Electric car battery maker A123 Systems, of Obama-stimulus fame, files for bankruptcy

posted at 12:41 pm on October 16, 2012 by Erika Johnsen

Another day, yet another example of what happens when the government tries to “create” jobs based on its own ideological-political ambitions rather than allowing the free market to function based on efficiency and consumer choice.

This latest government-sponsored (read: taxpayer-sponsored) green-energy bust comes in the form of A123 Systems, a manufacturer of lithium-ion batteries for electric cars. The company received almost $250 million in grants (which pretty much means the feds cut the battery-maker a check, and if the company does indeed go bankrupt, that cash is gone) from President Obama’s stimulus in 2009, not to mention over $140 million from the state of Michigan in the form of tax credits and subsidies. Via Bloomberg, A123 failed to make a debt payment that was due yesterday:

The company listed assets of $459.8 million and debt of $376 million as of Aug. 31 in Chapter 11 documents filed today in U.S. Bankruptcy Court in Wilmington, Delaware. Chapter 11 is the section of the Bankruptcy Code used by companies to reorganize. …

A123, which received a $249.1 million federal grant in 2009 to build a U.S. factory, needed a financial lifeline after struggling with costs from a recall of batteries supplied to Fisker Automotive Inc., the plug-in hybrid luxury carmaker. A123 announced in August that it was working on a deal with Wanxiang Group Corp., China’s largest auto-parts maker, for financing in exchange for a majority ownership stake.

As an avid free-trader, I have zero problems with a foreign company that sees an opportunity exploring the possibility of investing in an ailing company — Americans don’t have much interest in buying electric cars, but maybe China has a demand where we don’t — but it’s kind of tragically hilarious that the Obama administration so often touts their renewable-energy “investments” as avenues towards making us “energy-independent” and more competitive with China. What’s more, President Obama, DOE Secretary Chu, and then-Michigan Governor Jennifer Granholm all hailed A123 specifically as an innovator helping to bring about the future green economy of their utopian (dystopian?) visions. 63,000 jobs? Not so much (h/t Washington Examiner):

Besides the government’s brazen disregard for free-market signals and taxpayer money, boss Emeritus Michelle Malkin has reported on the company’s sketchy crony-ish ties to Democrats — not that any of this will even faze the Obama administration’s “we do what we want”-attitude. If Mitt Romney wants to go for the jugular again on “green jobs” in tonight’s debate (which, I think, he definitely should; if more taxpayers were more aware of the many frivolous ways in which the Obama administration has been “investing” billions of our dollars, I think there would be a little more outrage), he’s got a fresh tailor-made example ready to go.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Now we know where September’s $181 million dollars donated to Obama campaign came from.

bgibbs1000 on October 16, 2012 at 12:43 PM

I see a pattern forming here.

tommer74 on October 16, 2012 at 12:44 PM

Liberal: The rich aren’t paying their fair share!!!!!!!!111!

If you taxed Romney at 100% it would take 18 years to pay back what we lost on A123 Systems.

gwelf on October 16, 2012 at 12:44 PM

These stories really do get me all charged up.

newtopia on October 16, 2012 at 12:45 PM

Romneys first statement in the debate:

“Today, the US Taxpayers lost another $250 million because the current administration picked another loser in the so-called “green” energy sector. That won’t happen when I’m President of the United States”

Debate over; Matthews strokes out on live TV.

BobMbx on October 16, 2012 at 12:45 PM

Well that’s $250 million that could have been used for more teachers security in Benghazi.

heretic on October 16, 2012 at 12:46 PM

Do you suppose that Mitt will electrify the crowd tonight by brining this up during the debate.

newtopia on October 16, 2012 at 12:46 PM

The taxpayers can wipe their @ss with that note.

Oil Can on October 16, 2012 at 12:46 PM

Team Obama continues to struggle with the “Free” in free market economics. You can’t coerce/bribe people into buying crappy stuff they don’t want. (ObamaCare excluded, of course.)

