Bid For A123 Systems By Chinese Firm Draws Critics

Republican members of Congress are sounding off about the auction of bankrupt advanced battery maker A123 Systems to the Wanxiang Group, a Chinese auto parts manufacturer. Significant government support had been provided to the battery maker as part of the American Recovery & Reinvestment Act of 2009.

“The results of this auction further expose the folly of the Administration’s attempts to pick winners and losers and provide huge subsidies to force the commercialization of technologies,” says Sen. Lisa Murkowski (R-Alaska), ranking member of the Senate Committee on Energy & Natural Resources. Other critics in Congress include Rep. Marsha Blackburn (R-Tenn.), Rep. Paul C. Broun (R-Ga.), and Sens. Chuck Grassley (R-Iowa) and John Thune (R-S.D.).

Murkowski and colleagues highlighted their concerns about ownership of A123’s assets and technology being transferred to a foreign company. They say such transfers may fuel a loss of U.S. technological leadership and may have national security implications. The sale—which is actually to a U.S. subsidiary of Wanxiang Group—is subject to approval by the Treasury Department’s Committee on Foreign Investment in the U.S.

In 2009, the Department of Energy awarded A123 a $249 million Recovery Act grant as part of a federal effort to create a domestic supply chain for advanced electric vehicles. The company used $133 million of the grant in a cost-sharing investment to build manufacturing plants in Livonia, and Romulus, Mich.; A123 filed for bankruptcy this year. The remaining grant money will not be dispersed.

DOE points out that both the plants and the jobs will remain in the U.S. “The Energy Department worked through the bankruptcy process to ensure that the plants and equipment that were partially paid for by the Recovery Act would remain in Michigan, generating jobs and opportunity for American workers,” DOE spokesman Bill Gibbons tells C&EN.

Wanxiang bid $256.6 million for A123 in an auction supervised by the U.S. Bankruptcy Court for the District of Delaware.

The sale includes A123’s automotive, grid, and commercial businesses including technology, products, and facilities in Michigan, Massachusetts, and Missouri, as well as a cathode powder plant in China. The firm’s contracts with the U.S. military will be acquired by Navitas Systems, an Illinois-based firm, for $2.3 million.