Investment From China Places A123 Systems on the Defensive

As reported on Thursday by The Times, the financially troubled electric-vehicle battery maker A123 Systems reached a final agreement with the Wanxiang Group Corporation, a supplier of automotive parts and systems based in China, for an investment of up to $465 million.If fully realized and all options exercised, the deal would give the Chinese company an ownership stake in A123 Systems of 80 percent.The prospect of Chinese control of an American battery maker that benefited substantially from taxpayer dollars set off a blowback in Congress. But Dan Borgasano, a spokesman for A123, said no more than four of nine board seats would be allotted to Wanxiang, were the company to gain a controlling share in A123.Mr. Borgasano said roughly $120 million of its federal financing through the Energy Department had not been drawn down. A123, which reported second-quarter losses of more than $80 million, said last month it could be left with only enough cash for four or five months of operation.In an e-mail, the Energy Department said it was “currently reviewing” a letter sent by two Republican senators, John Thune of South Dakota and Charles E. Grassley of Iowa, objecting to the investment. The e-mail contained remarks attributed to a “senior administration official” who said the battery maker “had not provided any communications regarding any impact to our grant or requests to change the use of grant money, and D.O.E. will continue to monitor the situation closely.”Mr. Borgasano reiterated the Energy Department’s contention that the $120 million in federal funds could “only be used for building manufacturing facilities and creating the associated jobs here in the United States. It cannot and will not be used for anything else,” he said.Wanxiang, he added, had “a successful track record of partnering with U.S. companies and helping them increase their market share.”A123 is a supplier of lithium-ion batteries to Fisker Automotive, BMW, General Motors and Smith Electric Vehicles, as well as the Shanghai Automotive Industry Corporation, or S.A.I.C., in China. Armed with the federal grant, Mr. Borgasano said the company “built the capabilities we needed to satisfy anticipated demand, and ramped up quickly. The demand for passenger electric vehicles turned out to be slower than we’d expected, and that put us in the financial position we’re in.”A123 also supplies much larger batteries to the electric grid for renewable energy storage and other uses. “Wanxiang has been investing in clean technology, and we think our grid business fits into that portfolio,” Mr. Borgasano added.Powered By iWebRSS.co.cc