A financially strapped Massachusetts-based firm that manufactures batteries for electric cars, which reaped some $240 million in federal stimulus money, is being rescued by a Chinese manufacturing behemoth, owned by renowned Chinese billionaire Lu Guanqiu. A123 Systems, which was awarded a $241.1-million grant from the Obama administration and more than $125 million in state of Michigan tax credits, was once touted for its purported commitment to create thousands of jobs, while helping curb the use of conventional gas-powered vehicles and transitioning to a more “green” energy environment.
But according to a company press release, the lithium battery maker is handing its operational reins over to Wanxiang Group Corporation, China’s largest automotive components manufacturer and one of the country’s largest non-government-owned firms. Under the agreement, Wanxiang plans to invest as much as $465 million in A123, including an initial credit extension of $25 million, giving the Chinese manufacturer up to 80 percent of the company.
"We consider today's announcement to be a strong validation of A123's technology and the company's ability to compete in high-growth markets," asserted David Vieau, CEO of A123, putting a positive spin on the firm’s woeful financial condition. "We believe that the significant commitment of capital from Wanxiang would help strengthen A123's financial position, and by leveraging Wanxiang's global capabilities, we expect to see increased demand for our products. Further, Wanxiang has demonstrated its commitment to partnering with and investing in U.S. companies, so we also believe that we will continue to expand on our strong manufacturing and systems engineering capabilities in Michigan and Massachusetts."
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Photo of A123 Systems logo: AP Images