Another DOE-backed company goes bankrupt
Taxpayer-backed electric battery manufacturer A123 Systems filed for Chapter 11 bankruptcy protection after failing to pay a debt payment due yesterday.
A123 Systems received a $249.1 million federal grant in 2009 from the Department of Energy as part of President Barack Obama’s stimulus program. The company also received more than $100 million in grants and tax credits from the State of Massachusetts.
However, the company was heavily indebted and suffered losses every quarter since 2008. The company even had to lay off 123 workers last November, according to the Institute for Energy Research.
Bloomberg reports that the company needed financial help after struggling with costs associated with a recall of batteries supplied to Fisker Automotive, the luxury hybrid manufacturer and recipient of a $529 million Department of Energy loan guarantee.
In a recent regulatory filing, the company had warned that it would likely default on some of its debt and that it might be headed for bankruptcy protection, reports the Boston Globe.
“We determined not to move forward with the previously announced Wanxiang agreement as a result of unanticipated and significant challenges to its completion,” said A123 chief executive David Vieau in a statement.
“Since disclosing the Wanxiang agreement, we have simultaneously been evaluating contingencies, and we are pleased that Johnson Controls recognizes the inherent value of our automotive technology and automotive business assets,” he continued.
In September 2010, President Obama called Vieau and then-Michigan governor Jennifer Granholm to celebrate the opening of the Michigan plant that taxpayers had helped fund.
“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,” Obama said in the phone call. “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 the first presidential debate earlier this month, green energy firm bankruptcies came under fire when Republican candidate Mitt Romney attacked Obama for only picking “losers.”
“But don’t forget, you put $90 billion, like 50 years’ worth of breaks, into — into solar and wind, to Solyndra and Fisker and Tester and Ener1. I mean, I had a friend who said you don’t just pick the winners and losers, you pick the losers, all right?” Romney said in the debate.
In a statement released Tuesday, Romney campaign spokeswoman Andrea Saul stated: “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.”
At least 12 taxpayer-subsidized green energy companies have filed for bankruptcy since Obama took office, with the most prominent being Solyndra. The California-based solar panel maker received $535 million in federal loans and filed for bankruptcy on September 1, 2011.
According to Bloomberg, electric-vehicle sales have been less than 50,000 since 2011, which is only five percent of Obama’s goal for one million electric vehicles on the roads by 2015.
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