Electric Car Battery Maker A123 Systems Files for Bankruptcy Protection

[Mikeg]

Back in 2009-2010, A123 Systems received $100 million in MEGA tax credits and another $41 million in tax breaks and subsidies from the state of Michigan. A123 Systems also received a $249 million grant from the US DOE as part of President Obama's economic recovery "stimulus program."

In Oct. 2010 when A123 Systems began production, Gov. Granholm, President Obama, and US Senators Levin and Stabenow bragged for the cameras about all the new jobs they helped create with taxpayer money:



Oct. 2012 - A123 Systems has filed for bankruptcy protection and Johnson Controls and the Wanxiang Group are circling the corpse jockeying to grab the best pieces.

A123 Systems had been the poster child for government green energy initiatives and now it is about to become the poster child for crony capitalism failures.

[noise]

Remember when the Republicans supported the decision to provide A123 with these tax benefits, as well?

In any case, they were right and it was rather successful. The end goal was to support green energy initiatives and A123's efforts did just that. From the Freep story: "The battery industry has lowered the cost of lithium-ion battery pack production to about $500 per kilowatt hour, down from about $1,000 four years ago." Steps in the right direction.

[Mikeg]

Remember when the Republicans supported the decision to provide A123 with these tax benefits, as well?

In any case, they were right and it was rather successful. The end goal was to support green energy initiatives and A123's efforts did just that. From the Freep story: "The battery industry has lowered the cost of lithium-ion battery pack production to about $500 per kilowatt hour, down from about $1,000 four years ago." Steps in the right direction.

Why is it the government's responsibility to drive down production costs in the private sector? Also, your response fails to address the fact that this was trumpeted by the governor as an "investment " that would eventually deliver 63,000 new hi-tech jobs in Michigan.

~~rrriiiinnnnnggg~~ "Good Morning everybody..... Governor Granholm, this is your friend, Barack Obama!"

[Wheels]

While watching this story unfold on the 6 o'clock news yesterday a commercial came on for Debbie Stabmenow touting her involvement in this fiasco. What timing?

[noise]

Why is it the government's responsibility to drive down production costs in the private sector? Also, your response fails to address the fact that this was trumpeted by the governor as an "investment " that would eventually deliver 63,000 new hi-tech jobs in Michigan.

~~rrriiiinnnnnggg~~ "Good Morning everybody..... Governor Granholm, this is your friend, Barack Obama!"

You asked that question as though the government should never touch the private sector. Why would Romney, or Snyder for that matter, be interested in driving down costs in the private sector? Furthermore, nobody said it was a "responsibility".

My response did address your biased comment concerning Governor Granholm. Here are some other names that referred to this as an "investment":

Congressman Fred Upton
Congressman Vern Ehlers
Congressman Pete Hoekstra
Congressman David Camp
Congressman Thaddeus McCotter
Congresswoman Candice Miller
Congressman Mike Rogers

As I said, they were right about the support of green energy initiatives. From a bipartisan perspective, there's certainly a bigger picture.

[Mikeg]

You asked that question as though the government should never touch the private sector. Why would Romney, or Snyder for that matter, be interested in driving down costs in the private sector? Furthermore, nobody said it was a "responsibility".

My response did address your biased comment concerning Governor Granholm. Here are some other names that referred to this as an "investment":

Congressman Fred Upton
Congressman Vern Ehlers
Congressman Pete Hoekstra
Congressman David Camp
Congressman Thaddeus McCotter
Congresswoman Candice Miller
Congressman Mike Rogers

As I said, they were right about the support of green energy initiatives. From a bipartisan perspective, there's certainly a bigger picture.

I don't care who called it an "investment". When you place your chip on the roulette table, you don't call that an "investment"! There was never any expectation that these grants, tax credits, etc. would appreciate in value or be repaid using income that is generated in the future - which are the expected outcomes with any true financial investment. This type of government financial support of an industry is more properly described as speculative betting with someone else's money.

According to the Washington Post, A123 Systems' primary customer, Fisker Automotive, also received $193 million of a potential $529 million loan from the US DOE. Apparently someone at the DOE finally got wise and saw that this "house of cards" was about to collapse and closed the tap. Per the Post:

A123 is the fifth prominent clean-energy firm the Obama administration subsidized with loans or grants that has filed for bankruptcy protection, joining solar firms Solyndra and Abound Solar, energy firm Beacon Power, and battery company Ener1. Solyndra, whose lead investor was linked to a key Obama donor, is often cited by Republicans as a prime example of “cronyism” in President Obama’s stimulus program.

