A123 Systems to File Chapter 11 Bankruptcy
The biggest headache in electric vehicle [EV] technology has got to be the battery and charging systems. For years, the technology just wasn’t reliable enough to make a feasible EV that draw the public’s attention. Over the years, battery formulations have changed, battery packs have gotten smaller and more powerful, and the EVs powered by them have benefited with increased range and reduced charging times. Still, EVs have yet to go mainstream because of these very issues.
Battery manufacturers have not had it easy waiting for EVs to increase in production. Compact Power, a subsidiary of LG Chem and supplier of Chevy Volt battery packs, recently furloughed its workforce because of slacking Volt sales. Unfortunately, another leading EV battery research and manufacturing company, A123 Systems, seems to have been unable to wait out the expected increase in EV production, and is seeking Chapter 11 bankruptcy.
A123 Systems, in spite of their industry-leading Lithium-Ion [Li-ion] Nanophosphate rechargeable battery technology, has been slowly sinking over the last couple of years, having yet to make a profit since their IPO in 2009. All start-up companies have this fear, especially if the demand for their product hasn’t hit its stride.
Today, October 16, 2012, A123 Systems announced that it had entered into an asset purchase agreement with Johnson Controls, Inc. and that it would file for Chapter 11 Bankruptcy in Delaware. Johnson Controls will take possession of all of A123 Systems’ assets in the US and abroad, including factories in Michigan and China. A123 Systems will retain some of the licensing for its grid, commercial, and government technologies.
Jay Friedland, Plug In America‘s legislative director, said in a statement issued today, “Our country is experiencing tremendous success as we electrify transportation. Johnson Controls, Envia, Saft, GM, and LG Chem are making great strides in driving down battery costs while creating a US-based sector for battery technology. Government can help facilitate innovation, but the natural business cycle remains – some failures in any emerging industry are inevitable. ”
Categories: Automotive News