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Another 'Green' Failure? Battery Maker That Received $249 Million From Admin. Files for Bankruptcy


Energy Sec. Steven Chu in 2009: "One of the success stories...the model of what we want to happen on a bigger scale" Obama in 2010: “The work you’re doing will help power the American economy for years to come" --

(Photo: AP)

​President Obama gives a speech with, from right, A123 Systems President and Chief Executive Officer David Vieau, A123 Systems electrical engineer James Fenton and A123 Systems design engineer Antonio Biundo in April, 2010. (Photo Credit: Associated Press)

Battery maker A123 Systems Inc. filed for bankruptcy protection on Tuesday, a little over three years after it received a $249 million grant from the Department of Energy to build its U.S. factories.

In September 2010 the president called the manufacturer to congratulate it on the "tremendous milestone" it represented in being able to mass produce advanced vehicle batteries, calling it the "birth of an entire new industry in America."

“The work you’re doing will help power the American economy for years to come,” the president assured, adding how the company will help our "communities and our states and our countries...to thrive."

Not only that, President Obama also thanked Secretary of Energy Steven Chu (who once said he wanted American gas prices similar to those in Europe) for "[getting] the money out the door quickly and wisely."

As the Wall Street Journal notes, those words have a "particular sting" to them now, and will likely be coming to a presidential debate near you.

U.S. Secretary of the Treasury Timothy Geithner participates in a working lunch with prominent businessmen, including Desh Deshpande of A123 Systems, in June, 2011 at the Department of the Treasury. (Photo Credit: Getty Images)

Republicans are likely to use the latest taxpayer-funded failure to criticize the Obama administration's generous funding of alternative energy companies, which they say is either a waste of money or a crony way to funnel money to Obama donors.  Critics point to Solyndra LLC in particular, a politically connected and now-bankrupt solar power company, which left taxpayers on the hook for $528 million.

A123 has struggled for several years after a number of bad investments like the Fisker Karma, which-- though it retailed for about $100,000-- has a reputation of bursting into flames.  Though A123 lost $83 million in the second quarter, it announced a $450 million lifeline from Chinese auto parts maker Wanxiang Group Corp. two months ago, but the deal was scrapped.

Using its federal stimulus grant, the company set up manufacturing operations in the Detroit suburbs of Livonia and Romulus, Mich.  However, unlike a loan, the company's $249 million government grant does not have to be repaid. A123 only had to match the grant money as it was used.

So far the company has drawn about $129 million of the grant, spokesman Dan Borgasano said Tuesday.

Johnson Controls will get A123's automotive assets for $125 million, including lithium-ion battery technology, products and customer contacts. It will also take over the factories in Michigan, cathode ray factories in China and an equity interest in a Chinese battery company.

In 2009, Energy Secretary Steven Chu called the company "one of the success stories of a high-technology company that was funded with government funds," and "the model of what we want to happen on a bigger scale."

​The Associated Press contributed to this report.



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