.

[noise]

Also, your response fails to address the fact that this was trumpeted by the governor as an "investment " that would eventually deliver 63,000 new hi-tech jobs in Michigan.

I don't care who called it an "investment".

Then why did you bring it up?

You are confusing the support of green energy initiatives with a financial investment. Despite your objections, many people believe in a greater good.

[Mikeg]

Then why did you bring it up?

I was talking about the politician's boasting of the forthcoming 63,000 jobs, which you did not address.

You are confusing the support of green energy initiatives with a financial investment. Despite your objections, many people believe in a greater good.

I am not confusing anything. The politician's use of the term "investment" has nothing to do with a financial investment, it just sounds better to gullible ears than saying "spending your tax dollars".

Pray tell, what is the "greater good" that results from flooding the nascent field of electric vehicle and battery manufacturing with so much state and federal "investment" that there are too many start-ups and not enough buyers, even with the federal tax credit on EV purchases? It should be no surprise to anyone that the result is a bubble that will eventually burst - and there is no "greater good" to be found in that outcome.

[Papasito]

Political or not, these "alternate energy" companies are a nice, feel-good idea built on weak demand and are uncompetitive versus existing products and technologies.

It's been said that these alternate technologies are decades away from being feasible in the real world, and that is probably true. However, there are groups pushing for existing energy sources to become strangled, limited and scarce, and for these new technologies and energies to become the forced replacement for them. The world is just not ready.
And who suffers? The middle class and the poor.

106 power plants are offline because fringe groups don't like coal. Fracking and natural gas are going to be fighting to stay alive against legislation that is soon to hit Washington. Oil is seen as a bad word, while EVERYTHING is made of plastic, a by-product of oil. Even the purified tapwater the hippies drink comes in plastic bottles.

The technologies are here for 40-60mpg gas powered vehicles.
The technologies have been here for large commercial vehicles to run on natural gas. Some cities have their entire bus systems operating on it.

But electric cars that cost $10-$20k [[and beyond) more then gas powered vehicles that are fuel efficient and have proven systems just don't seem to be worth paying the up-front difference when they burn down, break, or the manufacturers of the products go out of business.

Government should not be here to push feel-good ideas. They should promote and encourage cleaner, more environmentally efficient products, and provide incentives for them them to take a foothold in the free market. But I don't think it's Government's place to throw money at these companies.

At almost 16.2T in debt, we shouldn't be throwing money at anything. The Government should be watching every penny. Remember when Obama said "Line By Line" he would go over everything and stop wasteful spending when he was campaigning back in 2008? HAHAHAHAHAHA!!
That never happened. It SHOULD have.
When our credit cards are maxed out and we don't have extra spending money, we have to watch our budgets. Why shouldn't the Government?


Meanwhile, while we are doing all this to choke our own energy sources and production, China is building on a massive scale - Coal powered power plants, manufacturing, and growth on a gigantic scale using traditional energy sources. We are allowing ourselves to deteriorate and collapse by our own stupidity, while countries who are our known enemies are ignoring the feel-good rules we put on ourselves and turning themselves into world superpowers and turning us into a 3rd world country.
Just look at photographs of Detroit 3O years ago, and now and compare them to photographs of Shanghai 3O years ago, and now. We are doing it to ourselves.

[oladub]

As much as I complain about Obama, I like his general idea of promoting and pushing electric cars. His implementation of this technology has been poor but the idea behind it is good.

If the development of electric vehicles was structured as a defense necessity, the R&D and some of the implementation expenditures make sense and Republicans would more likely support it. We spend billion$ every year keeping the Persian Gulf open and have spent over a trillion dollars fighting oil wars. Maybe Iran is next. We are destroying our own economy doing so.

My son leased a Volt and figures he saves about $50/month on fuel*. He charges his Volt at four cent/kw hour night rates. The one time it ever used gas was after 48 miles of charge.

Put a price tag on the lives, disabled vets, and taxes we have to pay to keep these wars up and it suddenly makes a lot of sense develop electric car technology. We are swimming in coal and natural gas in this country as solar, wind, and eventually fusion become gradually more viable.