VastRightWingConspirator on October 16, 2012 at 12:46 PM

A MSM story never written: Is it time to pull the plug on Green Energy?

newtopia on October 16, 2012 at 12:46 PM

We sure are spending a ton of money to kiss all of these frogs to find the Green Energy Prince. While I would prefer the government stay out at least Newt’s idea was better, put up a reward for missions accomplished. Paying for The Won’s donors’ tax write offs isn’t working out.

Cindy Munford on October 16, 2012 at 12:47 PM

The good news is that we’ll get another snazzy, new art project out this!

newtopia on October 16, 2012 at 12:48 PM

The Loser picks yet another loser.

Bitter Clinger on October 16, 2012 at 12:48 PM

Between Obama and good ole Jenny “blow you away in 5 years” Granholm, those of us in Michigan (who vote the right way) never stood a chance. I love the lakes and woods but maybe it’s time to leave.

moo on October 16, 2012 at 12:49 PM

Heh.

Mr. President, how many dead batteries do you have to produce before you’ll invest in an army of new teachers?

newtopia on October 16, 2012 at 12:50 PM

They spent their money like they spent our money, till it was all gone.

meci on October 16, 2012 at 12:50 PM

Well, The Commie has accomplished one thing – he’s increased the number of euphemisms for “failure,” by one -

“Stimulus.”

OhEssYouCowboys on October 16, 2012 at 12:51 PM

I long for the day when children will hold bake sales to build wind turbines.

newtopia on October 16, 2012 at 12:51 PM

How many Cayman accounts have been “stimulated”?

OhEssYouCowboys on October 16, 2012 at 12:52 PM

“Mr President, you only pick losers.”

Another example to hammer the Emperor God-Boy-King with, Mr. Romney.

Jeddite on October 16, 2012 at 12:52 PM

Meanwhile the Vienna Embassy got a $100K charging station for EVs and Benghazi bupkis for security

tmitsss on October 16, 2012 at 12:54 PM

Wonder why our government can’t make a decent battery and show a profit?

Bmore on October 16, 2012 at 12:54 PM

Good ideas are good ideas and the free market is very, very good at identifying them. It does not need a memo from the White House.

Not even from The Man Who Knows More About Everything Than Anybody.

IndieDogg on October 16, 2012 at 12:54 PM

Kinda a shame actually, I’ve kept half an eye on A123 since before they took government money, and in all honesty their tech seems pretty good. Aside from the whole Fisker recall, my suspicion is that they tried to scale up way too fast. I’m not sure if that was just a poor business decision or something the administration pressured them to do, or whatever.

Basically, they had a decent product, but demand wasn’t high enough to support a factory that large. They needed either a more limited operation, or they needed to focus on R&D while selling licenses and patents to established manufacturers.

WolvenOne on October 16, 2012 at 12:55 PM

This is just the sort of behavior that Bush subsidized when Paulson drove him into a panic designed to save his ex-employer and coincidentally not its chief two competitors. If there was ever an industry that should have been bankrupted it was investment banking. Now Obama has repeated the experiment of corrupt business practices to the tune of trillions more, keeping parasite industries alive and well at the expense of all taxpayers, the industrial base, meaningful scientific research, national defense, the elderly and the young.

pat on October 16, 2012 at 12:56 PM

Oh my God! Atomic Bomb for the Obama Campaign!

/gumbo

ShadowsPawn on October 16, 2012 at 12:57 PM

Mitt already accused the Obama administration of wasting 90 BILLION on green energy fiascos, in the last debate, I guess it’s time up the anty. Accuse him of wasting a trillion dollars on green energy scams. Make it hurt. I’m sure his people can come up with the numbers. World wide the cost has to be in the trillions, considering the costs of mal-investment and lost opportunities.

JimK on October 16, 2012 at 12:57 PM

Anyone have a verifiable list of all the green energy failures getting stimulus money to date?

fbcmusicman on October 16, 2012 at 12:58 PM

And anyone really expected anything different?

The business model that actually works is to develop a prototype, test it, market it, and then begin production, with continuous testing and updates as the market demands, improving, cutting costs, and offering something that the public demands and is willing to purchase.

