A123 Systems Falters: Slow EV Sales, Recalls

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Automotive News - July 6, 2012

The fed­er­al gov­ern­ment has set very aggres­sive goals for the sale of plug-in elec­tric vehi­cles. To aid the sale of these vehi­cles the Feds pro­vid­ed a $249 mil­lion grant to lithi­um-ion bat­tery man­u­fac­tur­er A123 Sys­tems. Pres­i­dent Oba­ma con­grat­u­lat­ed A123 work­ers via video con­fer­ence as the com­pa­ny ramped up pro­duc­tion at its Michi­gan plant. Now A123’s future is in jeop­ardy, telling the Secu­ri­ties and Exchange Com­mis­sion that the com­pa­ny has only five months of cash left.

The Depart­ment of Trans­porta­tion has pre­dict­ed one mil­lion elec­tric vehi­cles will be on U.S. high­ways by 2015. The gov­ern­ment has loaned or pro­vid­ed grants of tax­pay­er dol­lars to sev­er­al elec­tric car mak­ers like Fisker and to bat­tery mak­ers like A123 with the mil­lion unit goal in mind. Despite tax cred­its and oth­er induce­ments con­sumers have not been sparked into buy­ing elec­tric vehi­cles. Researchers now esti­mate the num­ber of elec­tric vehi­cles to be sold by 2015 will like­ly be in the 410K range.

A123 sup­plies the bat­ter­ies that pow­er the Fisker Kar­ma. Both com­pa­nies were embar­rassed when a Kar­ma famous­ly ‘died’ dur­ing an eval­u­a­tion by Con­sumer Reports. As a result A123 issued a recall for its lithi­um-ion bat­ter­ies cost­ing the com­pa­ny over $60 mil­lion.

The new Chevro­let all-elec­tric Spark will also use bat­ter­ies sup­plied by A123 when it debuts in 2013.

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