The company also has a Pentagon contract classified as “secret,” and Sens. Charles E. Grassley (R-Iowa) and John Thune (R-S.D.) are waving red flags. In a letter to Treasury Secretary Timothy F. Geithner, they called for a review by the Committee on Foreign Investment in the United States, an inter-agency group that reviews transactions that might harm national security. Treasury oversees CFIUS.
“We must make sure we don’t sell any of our sensitive technology . . . [and] that we’re not handing that over to a person who would misuse it or sell our sensitive information to the Chinese government or any other country,” Grassley said.
A123 Systems, founded in 2001, sells lithium ion batteries for electric cars and for utilities that use them as backup, community or renewable-energy storage.
“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 a phone call to the company when it opened its Michigan plant in 2010. “And it’s going to allow us to start exporting those cars, making them comfortable, convenient and affordable.”
Obama said that American businesses could make only 2 percent of the world’s advanced batteries for hybrids and electric vehicles, but that “we’re going to get up to 40 percent of the world’s capacity.”
But sales of electric cars have been lackluster. And A123 Systems was hit by a series of setbacks. One of its main customers, Fisker Automotive, sharply reduced its purchases in October 2011. In early 2012, A123 spent $51.6 million to replace defective modules. In an effort to sell the company, its investment bankers contacted 74 parties, but only one, Wanxiang America, was interested in buying it and maintaining it as a going concern.
An investment firm, Wunderlich Securities, said in June that it would set a price target of zero on the stock “except that we believe the factory has some residual scrap value.”
On Oct. 16, A123 filed for bankruptcy. On the same day, it received just under $1 million more from the Energy Department.
“Sadly, the list of the Obama administration’s green failures continues to grow, and more folks are out of work,” Rep. Cliff Stearns (R-Fla.) said in a statement. “A123’s bankruptcy is a sign that the Obama administration’s green house of cards continues to collapse. In addition to the risk A123 poses to taxpayers, American intellectual property could be compromised if a foreign interest takes over A123.”