The Obama model is to build a huge expensive factory, with all the latest bells and whistles, talk about pie-in-the-sky grand strategy, and spend billions before the first prototype is tested, let alone even produced…and what the public demands is meaningless…government will simply mandate that the people purchase it, regardless. Worked for ObamaCare, right?

OK, engineers, entrepreneurs and business folks out there…how many of you became successful when you built a huge production facility first and then tried to come up with a product to manufacture?

Show of hands?

Thought so.

This Obama energy thing is nothing but a huge Ponzi on our dime, paying off contributors with our cash.

In the old days, we’d call this a crime, and act accordingly.

Under Obama…not so much.

coldwarrior on October 16, 2012 at 12:59 PM

Who’s got a scorecard of wins/losses of Obama’s “green energy” subsidies boondoggles?

ex_machina on October 16, 2012 at 1:00 PM

Anyone got a running total on what Obama’s flushed so far on green tech?

Dusty on October 16, 2012 at 1:00 PM

It’s getting better, this one is only about 250 mil lost…

right2bright on October 16, 2012 at 1:01 PM

I love the lakes and woods but maybe it’s time to leave.

moo on October 16, 2012 at 12:49 PM

I hear the trees are really nice, too — just the right height.

steebo77 on October 16, 2012 at 1:04 PM

Has Obama blamed Boosh yet?

steebo77 on October 16, 2012 at 1:04 PM

Anyone got a running total on what Obama’s flushed so far on green tech?

Dusty on October 16, 2012 at 1:00 PM

They said, in the last Biden debate, that their green job record in supporting companies is better than Bain’s record, and he shot out some % figure of x% are still in business…

I don’t know if that’s accurate, but I do know, it often takes longer than 3 years for a company flush with money to fail, but they seem to be able to do it.

It takes real talent for a company that is given 100 of millions, to fail in months…

Some companies can limp along for decades on millions of dollars of investment being pumped in…these guys can’t.

right2bright on October 16, 2012 at 1:05 PM

You pick losers

Conservative4ev on October 16, 2012 at 1:05 PM

Anyone surprised about this…

A123 Systems CEO David Vieau contributed $2,500 to Obama in 2008 race.

Paperwork here…

http://herndon1.sdrdc.com/cgi-bin/fecimg/?11020022656

a1776patriot on October 16, 2012 at 1:05 PM

OT – Gallup 7 day tracking has Romney up 4 with likely voters: 50-46. Zowie….

joejm65 on October 16, 2012 at 1:05 PM

The “You didn’t build that” crowd just keeps proving that “They can’t built that”

To paraphrase Reagan ” It’s not that they don’t know. It’s what they do know, is wrong”

Jabberwock on October 16, 2012 at 1:10 PM

Loser! Pick it, Champ!

dont taze me bro on October 16, 2012 at 1:11 PM

Obama: Governor Romney is going to take us back to the same failed policies that got us into this mess.

Romney: Mr President, might I remind you of the $1.6B your Administration gave to LightSource, a company now bankrupt, $500M to Solyndra, also bankrupt, and just annouced today, a $249M to A123 which filled for bankruptcy. This. This, Mr. President is an example of the failed policies of yesterday that led to the government backed ecomonic collapse of the housing market. Your Administration hasn’t turned away from the behavior that led to the economic crisis you inherited, it has doubled down on it.

newtopia on October 16, 2012 at 1:14 PM

My guess is that Michelle Malkin will have a good/full list of the green failures.
Wish I had time to look, myself.

pambi on October 16, 2012 at 1:15 PM

A123′s first mistake was not hiring Big Bird.

DarthBrooks on October 16, 2012 at 1:16 PM

I love the “UPPER HAND” on the banner behind Jennifer “Arrghhhh” Granholm.

Should have said “MIDDLE FINGER.”

pain train on October 16, 2012 at 1:16 PM

Having used A123 batteries, I know that they have some excellent technology, but their management and marketing suck.

Socratease on October 16, 2012 at 1:20 PM

Losers: tax payers and the employees
Winner: The jerk that will file for bankruptcy and keep most of our money.

