker Automotive.

A123 Systems, which produces lithium ion batteries for the electric car maker Fisker and the truck manufacturer Navistar, received a $249 million Department of Energy grant that was financed by the president’s stimulus program. The company has been struggling as electric vehicles have failed to gain a foothold in the American domestic car market. Another battery maker that received federal support, Ener1, filed for bankruptcy earlier this year.

In a memo issued to reporters on October 16, the Energy Department said that the advanced battery market continues to grow in the United States and around the world despite the troubles of some domestic companies.

The memo said that the agency, with support from Republicans and Democrats, has awarded $2 billion in grants to twenty-nine companies to build or retool forty-five manufacturing facilities in twenty states to build advanced batteries, engines, drive trains, and other key components for electric vehicles.

The department said that more than thirty of these plants are already in operation and that A123’s announcement that it is selling key assets means that it will continue to operate in the battery market. It noted that A123 received a $6 million grant from the Bush Administration as part of its efforts to promote a domestic electric car industry.

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