A123, Leading Battery Innovator, Seeks Strategic Assistance

This week, two months after a costly and embarrassing battery recall, A123 Systems released sharply lower first-quarter revenues and earnings: The battery innovator posted a first-quarter loss of $125 million, with revenues down 40 percent from the first quarter of 2011, a result far worse than investors had anticipated, according to the Wall Street Journal. Struggling to regain confidence and in desperate need of a short-term cash infusion, the maker of nano-technology-enabled lithium ion batteries announced it was seeking strategic guidance.

Over the years, A123 Systems has received extensive support from the U.S. Advanced Battery Consortium and obtained $128.6 million in grants from the U.S. Department of Energy to build a manufacturing plant in Michigan. With Republicans eager to highlight Obama Administration failures in "picking technology," could the A123 situation turn into a significant political liability for the president, like the Solyndra debacle? Not likely. The battery consortium itself goes back decades, predating even the Clinton Administration. And Energy Secretary Chu long ago expressed doubts about whether lithium ion is the best way to go in advanced car batteries, as Dexter Johnson pointed out here, two months ago.

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