Battery Maker A123 Systems Files for Bankruptcy

Dawn McCarty and Craig Trudell, Bloomberg
October 16, 2012 | 47 Comments

A123 Systems Inc., the electric car battery maker that received a $249 million federal grant, filed for bankruptcy protection after failing to make a debt payment that was due yesterday.

The filing may fuel further political debate over government financing of alternative-energy and transportation businesses. Federal grants and loans to companies including A123, Fisker Automotive Inc. and Tesla Motors Inc. have drawn scrutiny from congressional Republicans following the September 2011 bankruptcy filing ofsolar-panel maker Solyndra LLC two years after it received a $535 million loan guarantee from the U.S. Energy Department.

“This action is expected to allow the company to provide for an orderly sale of the automotive business assets and all other assets and business units,” A123 said in a press release. Johnson Controls Inc. plans to acquire A123’s automotive business assets in a deal valued at $125 million and will provide financing of $72.5 million to support A123’s continued operations, according to the release.

The company listed assets of $459.8 million and debt of $376 million as of Aug. 31 in Chapter 11 documents filed today in U.S. Bankruptcy Court in Wilmington, Delaware.

The Waltham, Massachusetts-based company said yesterday it expected to fail to make an interest payment due yesterday on $143.8 million of notes expiring in 2016.

Shares Fall

A123 fell as much as 17 cents, or 73 percent, to 6 cents a share in over-the-counter trading as of 10:48 a.m.

A123, which received a $249.1 million federal grant in 2009 to build a U.S. factory, needed a financial lifeline after struggling with costs from a recall of batteries supplied to Fisker, the plug-in hybrid luxury carmaker. A123 announced in August that it was working on a deal with Wanxiang Group Corp., China’s largest auto-parts maker, for financing in exchange for a majority ownership stake.

Wanxiang plans to invest as much as $465 million in A123, giving the Hangzhou, China-based company a stake of as much as 80 percent, A123 said in an Aug. 16 statement. In yesterday’s filing, A123 said it was considering strategic alternatives including “one or more potential transactions” to address its liquidity problems. There is “no assurance” that A123 will be able to find a way to continue to operate its business as a going concern, the company said.

The company and its debtor and non-debtor affiliates, collectively, have about 1,763 active employees, located in 10 facilities across the U.S., China and Germany, according to court papers. Its businesses consist of three primary business segments: transportation; grid energy storage; and commercial.

A123 Securities Corp., a non-operating company that holds a large portion of the company’s cash, and Grid Storage Holdings LLC, a shell entity formed “for the sole purpose of facilitating certain contemplated grid projects which ultimately were not completed,” also sought protection, according to court papers.

Obama’s Call

President Barack Obama called A123 Chief Executive Officer David Vieau and then-Michigan Governor Jennifer Granholm during a September 2010 event celebrating the opening of the plant in Livonia, Michigan, that the company received the U.S. grant to help build.

“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, according to a transcript provided by the White House. “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.”

Electric-vehicle sales since 2011 totaled fewer than 50,000 through September, just 5 percent of Obama’s target to have 1 million such vehicles on U.S. roads by 2015.

The debtors’ two largest customers are Fisker and AES Energy Storage LLC and its affiliates, which accounted for about 26 percent and 24 percent of their total revenue during the year ended December 31, 2011, respectively, court papers show.

Republican presidential candidate Mitt Romney said last month that Obama has picked “losers” for alternative-energy loans and grants. His running mate, Paul Ryan, has called for all green-energy subsidies to be eliminated.

A123 has posted at least 14 straight quarterly losses. Its shares have fallen 85 percent this year to 24 cents at yesterday’s close in New York and traded at 16 cents at 8:29 a.m. before the start of regular trading.

The case is In re A123 Systems Inc., 12-49658, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Lead image: Bankruptcy via Shutterstock

47 Comments

frederic pouyot
October 23, 2012

Indeed Better Places (www.betterplace.com) provides an example of smart companies who can profit from the EV revolution. The Better Places business model pushes what I have initially proposed to the next step, increases convenience and speed of EV repowering (making it comparable to the time to refuel) and reduces EV ownership risks by handling battery replacements and promoting and infrastructure for battery replacements and recharging. People do not buy years of gas ahead for the period of a car ownership and the best way to show that EVs can compete is to make the Vehicle transportation cost separate from the initial investment. The cost of the batteries needs to be handled separately and my suggestions is that it be charged back per usage (mile or km). This model is used to finance power projects that are also characterized with high upfront capital costs and low O&M. If governments are not ready to charge usage fees for EVs they way they do for power capacity used by the public, private companies like Better Places can fill that gap and make money at it. Considering available 21 century IT and telecom technologies, this is technically feasible, easy to deploy and economically desirable.