DDay on October 16, 2012 at 1:22 PM

Perfect timing on A123…

crr6 unavailable for comment…

Khun Joe on October 16, 2012 at 1:23 PM

“You did not build that bankruptcy!”

Shy Guy on October 16, 2012 at 1:24 PM

When conservatives talk about “government waste” they are talking specifically about programs that serve the elderly and children.
 
libfreeordie on August 12, 2012 at 4:29 PM

rogerb on October 16, 2012 at 1:25 PM

These stories really do get me all charged up.

newtopia on October 16, 2012 at 12:45 PM

I know. they just so…. electrifying ain’t they?

44Magnum on October 16, 2012 at 1:25 PM

newtopia on October 16, 2012 at 1:14 PM

There is a list of like twelve of them so far. Gateway pundit was keeping score. Almost 80% of the companies Zero sent our money to, crashed, burned and laid off everyone working there.

The latest on Solyndra is they filed for bankruptcy in such a way that the IRS has claimed they are trying to evade taxes.

dogsoldier on October 16, 2012 at 1:26 PM

[newtopia on October 16, 2012 at 1:14 PM]

Great point. It’s not my intention to spread the blame or distract from the choices made by Barry and his crony protege Chu, but, IIRC, this green energy program subsidy was started (or at least furthered) under Bush and Republicans who were, partly bandwagon, partly scared sheep, about the whole trumped up Dem/Prog/Lib?Enviro Gorebal Warmening / Climate Change farce which was foisted on us by the same government (not just Bush) apparatus that fed hundred of millions of grants to the climate science industry that created this farce. And we got that ethanol subsidy travesty to boot.

Taxpayers have been taken to the cleaners like never before with this hoax. Anyone remember how switchgrass was going to save us?

Anyway, it’s time to cut the Fed off from doing this stuff but also to cut off the research grant complex or reform it in some way so that it doesn’t create the market for these government subsidies, because it’s not just green tech graft stuff that gets rolling with the research but all sorts of niche government teat sucking.

Dusty on October 16, 2012 at 1:33 PM

The green energy business is too big to fail! Bailouts needed!

Day after the election, -wait for it.

slickwillie2001 on October 16, 2012 at 1:49 PM

We can call these failures, but the Ideologue-in-chief is just killing 2 birds with one stone. By taking $$$ from the American economy he’s getting more people on the Govt. dole and this green energy idiocy, can only work if oil is over $150P/Brl. So, he’s making sure to hurt the oil ind., any chance he gets.
Update for those following”How to take on the Enemy media & Win: http://paratisiusa.blogspot.com/2012/09/an-open-letter-to-those-who-should-know.html?spref=tw

God Bless America!

paratisi on October 16, 2012 at 1:56 PM

These stories really do get me all charged up.

newtopia on October 16, 2012 at 12:45 PM

I know. they just so…. electrifying ain’t they?

44Magnum on October 16, 2012 at 1:25 PM

Resistance is useless, without volts and amps.

rah1420 on October 16, 2012 at 1:58 PM

This is really funny.
And it’s really alarming & sad.
Romney has so much ammo it must be hard to pick what to go with.

Badger40 on October 16, 2012 at 1:59 PM

“A123 Systems”? That has got to be a joke. Wouldn’t surprise me if there are teenagers out there with P.O. boxes registered to “Hyper-Global GreenTech” and “SolarSpike PowerJuice Systems” that got tens of millions from DoE.

JeremiahJohnson on October 16, 2012 at 1:59 PM

Billions pissed away on “green” energy, health insurance premiums skyrocketing, gas prices through the roof, jobs scarce, food costs rapidly rising – and YET 40-some-odd-percent of Americans will vote for more of this??

Truly stunning.

Common Sense Floridian on October 16, 2012 at 2:26 PM

Well, damn. No, I’m not a fan of giving money to pet projects and liberal/environmental zealot cronyism but I did take a flyer on this one as a penny stock back before Romney hammered Obama in the first debate and it looked like we were set for another four years.