If we could separate out the development and implementation of war saving technologies from the corruption and favoritism presently plaguing these new technologies we would be on to something.

A123 has been purchased by Johnson Controls a Milwaukee, Wisconsin [[go Badgers!) Company with 162,000 employees worldwide already deeply involved in autos and 'power solutions'. A123 had recently made some major cost saving lithium battery improvements so our tax dollars have not all gone to naught.

Slightly off topic: T. Bone Pickens war right. Converting large diesel trucks to natural gas is simpler technology that should have been implemented a long time ago. Waste Management has converted a lot of its trucks to natural gas and has save enormous amounts of money doing so. We really don't have to continue bowing to the saudi Emir.

*lease based on $3,000 plus $179/month plus tax @10,000 miles/year for 2 years.

[noise]

I was talking about the politician's boasting of the forthcoming 63,000 jobs, which you did not address.

What is there to address? Your bias blamed a sole politician for an incorrect belief. I pointed out it wasn't the belief of a sole politician. What else needs to be said?

I am not confusing anything. The politician's use of the term "investment" has nothing to do with a financial investment, it just sounds better to gullible ears than saying "spending your tax dollars".

Pray tell, what is the "greater good" that results from flooding the nascent field of electric vehicle and battery manufacturing with so much state and federal "investment" that there are too many start-ups and not enough buyers, even with the federal tax credit on EV purchases? It should be no surprise to anyone that the result is a bubble that will eventually burst - and there is no "greater good" to be found in that outcome.

You're not only confused with the terms, you're confused about what you've just posted.

If you don't understand the greater good of investing in green energy initiatives, nothing I post here will explain it to you. Some people deny global warming.

[noise]

Political or not, these "alternate energy" companies are a nice, feel-good idea built on weak demand and are uncompetitive versus existing products and technologies.

It's been said that these alternate technologies are decades away from being feasible in the real world, and that is probably true. However, there are groups pushing for existing energy sources to become strangled, limited and scarce, and for these new technologies and energies to become the forced replacement for them. The world is just not ready.
And who suffers? The middle class and the poor.

106 power plants are offline because fringe groups don't like coal. Fracking and natural gas are going to be fighting to stay alive against legislation that is soon to hit Washington. Oil is seen as a bad word, while EVERYTHING is made of plastic, a by-product of oil. Even the purified tapwater the hippies drink comes in plastic bottles.

The technologies are here for 40-60mpg gas powered vehicles.
The technologies have been here for large commercial vehicles to run on natural gas. Some cities have their entire bus systems operating on it.

But electric cars that cost $10-$20k [[and beyond) more then gas powered vehicles that are fuel efficient and have proven systems just don't seem to be worth paying the up-front difference when they burn down, break, or the manufacturers of the products go out of business.

Government should not be here to push feel-good ideas. They should promote and encourage cleaner, more environmentally efficient products, and provide incentives for them them to take a foothold in the free market. But I don't think it's Government's place to throw money at these companies.

At almost 16.2T in debt, we shouldn't be throwing money at anything. The Government should be watching every penny. Remember when Obama said "Line By Line" he would go over everything and stop wasteful spending when he was campaigning back in 2008? HAHAHAHAHAHA!!
That never happened. It SHOULD have.
When our credit cards are maxed out and we don't have extra spending money, we have to watch our budgets. Why shouldn't the Government?


Meanwhile, while we are doing all this to choke our own energy sources and production, China is building on a massive scale - Coal powered power plants, manufacturing, and growth on a gigantic scale using traditional energy sources. We are allowing ourselves to deteriorate and collapse by our own stupidity, while countries who are our known enemies are ignoring the feel-good rules we put on ourselves and turning themselves into world superpowers and turning us into a 3rd world country.
Just look at photographs of Detroit 3O years ago, and now and compare them to photographs of Shanghai 3O years ago, and now. We are doing it to ourselves.

There are too many contradictions in this reply to even begin to address.

[Mikeg]

.......If you don't understand the greater good of investing in green energy initiatives, nothing I post here will explain it to you. Some people deny global warming.

This must be that "GREATER GOOD" you keep blathering about:

Even as advanced battery maker A123 Systems struggled for financial viability, it played the Washington insider game, where political money and access go hand in hand.