Howard Johnson
October 22, 2012

frederic...........are you referring to better place?/ http://en.wikipedia.org/wiki/Better_Place

frederic pouyot
October 22, 2012

Anybody wants to know why battery powered vehicles already make economical sense in 2012 in many situations, many countries -including parts of North America, and even in the US for taxi fleets (just an example), well check the Video, free course and free Software tool GPEKS has developed (EVScreen) which can both be downloaded from http://cleanenergyinstitute.net/course/view.php?id=53

Lawrence Carroll
October 22, 2012

Hey Bill,

I love the way you express it . . . !

Reading your description -

"The problem is wealth at the top. It doesn't matter whether it is the current USA, the old Russia, England, France, etc.. it doesn't matter."

- so good! And it reminded me about a corrolary to that reality: that the wealth will always tend toward the top as long as the rest of the population remains - whether willfully or not - ignorant and/or divided. In other words, it is really all automatic. If you ever have enlightenment amongst a significant portion of the population, then obivously a proportionate and equal amount of "wise" rule would then simply be the followed "paradigm" since the majority at that point wouldn't tolerate anything less . . .

Another thought: the "status quo" in and of itself is not necessarily bad (it could always be worse!), but usually is, for the simple reason most are "ig-nant" to some degree. ahaha! :)

I think I feel the same way about nuclear as you do! I haven't read that book, but I have read quite a bit else around. I Love Greenpeace's lengthy and detailed analysis, as well as the Nuclear Resource and Information Service's stuff, amongst so many . . .

I too am pining for the day when I get my first plug-in car to replace my Honda hybrid, but already have a EV ATV for the woods and yard. Love that quiet, smooth, and emission free power! And no spark plugs to replace, no oil or water pumps, no timing chains, no valves, no . . . well a lot of stuff isn't necessary!

Enjoy . . . :D

William Fitch
October 21, 2012

Hi: #41, you are correct. People try and paint Red or Blue as the fault. The same puppeteers hold both parties strings. They show just enough difference between the two to keep hope alive to sedate Revolution. The problem is wealth at the top. It doesn't matter whether it is the current USA, the old Russia, England, France, etc.. it doesn't matter. Once you have centralized money available to corrupt whatever government is in place, it will all go down the toilet. The masses must own the wealth, not a few multinational corps like O&G, Banks, Big-Pharma and the MIC.. Combined, they are the one's moving all the pieces on the board, not the people. As long as that is the reality, war and poverty will not be avoided. As for Nuclear being viable, that's one of the worlds biggest jokes. An interesting read is, 'Nuclear Power Is Not The Answer'. She sheds light and enough detail on the whole Nuclear power industry from inception to today. AS for EV's with my PV still in progress (maybe done before Winter) in a few years I might be able to afford an EV. That will indeed be a very happy day for me!!! Until then it is less costly used cars at a few thousand a pop... .....Bill

Atanacio Luna
October 20, 2012

Paoul Farley, did your read pluvial's post? Maybe you have it confused with another. My the point is that we need to tax carbon and other damaging energy regimes to let the most competitive energy regimes be driven up by the market. That is the point you are making too, if you look at what you are saying and extrappolate what it means. If a city comes in and tears down your house to build a freeway, that is fine; the society gains because they have better transportation, but they should pay you for your loss. The same applies with all energy regimes; they should pay for the damage that they do. If we are not sure, then err on the side of causion and tax more than is necessary. That is a good thing. I workded in the car idustry when the US put up law after law to protect our bad car industry. That pushed the product of my company to be more and more competitive, to the point that they made the US car industry uncompetitive; hence, the government had to step in and rescue them (correctly). The mind is plastic it can expand if one tries.

Lawrence Carroll
October 20, 2012

Our governemnt have always subsidized businesses, and in particular, big ones, whether via direct subsidies, university research, military spending, tax breaks etc. etc. It is a myth, for example, the FDR started it - he just shifted the emphasis somewhat for awhile.

