A123 looks to China
A Chinese company’s plan to invest in A123 Systems may save the Waltham battery maker, but the deal is another blow to the US economy and the country’s efforts to subsidize green technologies.
Dave Vieau, the CEO of A123, announced the deal in a conference call with analysts on Wednesday morning. He said Wanxiang Group Corp. had signed a nonbinding memorandum of understanding committing it to provide $75 million in bridge financing and to purchase $200 million of A123 debt. Wanxiang, China’s largest automotive parts manufacturer, could also invest another $175 million and gain control of 80 percent of A123’s stock.
“We believe that Wanxiang’s capital investment will remove the uncertainty regarding A123’s financial situation and enable us to resolve our liquidity constraints that have impacted business growth,” Vieau said.
The announcement was another sign of Chinese economic strength and another setback for US efforts to bolster home-grown companies with exciting green technologies. Evergreen Solar and Solyndra have already fallen victim to Chinese dominance in the solar industry. Now the Chinese are on the verge of taking over a company with electric car battery technology so promising that it received nearly $250 million in federal support, a $5 million forgivable loan from Massachusetts, and a hefty package of grants, loans, and tax credits from Michigan, where A123 built a factory.
Perhaps the most disappointing piece of news is contained in a Reuters article detailing how US battery makers, often with government financial support, overbuilt in anticipation of much larger electric car sales. As the Reuters piece said: “A123 promised to create 38,000 US jobs, including 5,900 at its own plants. A123 said on Thursday it has 1,300 workers.”
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