China Firm to buy A123

[Steverino]

Wow.

The Waltham, Mass.-based company said on Wednesday that Wanxiang Group Corp., a Chinese conglomerate, agreed to acquire up to an 80% stake in return for an up to $450 million investment.

http://online.wsj.com/article/SB1000...949308486.html

I suppose this will make those who hate EV investment by the US happy. Me? It makes me remember how the US TV manufacturing was sold off to other countries.

[scottf200]

China's Wanxiang Saves American Battery Maker A123,
Takes 80% Stake In Company
http://insideevs.com/chinas-wanxiang...ke-in-company/

Struggling US battery maker A123 has dramatically avoided the perils of bankruptcy by signing a non-binding MoU (memorandum of understanding ) with China’s Wanxiang Group Corp, the largest auto parts maker in that country (think Magna as a US-based comparison).

The deal will see Wanxiang take up 80% control of the company by year’s end in exchange for an investment of up to $450 million dollars.

This is good news if you are interested in the upcoming Chevrolet Spark EV, and were concerned about A123's ability to deliver lithium packs for that car when it gois into production in 2013.

Fisker Automotive can also breath a sigh of relief that their battery maker for the Karma and upcoming Atlantic is not going anywhere.
<snip>

[DonC]

I think one problem for A123 is that because of slower than expected demand the Chinese have been selling their batteries out the backdoor at a hefty discount. This is one say to stop that I guess.

NOTE: Scott, I merged your thread. Looks like you and Steverino posted at roughly the same time.

[bonaire]

Will their 80% share allow them to kick the executives to the curb? That'll be necessary for anything to get done. Plus, A123's per-cell price and system prices are a bit high compared to, well, anyone. We need a good US-based and US-owned battery maker.

GE should have bought them or did an 80% deal. They had the cash to do it and could have offered even better numbers.

[Steverino]

"China has thrown its weight behind the development of electric cars as well as other fuel-saving technologies. Policy makers there worry about the nation's increasing dependence on foreign-oil supplies, especially from the often-volatile Middle East. They also face rising pressure at home to address China's extensive pollution problems. Among other measures, China is expected to phase in tougher new mileage requirement in coming years, though the government hasn't released details.

China has offered several incentives to boost the development of electric and gasoline-electric hybrid cars, including subsidies. It has said it will introduce a series of incentives to support their development, including asking cities to provide owners of the vehicles preference on parking fees, battery-charging fees and road tolls. In new regulations late last year it also shifted purchase requirements for some government employees to encourage them to buy such vehicles."


I wonder how Fox News in China treats this? Do you suppose they bash the whole thing like they do in the States? :-)


I note how EV's are seen as a way to lessen oil dependance. Almost makes me want to have one of them running for president instead of a "Drill, Baby".

[Noel Park]

O - M - G

Our local high school is now offering Mandarin classes. Probably a pretty good idea it would seem if we are to be able to communicate with our new bosses.

[MichaelM]

Will their 80% share allow them to kick the executives to the curb? That'll be necessary for anything to get done. Plus, A123's per-cell price and system prices are a bit high compared to, well, anyone. We need a good US-based and US-owned battery maker.

GE should have bought them or did an 80% deal. They had the cash to do it and could have offered even better numbers.

Not sure what you mean here. What basis do you have for these claims about their pricing and poor management?

With respect to GE -- they've been an investor in A123 for a long time. They had their chance.

If you want a US-owned battery manufacturer suitable for EV's your choices are Dow-Kokam (actually a JV with Kokam of Korea) and Johnson Controls. Both are manufacturing lithium-ion cells in the US (Michigan).

[bonaire]

A123 cell pricing has always been quite a bit higher than comparable Korean cells for similar power output (ie. their LiFEPO4 versus Li-Poly). Their 20Ah cells sold individually are $60 through off-shore distributors and unavailable through A123 directly. Their cylindrical cells were also very pricey for RC hobbiests compared to other alternatives. They basically priced themselves out of anything other than big OEM deals.

Bad management/QA implies their welding machine engineering. They took cells from all four welding machines at Livonia and homogenized them into system packs for Fisker and others. If one welding machine went bad, all packs were affected. Any good QA person knows that lines should be setup independently so they don't cross-contaminate. Then one welding machine went bad and they had to spend $50M on Fisker Karma full system replacments for 1000 cars and other OEM partnerships. Could have been a $12.5M charge. One misaligned machine. Torpedo in the bow. Oh, and during torpedo alert #1, they wrote in retention agreements even while looking at the $50M charge:

In February 2012, the Company entered into employment areements with approximately 40 employees. The agreements provide for severance payments ranging from 6 months to 24 months of salary in connection with a change in control and subsequent termination of employment. Certain of the agreements also provide for the above benefits if the employees' employment is terminated without cause prior to a change in control. Certain of the agreements also provide for acceleration of vesting of stock options and restricted stock units in the event of a change in control.

Meaning "If we're going down with the ship, boys, let's make sure we get golden life rafts"

Also :
http://nlpc.org/stories/2012/02/15/a...er-funded-a123

[DonC]

Our local high school is now offering Mandarin classes. Probably a pretty good idea it would seem if we are to be able to communicate with our new bosses.

Good I figured this out years ago. LOL

[MichaelM]

A123 cell pricing has always been quite a bit higher than comparable Korean cells for similar power output (ie. their LiFEPO4 versus Li-Poly). Their 20Ah cells sold individually are $60 through off-shore distributors and unavailable through A123 directly.

Bad management/QA implies their welding machine engineering. They took cells from all four welding machines at Livonia and homogenized them into system packs for Fisker and others. If one welding machine went bad, all packs were affected. Any good QA person knows that lines should be setup independently so they don't cross-contaminate. Then one welding machine went bad and they had to spend $50M on Fisker Karma full system replacments for 1000 cars and other OEM partnerships. One misaligned machine. Torpedo in the bow.

Many folks / companies have tried to launch programs using off-brand cells, usually from China or Korea. It never ends well. Cheaper alternatives are absolutely available, but every major OEM has pinned their EV programs on name brands -- not the cheapest available cell-of-the-month. Among the big players, I think you'll find A123 to be anything but the priciest.

As for their well-know welding machine issue: One machine out of four went out of cal. They discovered it, admitted it, fixed it, and replaced all products. It happened quickly, at their cost, and everyone moved on. Every manufacturing company has / has had / will have quality issues, but A123 handled theirs like big boys and moved on. Hardly a reason to fire everyone.

Meanwhile, their customers include GM (ahem), Mercedes, BMW, BAE, Navistar, Tata, Ferrari, PSA, VW, Eaton, Jaguar Land Rover, Cummins, John Deere, McLaren.

That's a list of some pretty outstanding companies, all of whom could have chosen any battery supplier in the world. Most of these companies are not American, so clearly no bias for A123 from that standpoint.