The "economy of the world" has been dominated by government micromanagement for a very long time. And where does the government get its mandate(s)? From those from whom it rules - the "people." And as long as those people desire government (or at least fail to protest this micromanagement of the economy), then goverment will always pick "winners and losers" (regardless of what the current Republicans claim otherwise).

Back when Calvin Coolidge was in office, there was an attempt by many small farmers to get him to impose a protective tariff on items like corn, since these small farmers were not doing very well at all - and among other expenses - had to pay high fees (according to Robert Caro) to get their goods shipped via the Railroads. Coolidge refused, saying that it was against the principles of free enterprise. Yet that same day he signed a bill into law that raised the tariff on pig iron by 50%.

Is this same thing happening today? I would say so - but I wouldn't be too quick and draw such sharp distinctions between the Democrats and Republicans that apparently existed by in Coolidge's day (and continued for some time). Today's Democrats are far less different than the Republican opposition is, as both support big business, big war, big drug war (under Obama, the US is now using the military in Africa and more extensively in Latin America than ever before to fight the silly drug war), & big bailouts . . .

The only differences are that Obama has subsidized renewable energy more (perhaps) than Bush and, in that respect, in similiar to Carter. However, in both cases, if you look at the overall picture, there is very little real difference between the mainsteam "Right" and "Left."

Howard Johnson
October 19, 2012

paul-farley........Good to hear that you are selling pv systems ! I live in AZ.. As a purchaser of a pv system I need to let you know that I purchased this pv system because it makes me money. You see, if I would have used the 7,300 dollars to buy a car, I would have bought a depreciating product. Or if say, I had put this money in the bank, I would have had a rate of return of say 1% instead of 10%. Or if I had made any other home investment, remodeling, etc, I would not have had such a great return on my investment. And the tax credits are only for 1 year for one American. Me.. Hardly a drain on the taxes collected by the USA. Check out this children's home install: http://www.eastvalleytribune.com/local/mesa/article_e6729c06-e9c8-11e1-8614-0019bb2963f4.html?TNNoMobile

frederic pouyot
October 19, 2012

Paul, many people file for bankruptcy because they are victim of a time, of a system, even with the best management. Talk to farmers! I am not saying A123 had the best management, but I am saying the US has continuously subsidized organizations with bad management, so again, let's put thing in perspective before shouting scandal. Big energy and big motor industries have relied on subsidies for decades, tens of billions per year. And what is worst is that now that they are all grown up, they still get huge subsidies in the form of tax cuts, spill cleanups, oil wars and many other. Emerging Solar, Renewable and Car industries deserve continued support. This should be considered a national security issue as these industries have more potential for local job creation than old energy. In regards to Cliff Claven, he is obviously a hired 'merchant of doubt'. To find out how is kind operates, check out www.merchantsofdoubt.org

Paul Farley
October 19, 2012

Puvial, I sell Photovolatic systems. Like Cliff, I understand what is happening out there. Right now, where prices are, if you take away the Federal Tax Credit of 30% with no cap, the solar industry dies. We are dependent on Govt. For Every tax credit that is given to somebody, that is a tax dollar lost to govt!! Please Puvial, don't try to twist facts with me. I am for advancement of renewable energy. The question is, how long can you go and invest before your realize our investment in this product is not worth it. I truly believe that time will come, where solar could be affordable, BUT, if it has to be subsidize in any way, it is a product that is not affordable. PV systems are not affordable unless you get that tax credit and in addition to any other incentives they are out there. In NY, we have 3 incentives, federal tax credit, NYSERDA and State Tax credit of 25% with a $5k limit. With these 3 incentives, the average savings is 50-55%. Your cost is between 45-50%%. That means you can't afford it. that is the bottom line! Please, please, please, get your facts straight. Payback times are somewhere around 7-10 years with these incentives in NY.

And Fred, read the article, are you now saying this battery company went bankruptcy because of bad management? Like Cliff, i'm about facts, if your company is bast on the future of 1 or a couple of electric cars, I guess you can say this was bad management from uncle sam, I say its because nobody is buying these cars.! And that my friends are the facts!