There tech really is legit but they are run terribly and frankly, the demand isn’t there yet. Problem is, however, is that something doesn’t smell right about this whole deal. Of course, any time investors get their rear end handed to them, the cries of foul start up but that said, something here doesn’t add up.

Texas74 on October 16, 2012 at 2:28 PM

Didn’t Obama say that A123 was the way of the future in 09 or 10?

He was correct in his future for America.

jukin3 on October 16, 2012 at 2:39 PM

I know. they just so…. electrifying ain’t they?

44Magnum on October 16, 2012 at 1:25 PM

Say watt?

I find them revolting.

Shy Guy on October 16, 2012 at 2:50 PM

These stories really do get me all charged up.

newtopia on October 16, 2012 at 12:45 PM

I know. they just so…. electrifying ain’t they?

44Magnum on October 16, 2012 at 1:25 PM

Resistance is useless, without volts and amps.

rah1420 on October 16, 2012 at 1:58 PM

Your reluctance to embrace this green technology is troubling.

slickwillie2001 on October 16, 2012 at 3:04 PM

Romney has what we in the Army would refer to as a “target rich environment” tonight.

Red Cloud on October 16, 2012 at 3:05 PM

Just who asked for the stimulus money for A123? Well, let’s see:
“Sincerely,
The Michigan Delegation
Senator Carl Levin
Senator Debbie Stabenow
Congressman John D. Dingell
Congressman John Conyers
Congressman Fred Upton
Congressman Dale Kildee
Congressman Sandy Levin
Congressman Vern Ehlers
Congressman Pete Hoekstra
Congressman Bart Stupak
Congressman David Camp
Congresswoman Carolyn Cheeks Kilpatrick
Congressman Thaddeus McCotter
Congresswoman Candice MillerCongressman Mike Rogers
Congressman Gary Peters
Congressman Mark Schauer”

Damn democrats

plewis on October 16, 2012 at 3:34 PM

May 19, 2009

The Honorable Steven Chu
Secretary
U.S. Department of Energy
1000 Independence Avenue, SW
Washington, DC 20585

RE: Recovery Act-Electric Drive Vehicle Battery and Component Manufacturing Initiative (DE-FOA-000028)

Dear Mr. Secretary:

We are writing to express our united support for the full consideration of the applications submitted to the Department of Energy by some of the most innovative and knowledgeable firms, collaborations and individuals from Michigan, which is home to an unparalleled expertise and experience in deploying large-scale new manufacturing technologies.

The American Recovery and Reinvestment Act included $2 billion for grants for manufacturing of advanced batteries and electric motors and electronics. The purpose of this funding is to invest in vital home-grown technologies and job creation in a new industry essential to jump start the development of a U.S. manufacturing base for batteries and to accelerate development and commercialization of reliable, safe and affordable electric drive vehicle systems. This new grant program is also viewed as a vital component of reducing dependence on foreign fuels, lowering vehicular emissions and helping vehicle manufacturers meet higher fuel economy standards.

Michigan is uniquely prepared to offer an American-led solution that meets these important goals. While Michigan’s auto industry is facing historic challenges, this is also a time of unprecedented opportunity for our highly skilled workers to take a leadership role in meeting critical national needs. Nine of the world’s top original equipment manufacturers (OEMs) and 46 of top 50 global suppliers have significant investments in our state, much of those now focused on developing zero or near-zero emission vehicles of the future. Our skilled workforce will also bring unmatched technical expertise that will give Michigan battery manufacturers a significant advantage over their competitors.

