A123 Systems Inc. and the U.S. Department of Energy have agreed to extend the contract over a $249 million grant for a factory in Michigan, according to a U.S. Securities and Exchange Commission filing last Wednesday. A123 now has two more years or until December 2014 to fully take advantage of this grant from the administration of Obama to support advanced battery development and generate jobs in the U.S.
A123 spokesman Dan Borgasano said that it was given the grant in 2009 and had until the end of 2012 to fully make use of the grant. Borgasano added that with the extension, A123 can continue on its growth path in Michigan. A123 got a $127 million of the DOE grant at the end of 2011. What A123 had to do was to match at least a portion of the money that the U.S. government provided.
What usually happens is that the recipients of these grants get reimbursements for their expenses on approved projects. In the past few months, some setbacks have hurt A123's financial position and its stock dropped by over 40% so far this year.
Last Wednesday, there was an explosion at a General Motors research lab in suburban Detroit from a lithium ion prototype battery, injuring one employee. Sources told The Wall Street Journal that A123 Systems had built this battery. Batteries for GM's new all-electric Chevrolet Spark are expected to be made by A123.