I find it amazing, if I file a personal bankruptcy, it was because I failed to properly manage my debts/financing. I guess if a battery company, solar company or any other renewable product company goes bankruptcy, lets continue to pour money into it and blame oil for their failures. Lets blame Bush, me and anybody else you want to put on that list.

frederic pouyot
October 19, 2012

Cliff, let's clarify, you are pro "pseudo" science (you support the 1% of the scientific community that still denies oil triggered climate chaos and which goal is to confuse people) , pro-fact (when they suit your biased opinion), pro-energy (that is pro 19th and 20th century centralized and polluting energy) , pro-economy (that is the type of economy that lets big oil interest dictate what to do and makes the middle class poorer and more subservient) , and pro-America (you essentially support large American companies in energy and other sectors, not all American and American interests - especially the US companies that manage to avoid paying tax in the US thanks to armies of tax lawyers and deviant, deceptive practices).

Atanacio Luna
October 19, 2012

Cliff-c, by your answer to Puvi; it means that you do work for political interests that only want to confuse and discredit. Shame on you, and your ilk. You could put your talent to good uses in other ways. Genuine people like Paul-F loose interest in advancing our energy regime with the likes of your work. That is your intention and your success, but it is a sad evil task of yours. The facts are 1) We are destroying the planet with consumptive energy technology. 2) We can develop alternatives. 3) Those alternatives must be proactively accelerated. 4) Those alternatives must be orders of magnitude cheaper than fossil fuels. 5) There are such alternatives. 6) The best way to develop the best alternatives is to TAX the damaging externalities of fossil and nuclear fuels. Repeat the word 'tax' softly to yourself 1000 times for your penance. If you repent then you will quit your evil task to dis-inform and misinform.

Cliff Claven
October 19, 2012

Fred-P: I'm pro-science, pro-fact, pro-energy, pro-economy, and pro-America. No one's role on this or any forum is to represent the opinions of others, as you think yours is. Speak for yourself, not for me or other commentors. Debate the facts and cite your sources, don't slander or ascribe motives to people you don't even know. As I said before if you want to discuss something related to A123 or EVs versus IC vehicles I'm up for it.

frederic pouyot
October 19, 2012

Cliff and Paul, you way of thinking that is favorable to big oil and which purpose is too discredit support for modern solutions like EVs and Renewable Energy does not represent the majority of the people on this web site. You may be more vocal than the others, but that does not mean your views represent people here.

Many people spend a significant amount of awake time in their vehicle. So even in that respect the comparison makes sense. To go back to the topic of batteries, I do not know how A123 systems was managed, but I am not sure it was more ill managed than car makers who received 25 billion in bailout, or than BP that let the oil spill happen and cost 40 billions (of which BP only paid less than 1/3). So let's put things in perspective. If you can not connect the dots between politics, oil and strategic investment choices, others can. In any case, I am happy you are wasting your time on this forum where most people, even if they are quiet disagree with your pro war, pro big oil and pro pollution views. EV powered by batteries are worthy solutions to support versus supporting the status quo political and economic choice you and republicans promote. At least you are not talking to an audience is likely to change their mind and be convinced by your republican rethoric against clean energy.

Paul Farley
October 19, 2012

Frederic, I want to apologize for my strong comments. I feel I'm a conservative person in many ways because of past experiences. I am one of the few who actually enjoys politics and I am passionate about it.

For your arguments on the war and oil, I can find studies that contradict what this study may say. Both studies i'm sure are right and wrong. Sometimes a study doesn't necessary mean your being brainwashed, just somebody's opinion. Right or wrong.

Paul Farley
October 19, 2012

Frederic, you are killing me and probably most people who are reading this. First, I agree with everything Cliff has said. It kills me when people go off topic. Stick to the messy failure of the battery company. 2nd, I and most Americans are not against investing in the Great United States Future. it will only make us stronger. If Thomas Edison was alive, I think he would agree. This program if you want to call it that, on how govt. was going to kick start the EV business has been a failure. Ask any GM employee dealing with the Volt.

Now, I cannot believe you compared Buying a house to a car. Unbelievable. People buy houses because that is where they want to live, invest, enjoy the pleasures and experiences of owning a home. Don't ever compare it to a car.

About the Brain washing, I'm not even understanding where you are going with that.

Instead of going back and forth on the oil and cars, Answer these questions,

1. Does GM lose money on every Volt that is made?
2. Would you invest your own money in to GM knowing that they still have to pay back our Govt in stock value?
3. Would you invest in A123 systems?

My answers are Yes, no and no.

I have invested in renewable companies, lost money on all of them, including GM. I wouldn't touch their stocks with a 100' pole. If you can't believe in a company with your own money, it's not worth it!

