Obama-Backed Battery Maker Files for Bankruptcy
An electric car battery maker that President Obama touted as part of a vanguard of a new American electric car industry has filed for bankruptcy and is selling its major assets, the company announced on Tuesday.
A123 Systems, which produces lithium ion batteries for the electric car maker Fisker and the truck manufacturer Navistar, received a $249 million Department of Energy grant that was financed by Mr. Obama’s stimulus program. The company has been struggling as electric vehicles have failed to gain a foothold in the American domestic car market. Another battery maker that received federal support, Ener1, filed for bankruptcy earlier this year.
The company’s troubles provide new ammunition for Mitt Romney, the Republican presidential nominee, who has criticized the Obama administration’s green energy grant and loan programs as a distortion of the marketplace and rife with political favoritism.
3:06 p.m. | Updated And a spokeswoman for Mr. Romney was quick to weigh in on Tuesday.
“At the town hall debate four years ago, then-Senator Obama promised to ‘easily’ create five million green jobs,” said the spokeswoman, Andrea Saul. “A123’s bankruptcy is 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.”
“While the President has said he would ‘double down’ in a second term, Governor Romney will return the federal government’s focus to its proper role supporting research and creating an environment where private-sector innovation can thrive,” she said.
In September 2010, Mr. Obama called A123’s chief executive, David Vieau, and Jennifer Granholm, then Michigan’s governor, to celebrate the opening of its battery manufacturing plant in Livonia, Mich., which was built partly with federal funds.
“This is about the birth of an entire new industry in America — an industry that’s going to be central to the next generation of cars,” Mr. Obama said. “And I want everybody to understand just a few years ago American businesses could only make two percent of the world’s advanced batteries for hybrids and electric vehicles – just two percent. But because of your extraordinary work, thanks to the Recovery Act, we’re going to get up to forty percent of the world’s capacity. And that means when folks lift up their hoods on the cars of the future, I want them to see engines and batteries that are stamped: Made in America.”
In a memo issued to reporters on Tuesday, the Energy Department said that the advanced battery market continues to grow in the United States and around the world despite the troubles of some domestic companies.
The memo said that the agency, with support from Republicans and Democrats, has awarded $2 billion in grants to 29 companies to build or retool 45 manufacturing facilities in 20 states to build advanced batteries, engines, drive trains and other key components for electric vehicles.
The department said that more than 30 of these plants are already in operation and that A123’s announcement that it is selling key assets means that it will continue to operate in the battery market. It noted that A123 received a $6 million grant from the Bush Administration as part of its efforts to promote a domestic electric car industry.