SEARCH BLOG: CHINA and ECONOMY.
A123 Systems, Inc. is headquartered in Massachusetts with locations around the world. But soon, its actual ownership will move to China.
NEW YORK (Reuters) - China's largest maker of auto parts won an auction for A123 Systems Inc (AONEQ.PK), a bankrupt maker of batteries for electric cars that was funded partly with U.S. government money, A123 confirmed in a statement Sunday.
Wanxiang Group Corp's bid of $256.6 million topped a joint bid from Johnson Controls Inc (JCI) of Milwaukee and Japan's NEC Corp, for the maker of lithium-ion batteries.
The sale did not include A123's Michigan-based government business that works with the U.S. Defense Department, which was instead sold to Navitas Systems for $2.25 million, A123 said.Actually, A123 Systems received a $250 million grant from the U.S. government and anther $140 million in tax credits from the State of Michigan. The Michigan plant was sold for $2.25 million versus tax credits and subsidies about 65 times that.
One question is this: why is A123 attractive as an investment to the Chinese when it was a failure as an investment for the U.S. government? Could be that the Chinese are buying the company for pennies on the dollar. Could be that the technology is more valuable than the other assets. Could be any number of reasons.
Another question: is the operating environment in the U.S. filled with too many barriers to success for new technology efforts? Could be that government involvement came with too many strings. Could be that A123 had good ideas and bad management. Could be that the real market for A123 products was less than planned for and resulted in a bad financial situation from over-commitments..
But whatever the reason behind the bankruptcy, this was another government investment in alternative energy that went bust. Maybe it's time for any government... state or federal... to quit picking winners and losers in the energy sector and let the marketplace do the picking. There are just too many bad decisions being made by politicians who have drunk the electric car kool-aid.
Anybody want to buy a Chevy Volt?