Car battery maker highlighted by Obama fails

A battery manufacturer for electric cars that was highlighted by the White House under two administrations filed for bankruptcy protection today, the company announced.

A123 Systems, which received a $249 million stimulus grant in 2010, has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware, the company said. A123 had so far used $129 million of its grant money to build up its manufacturing plants in Michigan.

While entering bankruptcy protection, the Waltham, Mass., company said it had agreed to sell its automotive battery business to Johnson Controls, Inc., for $72.5 million in debtor-in-possession financing. Johnson Controls also received stimulus funds as part of a $2.4 billion package of grants to “accelerate the manufacturing and deployment of the next generation of U.S. batteries and electric vehicles” announced in 2009. Johnson Controls is buying the manufacturing capacity that A123 built with the stimulus money it used.

The White House repeatedly highlighted A123 in 2010 for creating jobs in an emerging technology field.

In 2010, President Obama held a publicized phone call to A123 to congratulate the company for starting its operations, which were expected to employ up to 3,000 workers.

“Thanks to the Recovery Act, you guys are the first American factory to start high-volume production of advanced vehicle batteries,” Obama said in the call, held on Sept. 13, 2010.

A report to former President George W. Bush from his Council of Advisors on Science and Technology also highlighted A123 as an example of one of several “entrepreneurial companies developing energy storage technologies.”

In addition to vehicle batteries, A123 also made batteries for use to store electricity produced by wind turbines, a major challenge because wind is seen as an intermittent source of energy that could provide more consistent power with viable storage options.

The announcement of A123’s bankruptcy filing is likely to play a role in the presidential election, as Republican candidate and former Massachusetts Gov. Mitt Romney has repeatedly highlighted the failure of solar panel company Solyndra as an example of misguided government spending under Obama.

Solyndra failed after receiving a $535 million loan guarantee through the stimulus program.

Romney has argued that Solyndra’s failure is representative of waste from the government’s $90 billion stimulus plan to boost green job creation.

But the $34.5 billion loan guarantee program under the stimulus is largely considered to be a success, with Solyndra making up for the largest failure of up to $600 million in losses from the overall program, said Gregory H. Kats, a former director of finance for the Department of Energy who has testified at congressional hearings on the program. The loan program’s money is also expected to be repaid.

On announcing an agreement to purchase A123’s automotive business, Johnson Controls executive Alex Molinaroli said in a statement that it put the country on track to benefit from future car trends.

“Requirements for more energy efficient vehicles continue to increase, which is driving automotive manufacturers to pursue new technologies across a broad spectrum of powertrains and associated energy storage solutions,” said Molinaroli, president of power solutions for Johnson Controls. “We believe that A123’s automotive capabilities are a good complement to our existing portfolio and will further advance Johnson Controls’ position as a market leader in this industry.”

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