The Massachusetts firm dished out nearly $1 million to hire a powerhouse lobbying firm with close ties to President Barack Obama between 2007 and 2009, and two of its top executives made personal donations to several high-profile Democrats in Congress as it won federal funding for its efforts to build the next generation of lithium batteries for electric vehicles.
And its president and CEO, David Vieau, an early financial backer of President Barack Obama, scored five invitations to the White House in 2009 and 2010, including a meeting he attended with the president, White House logs show. And when the company opened a new Michigan plant, Obama made a high-profile call to congratulate.

I call it "crony capitalism" and even though this episode started during the Bush Administration, the Democrats have shown that they know how to play the game big time. A pox on both their houses.

[Mikeg]

.........If you don't understand the greater good of investing in green energy initiatives, nothing I post here will explain it to you. Some people deny global warming.

Since you claim to understand and embrace the "greater good" of investing in green energy initiatives, how many of the following companies have you invested your own hard-earned money into?

President Obama’s Taxpayer-Backed Green Energy Failures

It is no secret that President Obama’s and green-energy supporters’ [[from both parties) foray into venture capitalism has not gone well....

The government’s picking winners and losers in the energy market has cost taxpayers billions of dollars, and the rate of failure, cronyism, and corruption at the companies receiving the subsidies is substantial......

So far, 36 companies that have received federal support from taxpayers have either gone bankrupt or are laying off workers and are heading for bankruptcy. This list includes only those companies that received federal money from the Obama Administration’s Department of Energy. The amount of money indicated does not reflect how much was actually received or spent but how much was offered. The amount also does not include other state, local, and federal tax credits and subsidies, which push the amount of money these companies have received from taxpayers even higher.

The complete list of faltering or bankrupt green-energy companies:

Evergreen Solar [[$24 million)*
SpectraWatt [[$500,000)*
Solyndra [[$535 million)*
Beacon Power [[$69 million)*
AES’s subsidiary Eastern Energy [[$17.1 million)
Nevada Geothermal [[$98.5 million)
SunPower [[$1.5 billion)
First Solar [[$1.46 billion)
Babcock and Brown [[$178 million)
EnerDel’s subsidiary Ener1 [[$118.5 million)*
Amonix [[$5.9 million)
National Renewable Energy Lab [[$200 million)
Fisker Automotive [[$528 million)
Abound Solar [[$374 million)*
A123 Systems [[$279 million)*
Willard and Kelsey Solar Group [[$6 million)
Johnson Controls [[$299 million)
Schneider Electric [[$86 million)
Brightsource [[$1.6 billion)
ECOtality [[$126.2 million)
Raser Technologies [[$33 million)*
Energy Conversion Devices [[$13.3 million)*
Mountain Plaza, Inc. [[$2 million)*
Olsen’s Crop Service and Olsen’s Mills Acquisition Company [[$10 million)*
Range Fuels [[$80 million)*
Thompson River Power [[$6.4 million)*
Stirling Energy Systems [[$7 million)*
LSP Energy [[$2.1 billion)*
UniSolar [[$100 million)*
Azure Dynamics [[$120 million)*
GreenVolts [[$500,000)
Vestas [[$50 million)
LG Chem’s subsidiary Compact Power [[$150 million)
Nordic Windpower [[$16 million)*
Navistar [[$10 million)
Satcon [[$3 million)*

*Denotes companies that have filed for bankruptcy.

The problem begins with the issue of government picking winners and losers in the first place. Venture capitalist firms exist for this very reason, and they choose what to invest in by looking at companies’ business models and deciding if they are worthy. When the government plays venture capitalist, it tends to reward companies that are connected to the policymakers themselves or because it sounds nice to “invest” in green energy.

[noise]

How can we have an honest discussion when you're getting your ideas from places like the Heritage Foundation?

You may as well deny evolution, deny global warming, and make a birther thread. You will never, no matter how much information exists, support a good decision if it isn't made by your political party of choice. That's fine, as there are plenty of fools in the world, but don't expect to engage anybody in honest discussion.

I pay taxes, by the way. That's my hard earned money. It's going to something I agree with. Like parks and roads.

[firstandten]

What I don't understand in this discussion is why all the hand wringing ? The Feds invested in a couple companies that went under... it happens.

