A123 Systems expects a first-quarter net loss of $125 million

Article by Christian Andrei, on May 13, 2012

The A123 Systems Inc. expects to incur a net loss of about $125 million in the first quarter of 2012 – a 133% increase compared to the same period last year, according to a filing submitted by the company to the U.S. Securities and Exchange Commission. A123, which produces lithium-ion batteries, said that the recall of potentially defective battery packs had contributed to the loss.

The company was granted a $249 million grant from the Obama administration. As part of this program, some advanced batteries will be used. The cost of recalling the battery packs is about $66.8 million. Its quarterly loss is attributed to the recall as well as the "low factory utilization" of A123's plant in suburban Detroit, which the 2009 U.S. Energy Department grant helped pay for.

A123 Systems, which had its beginnings from laboratories at the Massachusetts Institute of Technology, estimates that it will achieve a first-quarter revenue of $10.9 million, about 40% lower than the previous year. The spokesman said that further details will be unveiled on the May 15 conference call when A123 releases its fuller financial results. A123 informed the SEC that the low plant use contributed to the reduced gross margins on products sold since the anticipated cost savings related to volume production have yet to be realized. Other factors that added to the loss were expenses for research and development and engineering as well as the hiring of new employees.

In late March, A123 announced that it was replacing battery modules and battery packs that may fail because of a manufacturing defect. This had led to the shutdown of a Fisker Karma electric car while consumer watchdog Consumer Reports is being tested. Privately held Fisker is a major customer for A123. A123 was expected to display a loss of $51.6 million in warranty expenses from the replacement of battery packs and modules for the recall of products that have already been sold and delivered. The cost of repairing the products that are still in inventory but not yet shipped is about $15.2 million.

Topics: a123

If you liked the article, share on:

Comments

Login or Create new account to add a comment!

Recommended

Remember Zenos Cars, a British carmaker that specializes in designing and building lightweight and high-performance sports cars? If you are wondering how the company is faring with their E10 lightweight...
by - January 21, 2017
Mercedes-Benz has revealed that in 2017, its series 124 coupé will be celebrating its 30th anniversary. While this itself is a significant event, it will also mean that this model...
by - January 21, 2017
BMW’s 550i xDrive has long been considered as one of the most successful business sedans in the world. For the brand, this may not be enough as it has officially...
by - January 20, 2017
Amazon is now moving beyond the four corners of online retailing. Only recently, the retail giant has been awarded a patent for its Road Network system. Since the patented technology...
by - January 20, 2017
The newest version of the Lamborghini Huracan is not a Superleggera, but a Performante. When Lamborghini filed for a patent for a new name, there were still debates whether this...
by - January 20, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries