A123 gets $249 Million federal grant

Interesting. It sounds like A123 wasn't able to find matching funds but has been given an extension of time to do so. I hope they're successful.

I wonder what they did with the initial $127MM?

 

They lost $55 million right off the bat with the Fisker Karma battery manufacturing mistake.

 

they lose money every year... i would have to look up the numbers, but more than 200mil for last 2 FY.

 

yes, and that was operating cash for current operations. 123 will need more capital before the end of the year.

Its a different situation. A123 really does have a solid reason for capital, but I don't see how a loan extension is fiscally warranted. A123 is still viable, but it is on much more shakey ground than when the loan was originally made.

 

Sometimes a lender will do a loan extension to give the borrower time to raise capital. If, e.g., Fisker sales exploded or if A123 were awarded a long-term supply contract from a national credit company, then it might be able to attract investment capital.

Besides, A123 probably doesn't have sufficient cash to repay the loan so demanding payment could force them into bankruptcy.

We sure don't need another Solyndra, though.

 

There goes more of my hard earned tax dollars. They'll probably go into bankruptcy etiher way.

 

A123 isn't in default, it has cash on hand, the extension allows it to borrow more of the money in the future. But the future doesn't look as bright as when the original loan covenants were written, which seems to be extending a loan on a less credit worthy customer.

They could repay the loan today They are burning cash though, and may not be able to repay a year from now without more equity sold in the company.

In the case of solyndra they did loan it more money when it was clear that it could not repay and its business model looked awful. On A123 the business model is a good one, but they have been executing badly, Near term sales are heavily tied to the karma and spark, and I would not bet on either car. A123 invested $20M in fisker and that investment is now only worth about $7 today, add in the $55M loss on manufacturing problems with the fisker battery and you can see how fast the company is burning through cash.

 

I still don't understand, and have never heard a reasonable explanation, why A123 does not sell to the public. They have had people dismantling Dewalt lithium packs to get cells and buying QC rejects on ebay for years.

 

Profits are low in the public sector. Ever priced out a plastic box that costs five to six bucks at Walmart in business to business catalogues? It's usually twice the amount. That's true of most products. Blenders and dishwashers have around a 400% mark up when research is placed in the name.

A123 needs volume to be profitable in the public sector. The demand for cells designed for cars is never going to be as high in the private conversion side as supply EV manufacturers.

I bet they are using the old cells they buy for R&D on improving recycling. Lithium recovery is lower than nickle in batteries. Just lowering the cost can be big.

 

And did the Navy turn a profit this year? More is wasted on Navy than is invested in alternative energy technology which provides real national security, jobs and industry to generate income to pay for the Navy and the rest of the $1.3T of yearly military spending to occupy Middle East oil fields.

Spending on the Navy is wasted in that military occupation of Middle East oil fields does nothing to lessen the threat to US national security while the $249M (0.0002% of military spending) invested in alternative energy technology in US will actually increase US national security.

 

?

 

I presume because there are now PEVs that are or will be manufactured and they think that direct sales just wouldn't be large enough to support larger-scale operation.

 

That was my reaction too.

However, there is a valid point in there: money invested in manufacturing is largely wasted if the manufacturer fails. Money invested in research, however, may retain value since IP and research effort is not lost when a company fails.

However, it does deny the important issue that much of the money spent on the Navy is the externalized cost of protecting access to oil.

 

The Navy is bankrupt. It makes no money and has to borrow $161B every year. I think someone was complaining about "wasted tax dollars".

Even if A123 goes bankrupt, the money spent went to engineering, production, construction and knowledge about building a US high technology, high wage, sustainable economy.

It's a good investment no matter how it turns out.

 

$249 Million ? Is THAT all? If anyone finds a quarter billion to be a waste ... and they're not getting their congress and house of rep's FIRED ... then they're crying for NOTHING. A quarter BILLION is less than ONE PERCENT of the waste that congress does, when they prostitute their selves to even a SINGLE military spending project:
Wired 13.07: Saving the Pentagon's Killer Chopper-Plane

and this SINGLE project's costs just continued and continued and continued ... even after that ... and yet some moan over battery research & development?

Hypocrites whine about battery R&D .... even as the U.S. continues to go bankrupt trying & trying & trying to continue FURTHERING its over sized lead on every other country's military. EVERY cruise missile costs over $830,000 ... and yet crybabies would kill battery R&D that costs NO more than THREE missiles. Blow up 3 cruise missiles and you've got 3 big holes. Invest in batteries, and you won't have to go around the world killing people ... setting up dictators that do our bidding for their oil ... causing their citizens to want to kill us in the 1st place. Man ... we really got things bass acwards ... when we'd rather invest growing our trillion dollar debt & defense budget ... rather than investing in technology that'll have even a CHANCE at a payback ... good luck with that.

.

 

Exactly.

$30B in investment in weapon to wage oil wars.

$249M investment in technology to eliminate need for oil wars.

The imbalance explains the problem.

It's worse than that because the technology and policies to eliminate the need for oil wars exists right now and is in practice in Europe. Investing one year of US military spending ($1T) has a pay back of two years based on halving the US military budget since no oil imports eliminates the No. 1 strategic military contingency upon which Pentagon budgets. We don't really need to invest in new technology as much as apply current technology and policies.

That doesn't count the 6,421 US soldiers killed and 46,373 wounded in last 10 years of Middle East oil wars.

The $249M for the A123 should be $500M and that should be part of a $1T "Green Manhattan Project" for US. That would be REAL "enduring freedom".

Shocking to see people on PriusChat who actually think US is an oil exporter when US is the world's biggest importer of oil, almost equaling the other 10 top oil importers combined.

Producers, Exporters, Consumers, Importers - millions of barrels per day.

 

If your product had a large enough following to create a world-wide black market, wouldn't that be a compelling reason to make your product easier to acquire by the public? Anyway, yesterday it was people taking apart tool battery packs, tomorrow it will be people dismantling wrecked PHVs.