A123 business plan changes

Not a good sign.

 

Another loser of our tax dollars. It is so deflating to see all these failures. Are there any good corporate managers out there anymore? This is the same company that won't sell their product to individual consumers. They only wanted to deal with commercial customers. Now, they will deal with the bankruptcy court.

Unbelievable.

 

Washington Post

The company isn’t vanishing entirely--it’s selling $125 million of its auto assets to U.S. manufacturer Johnson Controls, which will provide financing to the company in bankruptcy and continue to operate the stimulus-funded factories. To date, the company had used half of its federal grant money, or $129 million, to build a factory in Michigan.

Now, since A123 received stimulus money, this is likely to be a political fodder. Mitt Romney has already weighed in: “A123′s bankruptcy is yet another failure for the president’s disastrous strategy of gambling away billions of taxpayer dollars on a strategy of government-led growth that simply does not work.”

So let’s go through a few facts about A123 Systems--and the stimulus-funded battery industry more broadly:

 

It's a bummer but these companies develop complex, expensive products and the consumer is slow to adapt. And there's little to no profit in selling low quantity count one-off kits to consumers. If it's viable then we need to do a better job bootstrapping it.

And I understand the huge budget deficits and the need to save money but the alternative will be more of the same with the competition (chinese) continuing to clean the proverbial US clock with more high paying jobs going overseas while skilled workers default on home loans and college graduates work at McD's while defaulting on tuition loans and losing educational relevance.

 

Part of the problem with A123 is that the terms required it build things before there was demand. They thought they could hang on, but ran out of capital when there were quality problems on the karma batteries. Without those terms it might have made it, or sold out to a company like JCI on better terms for itself.

ENER1 seems like it was a bad political bet all along. Tesla, Nissan, Ford, GM all got money for batteries too. These companies should be around long enough to produce packs. A123 is not like Solyndra or Ener1. There seemed to be a genuine chance the company could make it.

We could be doing this much smarter though ;-)

 

In the old days, America just called investments like these "Critical Defense-Related Appropriations," and spent, spent, spent."

 

didnt JCI's battery plant go into chapter 11 as well? 2-3 years ago? I think I was discussing it with austin?

 

JCI is a large multinational. It's stock went down with the auto companies but it always has had plenty of assets. It has been buying other companies and recently added Recaro seats to its line up. It supplies batteries and other parts for toyota's built in north america and has been honored as one of their best suppliers. Its stock is down right now as it has major exposure to the european auto market which is not doing so well.

 

A123 was depending on the Volt to use their Li ion battery but GM decided to get the Volt Li ion battery from LG (korea). With no big volume buyer of their battery they went bust.

It's like in medival days - Prince Volt is looking for a bride and is the only eligibe guy in the kingdom with his choice of multiple maidens: Princess LG, Princess A123, Princess Panasonic, Princess Sony, and soforth. when Prince Volt decides on Princess LG.... Princess A123 faced with the destiny of a wall flower commits suicide.

 

Not at all A123 was only bidding on the volt. GM didn't go with them because of manufacturing capability along with other reasons. A123 had design wins in the Karma, chevy spark, and bmw activehybrid 3 and 5. The karma batteries had quality problems. They needed to fix these and ran out of cash. Tesla also ran out of cash, but because they are doing much better were able to raise it. If A123 had not overbuilt, which were terms of the government money, it would not have run out of cash yet.

 

not good news, but atleast it will stay in the US

 

and what happens to all the fiskers (with the recall)?

 

All the bad A123 packs were replaced at A123's cost.

JCI should be providing the same A123 battery packs to the karma. Its larger size and manufacturing expertise will help it with quality and management.

 

i wonder how much JCI will buy a123 assets for?

pennies on the dollar?

 

A123 Shows Risks as Battery Science Meets Government Cash - Businessweek

The valuable thing for JCI is the technology, so yes its pennies on the dollar. The bid is about as much as the federal grant. Most of the equity from private investors has been wiped out.

 

yes... what they do is have separate companies running separate parts of their business, so they can write them off if needed... i think there was article on their battery plant going chapter 11, but I might be wrong.

However it would not be unusual - this is how all of them operate. They form separate business that is owned by them but they are not financially responsible for it.

 

There are some business units in foreign countries that may work that way, but nothing in the US. In the US the different business units are organizational. JCI hasn't had anything go into chapter 11, but like many large corporations they close and open factories. JCI seems to open or buy much more than they close.

That isn't how JCI operates. You can easily look up its annual reports.

 

Some say the same thing about the space program ... despite the litterally hundreds of collateral products that rose from it. And what kind of return to you think you get for the trillions spent on military trainig, aircraft carrier (and the tons of planes that go on them), tanks, nukes, laser guided bombs ? Oh that right ... we feel safer. imo, money wasted on transportation tech is vastly better ... but what do I know.