Cliff Claven
October 19, 2012

Fred-P: Why have you twisted this forum into an alternative discussion of your alternative politics based on alternative information from an alternative universe which operates by alternative laws of physics and alternative facts posted on alternative websites? A123 systems got a dumptruck load of taxpayer money, made crappy stuff, never employed the number of people it promised, never made a dime of profit, and is now going bankrupt. It is no one's fault but the economically and scientifically and managerially challenged people who proposed and mismanaged A123 and the self-serving people who wasted taxypayer money on it for political gain. It is not about Afghanistan or mortgages or Bin Laden or BP. If you want to discuss the lifecycle GHG emissions of coal-powered EVs vs. diesel autos on a factual basis supported by citations from university studies and government agencies vice "alternative websites," then I'm in.

frederic pouyot
October 19, 2012

Yes Paul, you do need to check out alternative media like globalresearch.ca because the US and Western media has done a great job at brain washing and indoctrinating you and the massed with deceptive rationale for oil and resource wars.

You say that you and most can't afford EVs. Well many people like you can afford a house mortgage. Obviously, you and many people understand that owning a house does not provide a 5 or even 10 year payback. Un-informed people do not understand that EVs have to be evaluated on their lifecyle, just like when buying a home. The issue is the same with renewable energy, with high upfront capital cost and low operating cost. The typical car owner has no clue of the total cost per mile of their vehicle (including Fuel, O&M, insurance, parking, depreciation...) and even less of what that cost will be in the next 10 years considering that most oil in the US is imported and paid in a depreciating currency which has the potential to send priced much higher than anyone has seen or can imagine. The cost of electricity on the other side is much more stable and predictable that the cost of vehicle fuel. Bottom line, more people than you can imagine are actually able to finance the difference in cost between a new ICE Vehicle and a EV, and once they get educated about how to do the math, people will realize that it does make sense from the economic and risk management perspective, not even considering the fact that they could at the same time support local jobs, promote the US energy independence and the security of its people, fight global warming and reduce air and water pollution.

Paul Farley
October 19, 2012

frederic-pouyot-121688, On the war, couldn't disagree with you more. Not sure if you are from the U.S. I don't need to see a link to know that we were chasing the man who put 9/11 in planning, which was in Afghanistan and oil. If you want to throw oil in that mix, go ahead. You will have some followers. With that logic, we might as well say, we know where osma bin laden is, were not going to go after him, but there is oil over there, so lets invade. You or anybody else is not going to sell that to me.

The EV Battery had more support than you give credit. The agreement (Obama administration) was GE as well as other companies were going to buy the Volt, this in turn would help get the EV/Car battery world started. We have great tax credits for EV cars. But you do miss my point. For a price per mile in one charge and how far you can go, the cars are not worth it. Otherwise they would be selling. I would love to have a Chevy volt. I would love it. Not in my world My income without the future wife is over 50K. Most people have very high mortgages, your not going to get the average person to fork over 45K for a car in a 5 year loan. Not happening. I believe in 10 years or less, this can be affordable.

On your idea for financing a fleet of EV cars, i love the idea, But there should be proven studies that the cost of these cars will come down to where the average person can afford, otherwise it shouldn't happen, car manufacturers and Battery manufacturers will not be forced to bring their costs down, therefore the EV world would be nothing more than another expensive experiment that cost us lots of money, then we will be stuck because this will be an industry that can only survive due to taxes and nobody is going to want to see layoffs. There will be no turning back. This will be welfare program.

Bottom line, I would love to see EV cars everywhere, cost must come down. With the great tax credits that are available, it seems not to be workin

frederic pouyot
October 18, 2012

Paul, Afghanistan did not need to be invaded to get Osama bin Laden (killed in Pakistan - that was NOT invaded). Afghanistan is a strategic oil area next to the world's largest oil regions, a major pipeline and transit area. There are many other aspects, Check out to get the information main media will not cover on this at http://www.globalresearch.ca/ The reason why A123 and kind go bankrupt is that they did not get the level of support given to strategic energy sectors. I suggest the US adapts the Public Electric Utility model to transportation, where the Government would launch RFPs for public procurements to build EV/Battery production capacity that would initially target Government, taxi, municipal fleets and corporate fleets... EVs built under this mechanism could be provided in exchange for a usage fee per mile, (plus fixed cost) since you pay electricity by usage(/kWh). Like with a 4 GW nuclear or hydro dam, we could build a 4 GW EV fleet, to be financed, just like power plants over their life-cycle. Nobody objects when the Government ?picks? companies like Westinghouse to build a nuclear plant. If Tesla, Coda, Ford or battery makers are industry leaders and win RFPs, I do not see the issue. A large energy facility may cost in the area of 4 billion/4 GW and there are about 100 nuclear plants in the US. So I propose a Roosevelt type of New Deal, a 21rst Century version not to build large centralized power plants, but to build its strategic EV and RE infrastructure. After all, if Roosevelt could do his New Deal when America was broke following the 'Great Depression', so can a progressive US Government in 2012 following a modern type of Depression for a 21 century new deal. When we compare that to the 4 trillion cost of W Bush oil wars, 4.6 trillion bailouts to industries (25 billion for US car makers), to banks.. and the cost of BP oil spill, even 35 billion to finance the production of 1 million EV in the US over the next 5 years is quite feasible.

