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Tuesday, September 20, 2011

Favoritism?: Struggling Fed Funded Battery Manufacturer Gets Deal With Government Motors

A123 is battery manufacturing company who, according to the Department of Energy video below, was "bailed out" with the help of "Stimulus" funds to help them build factories here in the U.S.

But oddly in the video, Energy Secretary Chu claims that A123 was actually started with the help of Federal Funds even though the company has been around since 2001. Is he telling the truth, lying or just confused?:

Through 2010 and the first part of 2011, A123 was still struggling because even though it had some smaller production contracts what it really needed was a large, long term commitment from an Automobie manufacture in order to help force up their stock price.

Who came to A123's rescue in August of this year?

According to Cleanenergyintel.com, GM or Government Motors of course:

"A123 Systems (AONE) finally secured today its long-awaited production contract with auto maker General Motors (GM).

Not much by the way of detail has thus far been announced. However, this is clearly a breakthrough for AONE. The company has a number of smaller contracts for its battery packs - notably for Fisker Karma and its initial contracts with GM itself. However, shares in AONE have suffered as the industry has been waiting for the company to deliver a significant production contract with a major automaker - with a persistent rumour that such a deal was in the works with GM.

That wait had become something close to tortuous as GM continued to test AONE's battery chemistry at its lab in Warren, Michigan. Year to date AONE's shares were down 67% at last night's close.

GM has of course already said that it plans to produce 60,000 Volts next year. Micky Bly, the GM executive in charge of the company's electric vehicle program, also today stated that "GM is committed to offering a full line of electric vehicles - each of which calls for different battery specifications".

Exactly what part AONE will play in that program has not been announced. However, Reuters quotes a spokesman for the company as having stated that AONE expects to build thousands or up to tens of thousands of battery packs a year for GM."

Ironically A123 had been working with Chinese battery manufacturer BAK Battery since 2005 in designing their earlier products. According to a press release in 2006, BAK Battery even began manufacturing batteries based off of this collaboration utilizing BAK's cheap labor:

"China BAK Battery has also formed a contract manufacturing partnership with A123 Systems, an emerging supplier of Nano-Phosphate Li-ion batteries based on patented technology developed at MIT. Since early 2005, China BAK Battery and A123 have collaborated at their Shenzhen facilities to design, develop and implement an advanced mass production line to exclusively manufacture first products for A123. High volume production has commenced and these products have been rigorously tested to meet the most stringent Tier 1 OEM quality requirements. A123 high power batteries will be used in a variety of applications including power tools, medical devices and hybrid electric vehicles which are all respective growth areas for the Li-ion battery market.

"These new manufacturing agreements validate the success of our strategy to increase our presence in traditional Lithium Ion applications by expanding our OEM customer base and penetration while also partnering with leading edge technology developers," commented Xiangqian Li, the Company's Chief Executive Officer. "By partnering with leading researchers and manufacturers, we are leveraging our high quality, low cost manufacturing infrastructure, expanded capacity and capabilities to position the Company for continued growth during 2006."

There goes creating "American" Jobs or selling American made "Green" products to China.

So is this another example of Favoritism (Like Solyndra) where the Federal Government helped prop up A123 and felt it necessary to bail it out again in the form of a contract with Government Motors?

Or just an example of the Free Market at work?

Ok, Ok, I know... this is nothing that even resembles something like a "Free Market".....

More like a possible example of the Government picking winners and losers...again.

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