A123 Systems, a Department of Energy-backed company that makes advanced batteries for electric vehicles, had to be rescued from collapse by a Chinese firm, the American company announced Wednesday.
Wanxiang Group, one of China's largest auto parts makers, agreed to provide A123 a $450 million lifeline. "Today's announcement is the first step toward solidifying a strategic agreement that we believe would remove the uncertainty regarding A123's financial situation," A123 Systems Chief Executive Officer David Vieau said in a statement.
The company’s losses have been mounting. For the quarter ended June 30, A123 reported a loss of $82.9 million, or 56 cents per share, compared with a year-earlier loss of $55.4 million, or 44 cents per share, the Wall Street Journal reports. Revenue fell 53% to $17 million.
A123 was awarded $249 million in grants from the Energy Department and has used about half so far to pay for some of the costs of building a factory in Livonia, Mich. Energy would not approve any changes that allowed the grant money to be used for anything other than investment in the U.S. manufacturing facilities, a White House spokesperson told the Journal. The Wanxiang deal met with criticism on Capitol Hill. In a statement to Bloomberg, Rep. Cliff Stearns, R-Fla., charged Energy and the Obama administration of failing to prevent taxpayer-funded intellectual property from being transferred to foreign competitors. He added that the deal raised national security risks.
Stearns has also been a vocal critic of the Obama Administration’s decision to finance failed solar power company Solyndra.