Paul Farley
October 18, 2012

hljmesa, you tell me not to debate, but again, you continue the war drums. We had every right to go in to Afghanistan. We were backed by several countries, including France.

Now, you talk about taking the money from the two wars we are fighting and putting in to R&D. The problem is, all that money is borrowed. We truly need to bring Govt. cost down. We continue to believe that all the services that govt. offers are affordable. Solar has been around for over 50 years. Look where we are at. Average efficiency are at mid to high teens. We can make the argument that we have not put enough money in to it, but then you have to ask yourself, what has NASA been doing for the last 30+ years of dealing with solar. Remember, they do use if for space stations, satellites, etc.

Back to the Batteries debate. The point that I am trying to make is, the electric car is no where affordable or efficient enough to meet the gas engine. If you need very large tax credits to entice you to buy an electric car, its telling you something. If a car manufacturer is building a car and taking loses on every sale because government is setting the standards, its telling you something. I believe we are maybe 10 years or less that the battery car will make lots of sense. We are not there yet. The bottom line, throwing all that money in to one company didn't make sense. And the bankruptcy proves it And now there is talk that GM might have to file Bankruptcy to fix their issues. Under law, bankruptcy breaks union agreements, and that is what GM needs to do. Romney was right, lots of people and companies go through Bankruptcies and come out stronger.

I hope this bankruptcy makes the company stronger, I hope the new owner can make the company stronger and I hope the damages (layoffs) are at a minimum. Most importantly, I hope GM can change things around. The current administration is not the answer.

DoggyDog World
October 18, 2012

Frederic, our issue with China goes way beyond renewables and we can't solve the problem via renewable incentive policies.

It's perfectly OK to buy solar cells from China if they buy other stuff from us, e.g. DVDs and Chevy Volts. Instead they pirate the DVDs and put massive tariffs on the Volt because GM won't gift their IP to a Chinese 'manufacturing partner' and build the car over there. That crap has to stop, for all types of products. As long as the end result is balanced trade it doesn't matter if they dominate certain niches such as solar cells.

Louis Shaffer
October 18, 2012

Wow - this has triggered some emotional debate. I am a huge fan of renewables and supporting the Green economy. However, it is OK to admit when you are wrong (I hope). Solyndra and to a lesser extend A123 were direct bets on companies and that is not the best way to grow new technologies. Much better to make the regulations such that these are of interest to companies. In balance, I think the Obama administration rightly put a lot of money into ALL kinds of ways to increase energy usage and drive a greener economy - all with the double intent to spur the economy and prevent a depression. In the overall goal they succeeded. For specific companies of course some did not make it. It would be interesting to see the status of ALL companies that got money and how they are doing.

I see a continued trend in US politics which is to pick one case and try to build a world view on it. Obama has a pretty good overall track record. Romney was a poor governer, but a successful businessman. They have two different views on what government is for and who it should benefit. Let's get out and vote for whoever you think is best for the US in the long run.

