United States not planning to give A123 rest of grant

Article by Christian Andrei, on December 12, 2012

A123 won’t be given the remaining half of the $249 million grant from the U.S. Energy Department. A department official pointed out the battery maker’s bankruptcy and acquisition by a Chinese auto parts supplier. In the past weekend, the auction for majority of the assets of A123 was won by China's Wanxiang Group.

A123 manufactures lithium ion batteries for electric cars. The department official asked to remain anonymous since the proceedings are ongoing. He clarified that all parties who participated in the bidding for A123 knew about this condition. A123 had at one time been tagged by the Obama administration as a success but it struggled with the low demand for electric cars and some technical failures.

The grant for A123 is part of the Obama administration's $2 billion stimulus initiative to give domestic battery manufacturing a boost. In 2010, Energy Secretary Steven Chu visited one of its plants. The financial problems of A123 were later used by Republicans to criticize the administration's clean energy investments. A123 had gotten around $133 million of its $249 million grant as of October when it filed for bankruptcy protection.

The department official said that even with A123's sale to Wanxiang, the conditions of the grant require taxpayer funded equipment and facilities to stay in the U.S. Concerns have been raised about Wanxiang's takeover of A123 by several lawmakers who said that the sale will have to be approved by the Committee on Foreign Investment in the U.S. Treasury Secretary Timothy Geithner heads CFIUS, an inter-agency panel that vets foreign deals for security concerns. Critics said that the Chinese should not access A123's technology because A123 received government funding. In a statement, U.S. Sen. Chuck Grassley, R-Iowa, said that the review process at the Treasury Department is the “last hope” for guaranteeing a consideration for U.S. interests.

Topics: a123

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