U.S.-funded battery maker files for bankruptcy

An electric vehicle battery maker that was awarded $249 million in federal stimulus funds filed for Chapter 11 reorganization on Tuesday, giving GOP presidential candidate Mitt Romney potential ammunition to attack President Obama's green-energy subsidies.

The Waltham, Mass.-based company, A123 Systems, filed for bankruptcy court protection in Wilmington, Del., a day after it said it would be unable to make a debt payment. It's selling its automotive assets to a competitor, Milwaukee-based auto-parts maker Johnson Controls, which may enable it to continue operating two factories in the Detroit suburbs of Livonia and Romulus.

As electric vehicle sales remain sluggish, the rechargeable lithium-ion battery manufacturer has struggled. It took a hit when the batteries it supplied for electric car maker Fisker Automotive's luxury plug-in Karma stopped running during a Consumer Reports test drive, prompting a recall. In August, it announced an investment deal with Chinese auto parts maker Wanxiang Group, but the deal collapsed.

Its Chapter 11 filing will likely spur further GOP criticism, which escalated once solar panel manufacturer Solyndra filed for Chapter 11 protection in Sept. 2011 after receiving more than $500 million in federal loan guarantees. On Wednesday, a court will evaluate Solyndra's reorganization plan.

In the first presidential debate Oct. 3, Romney attacked Obama's green-energy programs. He called four aid recipients "losers," including Solyndra, Fisker, EV car maker Tesla Motors and auto battery manufacturer Ener1.

"You don't just pick the winners and losers, you pick the losers," Romney told Obama in a sharp exchange.

On Tuesday, Romney campaign spokeswoman Andrea Saul called A123's bankruptcy "yet another failure for the president's disastrous strategy of gambling away billions of taxpayer dollars on a strategy of government-led growth that simply does not work."

The Department of Energy said those investments have had bipartisan support. It pointed to a May 2009 letter to Energy Secretary Steven Chu, signed by GOP and Democratic members of Michigan's congressional delegation, in favor of the grants to A123 and three other companies.

"A123's promising technology has a long history of bipartisan support," DOE spokesman Dan Leistikow wrote on the agency's website. He said it received a $6 million grant from the Bush administration in 2007 and has used about half - or $132 million - of its 2009 grant.

Because of DOE investments, amounting to $2 billion in EV-related grants to 29 companies across 20 states since 2009, he said, the cost of a battery with a 100-mile range has been halved - to $17,000 - and is expected to drop to $10,000 by 2015. One other recipient, Ener1, has filed for bankruptcy protection; it did so in January but continues operating.

"In an emerging industry, it's very common to see some firms consolidate with others as the industry grows and matures," Lestikow said, adding that A123's sale to Johnson Controls means its manufacturing facilities and technology will remain "a vital part" of America's advanced battery industry.

Given the bipartisan support for A123's grant, "it's disingenuous" for Republicans to blame Obama for the company's problems, says Richard Caperton, an energy expert at the Center for American Progress, a Washington-based think tank founded by President Bill Clinton's former chief of staff John Podesta. Despite A123, he said "the long-term viability of the advanced battery industry looks just fine."

USA Today