The U.S. government gave its approval to China's largest auto parts maker to acquire A123 Systems Inc, a manufacturer of electric car batteries. Lawmakers have warned that this deal will permit the transfer of sensitive technology, which were developed using U.S. government funds. Several members of Congress and retired military leaders asked the U.S. committee to halt the sale since it endangers U.S. energy security.
A U.S. government committee on foreign investment had approved the sale of A123 to a U.S. unit of Wanxiang Group, the Chinese firm confirmed. Last December, Wanxiang agreed to pay $257 million for A123's automotive battery business and related assets in a bankruptcy auction where it beat out the U.S.-based company Johnson Controls Inc of Milwaukee.
However, the Committee on Foreign Investment in the U.S., a government body headed by the Treasury secretary, would still need to approve it before it can proceed. Wanxiang has now confirmed that the deal was approved by the CFIUS on Monday. Pin Ni, the president of Wanxiang America Corp, said that Wanxiang America is looking forward to finalizing the transaction and to continuing to cultivating the technologies that A123 has been developing.
The U.S. government had given A123 a $249 million grant as part of a stimulus program to support clean energy. Half of this money was not released. Last October, A123 filed for bankruptcy because of lower-than-expected demand for hybrid vehicles and technical problems.