The Japanese government supports its auto industry as a matter of fact Toyota gets so much support you would think they were in bed together with the Japanese government

The Korean government supports its auto makers

The German government supports its auto makers

And not with verbal pats on the back.

Whether its with the OEM or its supply base its still support

[gnome]

DTE has a program where you can pay slightly higher electric rates if you'd like to support their solar and wind projects. It isn't much a couple of extra dollars a month and I am allegedly getting some of that green energy.

Not sure how much of the green I get back for my green, but I have bought into their program and have done so since '07 or '08.

I wonder how many other folks here do the same thing? How much extra do you pay? Will you up your commitment?


Oh, yeah, I lost a good chunk of my retirement program to Stan Ovshinsky and his companies. Too bad. It seemed like the right thing to do at the time, and I don't regret it, but I am leery of these things and would never have invested other people's retirement plans into such green projects.

The truth here is that any investment in green energy is first going to benefit those who are early adopters of technology. Those who drive their Prius to Whole Foods for organic baby arugula.

So, I'm wondering for all those who have supported this Battery decision on this thread, ... what color is your Prius and how much extra do you pay to support DTE's green energy program?

[Mikeg]

How can we have an honest discussion when you're getting your ideas from places like the Heritage Foundation?

You may as well deny evolution, deny global warming, and make a birther thread. You will never, no matter how much information exists, support a good decision if it isn't made by your political party of choice. That's fine, as there are plenty of fools in the world, but don't expect to engage anybody in honest discussion.

I pay taxes, by the way. That's my hard earned money. It's going to something I agree with. Like parks and roads.

How can we have any kind of discussion when all your posts are littered with condescending fluff like, "....nothing I post here will explain it to you" and "There are too many contradictions in this reply to even begin to address"along with the insipid belittling and name-calling. Yet we're supposed to just take your word on it that opposing opinions and supporting sources of information are invalid without your having to provide any supporting evidence of your own? How does that promote "honest discussion"?

Yes, you and I both pay taxes on our hard-earned money. Unlike you, I do not confuse that with making a personal financial investment in a start-up company that carries the potential for significant monetary reward if and when they are successful in the marketplace [[as well as the significant risk that I may lose some or all of my investment if they should fail). You seem to be very comfortable with letting the government socialize the risks involved in every private enterprise, from the too-big-to-fail players right on down the line to the new hi-tech start-ups. Why is that?

[Mikeg]

During the Oct. 3, 2012 Presidential Debate, Mitt Romney told President Obama that "You don't just pick the winners and losers - you pick the losers." [source]

Let me offer another example to back up Romney's statement: Abound Solar.

Here's President Obama during his weekly address of July 3, 2010 touting his "investment" of our tax dollars into Abound Solar and taking credit for thousands of jobs that will never materialize:



According to the Oct. 25, 2012 edition of the Denver Post:

• Abound Solar closed its Colorado plant in July 2012 and filed for Chapter 7 bankruptcy liquidation in a move that left 125 workers without jobs and taxpayers holding the bag for up to $60 million in defaulted loans.
• the Weld County, Colorado district attorney's office announced on Oct. 25, 2012 that Abound Solar is under criminal investigation for possible securities fraud, consumer fraud and financial misrepresentation. It's alleged that officials at Abound Solar knew products the company was selling were defective, and then asked investors to invest in the company without telling them about the defective products. Similarly, the consumer-fraud allegation is that Abound Solar knowingly sold defective panels to customers. The third subject of investigation is that Abound Solar allegedly misled financial institutions when the company was seeking loans.
• President Obama's administration approved up to $400 million in federal loan guarantees for the company and prior to its bankruptcy, Abound Solar drew about $70 million in guaranteed loans. The US Department of Energy has estimated that U.S. taxpayers will be on the hook for about $40 million to $60 million after Abound Solar's liquidation.

[noise]

You seem to be very comfortable with letting the government socialize the risks involved in every private enterprise, from the too-big-to-fail players right on down the line to the new hi-tech start-ups. Why is that?

It's probably because I'm not a partisan hack and I actually own a business in the private sector.

[Hermod]

Ah, this all reminds me of a little incident that occurred back in about 1970. I was working "requirements" for the army. While there is a certain pot of R&D money for "basic research". you don't get funded with real R&D money unless there is a "requirements document" to meet a "battlefield need".