To support these manufacturers in their efforts, our state government colleagues, on a bipartisan basis, have taken aggressive action to organize our considerable research, development and manufacturing assets, including passage of unmatched state-level incentives to further leverage federal advanced energy investments. These incentives include $700 million in state tax credits for battery pack manufacturing, research and development, engineering and construction of production-scale battery plants. Utilizing these tax credits, four companies announced plans last month to invest more than $1.7 billion to launch advanced battery manufacturing in Michigan. On April 14, 2009, Governor Granholm announced the four companies awarded state refundable tax credits as:

•Johnson Controls-Saft Advanced Power Solutions (JCS), together with Ford Motor Company
•LG Chem-Compact Power, together with General Motors
•KD Advanced Battery Group, a joint venture of The Dow Chemical Company, Kokam America, Inc and Townsend Ventures LLC
•A123 Systems, together with Chrysler LLC

In addition, Michigan is already stimulating second-generation lithium-ion technology development through a Centers of Energy Excellence program, one of which includes the University of Michigan spinout Sakti3, and has formed various alliances with other academic and governmental entities including Oak Ridge National Laboratory and the U.S. Army Tank-Automotive Research, Development and Engineering Center (TARDEC). These alliances position the United States to take immediate advantage of Michigan’s strategic assets to establish the supply chain needed to support cell manufacturers, their suppliers, and vehicle OEMs. This supply chain will allow faster deployment throughout the product life cycle, from battery material development to recycling, reuse and reclamation.

In summary, Mr. Secretary, establishing a North American battery center of gravity in Michigan will significantly improve the federal government’s ability to more swiftly meet its ambitious vehicle electrification goals, and will pay dividends across the industrial Midwest through development of a strong supply chain. As the Department begins its review process, it is clear that our nation needs to ‘get it right the first time’ in deploying these recovery grant dollars. We urge you to strongly consider the importance of deploying the unmatched abilities and resources being offered to you from a state that has time and again persevered through regional and national challenges.

Sincerely,
The Michigan Delegation
Senator Carl Levin
Senator Debbie Stabenow
Congressman John D. Dingell
Congressman John Conyers
Congressman Fred Upton
Congressman Dale Kildee
Congressman Sandy Levin
Congressman Vern Ehlers
Congressman Pete Hoekstra
Congressman Bart Stupak
Congressman David Camp
Congresswoman Carolyn Cheeks Kilpatrick
Congressman Thaddeus McCotter
Congresswoman Candice Miller
Congressman Mike Rogers
Congressman Gary Peters
Congressman Mark Schauer

plewis on October 16, 2012 at 3:36 PM

Another one bites the dust

I prefer Weird Al’s version: “Another one rides the bus!”

Benedict Nelson on October 16, 2012 at 3:39 PM

Taxpayers and Republicans have had enough of the waste and fraud in the Obama administration. Taxes will be lower in the Romney administration and the government wil take a big haircut. Too large and out of control. One term for Obama.

Amazingoly on October 16, 2012 at 3:42 PM

“Mr President, you only pick losers.”

Another example to hammer the Emperor God-Boy-King with, Mr. Romney.

Jeddite on October 16, 2012 at 12:52 PM

Joe Biden: “I resent that! President Obama’s nose is no loser, and neither is his a–”

Benedict Nelson on October 16, 2012 at 3:43 PM

There are some republicans on that list….

That being said, when the government under the Obama administration and Pelosi/Reid legislature says: “We’re going to blow all this taxpayer money, who wants some?” might as well ask I guess…

Texas74 on October 16, 2012 at 3:46 PM

plewis on October 16, 2012 at 3:36 PM

Usually the least intelligent stay quiet so as not to tip everyone else off that they are incredibly stupid.

So what is your excuse?

tom daschle concerned on October 16, 2012 at 3:58 PM

Electric car battery maker A123 Systems, of Obama-stimulus fame, files for bankruptcy

Well, there’s still a huge demand for batteries out there…why can’t they just retool and make different kinds?

Oh, I forgot about the Corporatist-Fascist angle. Now, when they have complete control such companies will no longer go bankrupt, but rather be hailed as successful examples of the New Socialism no matter how awful they are.

Dr. ZhivBlago on October 16, 2012 at 4:33 PM

A123 Systems

After a certain point, they just got tired of coming up with good fake names for the shell corporations funnelling public funds into Obama campaign contributors’ pockets.

Every time we hear about some new scandal from this administration, it always turns out to be the tip of the tip of a brand new iceburg.

logis on October 16, 2012 at 5:03 PM

Thank God this came out after tonight’s debate.

/oops

roy_batty on October 16, 2012 at 5:54 PM