At any rate, I get a call one afternoon from a guy who wants to talk to me about "non-Newtonian additives". After my query as to "WTF non-Newtonian additives?", the guy explains that it is research into additive which will reduce the friction loss in MOGAS, AVGAS, and diesel moving through a pipeline allowing the same volume to be pumped with smaller pumps. I allow as to how this seems to be a "good thing". He asks me to travel up to Ft Belvoir and get a briefing on the research.

I tackle the 150 miles or so of Interstate-95 [[yecch) and get ushered into these guys laboratory. It appears that they have some interesting additives that will make the fuels slicker so that they flow more easily through a pipeline. the basic problem is that these additives inhibit the ability of the fuels to do their thing and go bang in the cylinders of the engines which use the fuel.

They claim this to be a "minor problem" and they just need to do more research. Unfortunately, the guy who dispenses the basic R&D funds is going to cut their water off because they do not have a documented requirement for "non-Newtonian additives" and would i pretty please go back to my office and generate a requirement immediately before their office is discontinued and their suckling at the gummint teat is terminated.

I went back and talked with my people and we decided that we would not do such a requirement. If [[very big If) we were to be involved in a major land mass war, we might need maybe two 250 mile pipelines and there would be very little savings. On the other hand, in the US, companies were piping several umptillion gallons of fuel through pipelines thousands of mile long. If something like non-Newtonian additives were feasible, the pipeline and oil companies would be falling all over themselves to develop these additives. We also thought that any fuel the oil companies sold us would already contain these wonder additives.

So, I got back to them and told them there would be no requirements documentation for "non-Newtonian additives" and I was never graciously received at Fort Belvoir on future trips for other purposes.

[Mikeg]

Last Friday President Obama was interviewed via satellite by Denver TV station reporter Kyle Clark.

During that interview [[after President Obama was asked twice and refused to answer each time whether pleas for help on the ground in Benghazi, Libya were denied during the seven-hour long terrorist attack on the US Consulate in which four Americans were killed - which makes me wonder, when are we going to see a Non-Detroit thread on this scandal?) he was asked the following question about Abound Solar:

KYLE CLARK: In a national address, you touted the stimulus money going to Abound Solar – a Colorado company connected to one of your billionaire fundraisers. Now, as you may know, Abound Solar is out of business and under criminal investigation. The jobs are gone and taxpayers are out about 60 million dollars. How do you answer critics who see Abound Solar as Colorado’s Solyndra – a politically connected clean energy company that went under and took our money with it?

President Obama replied laughingly:

PRESIDENT OBAMA: [[Laughs) Well, Kyle, I think that if you look at our record that these loans that are given out by the Department of Energy for clean energy have created jobs all across the country and only about four percent of these loans were going to some very cutting-edge industries that are going to allow us to figure out how to produce energy in a clean, renewable way in the future and create jobs in Colorado and all around the country. And some of them have failed but the vast majority of them are pushing us forward into a clean energy direction. And that’s good for Colorado and good for the country. And these are decisions, by the way, that are made by the Department of Energy, they have nothing to do with politics.

That last sentence is a laughingly outrageous lie and CompleteColorado.com has copies of an Energy Dept. - Treasury Dept. e-mail thread that proves it.

DOE loan executive Jonathan Silver tells DOE credit advisor Jim McCrea, “You better let him know the WH wants to move Abound forward.” It appears to be a mild scolding to a Treasury advisor, Ian Samuels, who is not moving fast enough to schedule calls regarding Abound.

The second page of the email thread makes mention of “…transaction pressure under which we are all now operating…” This entire email thread happened just a few days before President Obama would hail the government-backed loans as a job creator for Colorado.

[oladub]

"A Chinese car parts maker has won the auction for bankrupt US battery maker A123 Systems, in a further success in international dealmaking for Chinese groups."
http://www.ft.com/intl/cms/s/0/f5d46552-4225-11e2-979e-00144feabdc0.html#axzz2EcDOCIf4

The difference between having a budget deficit and a budget surplus sometimes means that whomever has a budget surplus gets to buy things from someone else who wasn't so wise with their money. Michigan taxpayers just contributed a pile of money to China.

Forward!