frederic pouyot
October 17, 2012

Cliff, even if people drove EV with electricity produced 100% by coal studies have shown that the CO2 per mile/km is actually lower compared to the CO2 per mile/km of a comparable (shape, size, power) ICE car, and certainly contributes much more to peace in the world. This is easy to understand. The power efficiency of an ICE Vehicle is very low to start with. Even when aided with turbochargers and stock efficiency aids, most engines retain an average efficiency of about 18%-20%. Coal plants have an efficiency about 10 points above that. Unlike with coal, most oil has to be extracted at great cost and transported greater distance on average. Oil from Canada requires 30% of the energy produced to extract it. What is more, cars are not designed to idle, and their are designed for optimal performance at 60 miles/hour. But let's not forget to add to the equation that for each gallon of oil used, you need to add the cost (and inefficiencies) of military resource wars and ... the US military is the world's largest consumer of oil. Add that to the equation and most intelligent people can figure out why an economy that supports EVs is more efficient than an economy that promotes the status quo with ICE Vehicles... even with EVs been powered 100% by coal. Also, unlike with ICE Vehicles, at least it is possible to switch the power source to clean, locally available renewable energy that can sustain peace and promote local economic development. ============================ PS: Algae oil also offers great potential for capturing the CO2 from coal plants. Nothing of that sort exists with ICE vehicles.

frederic pouyot
October 17, 2012

Chris (doggydogworld), I see a contradiction in your view on incentives and foreign policies. One one hand you write 'incentives ... should not discriminate against foreign companies', but on the other hand you say we need to 'deal' with foreign owned companies like those from China. Would that dealing not be considered 'discrimination'? The matter of the fact is that China has reached the status of world leader in manufacturing in both solar PV, solar thermal and Wind Energy. And this has happened thanks to government support, not thank to free market ' and the miracle of fair competition'. Quebec, a region that will produce, as of 2012, 100% of its electricity from clean, CO2 free renewable energy (Hydro and Wind) has been able to do that thanks to its public utility, Hydro Quebec, not thousands of small utility companies fighting in a doggy world market. Nuclear capacity has been built virtually from scratch in the 1960s using new and unproven technologies. We can do better with Renewable and Electric Vehicles, but this will take the same type of long term vision and support. Start-up have very little chance unless they partner with strong mainstream partners (in electronics, construction, transportation) and seek long term government support. We do not have to nationalize the Renewable Energy Industries, but they need to be treated as seriously and strategically as nuclear power was. We need at least some Private Public Partnerships, and mechanism so that financing is not an issue (long term government procurements contracts for example).

DoggyDog World
October 17, 2012

Frederic, incentives which help us achieve national goals should not discriminate against foreign companies. Trading something we make well with country X, who makes terrific EV batteries, helps both partners. What doesn't work is trade with a country that refuses to buy our goods and services. The major offender here is China, and we need to deal with them separately from any domestic incentive programs.

As for start-ups, they all struggle with cash flow. I've been in enough to know how difficult it is to get cash from investors and/or early customers. I also know firsthand how keenly that struggle focuses management on stuff customers will actually pay for. Getting money from gov't, which I've also done, focuses you on what the politicians want. That's the exact opposite of where we want our startups to focus and the main reason why gov't support for individual comapnies is so counter-productive.

Howard Johnson
October 17, 2012

paul.........no need for a debate..a discussion will do......

911 was a declaration by Saudis, not in power..for us, USA, to "leave us alone" didn't happen..with a knee jerk reaction we responded with invasions of sovereign nations.

http://en.wikipedia.org/wiki/September_11_attacks

Just like all of the knee jerk reactions to try and prevent alternative energy ideas from moving forward.. If we, usa, devoted as much money, manpower and time to new energy ideas, as we do to war, throughout the globe..we, USA, would have many, many more alternative energy producing installations than presently
..Think about it...
The best job available for a high school graduate is the military, because they get a bunch of money to sign up, taxpayer money...Renewable energy cannot offer this. And retirement..not even going there..

Paul Farley
October 17, 2012

hljmesa, your not even comparing apples to apples. Iraq, yes, Afghanistan, no if you want to get in to a debate about wars. Last time I remember Afghanistan is where the planning of 3000 Americans were killed, not sure if you know, but a few tall building also came down. In addition, both parties vote on funding for that war, so don't go start pounding your war drums. Once again, were talking about a company that is failing in the battery business for electric cars, not wars!

frederic pouyot
October 17, 2012

Cliff Claven, I see that you are very active on the internet spreading the world with biased and damaging information. I take it you must be paid by Oil interest and Oil backed Conservative politicians to be a media hit man. A few hundred years ago, people thinking like you would have said the earth is flat, that talking to people that are not at ear's reach is impossible, that stepping on the moon is nothing but a dream. You probably would have been the type to argue in the early 1900s that motor vehicles would never replace horses and carriages since there is abundant supply of grass to feed them. The problem with people that think the way you do Cliff is lack of foresight (beside the lack of conscious). Batteries and EVs will develop not because we will reach the end of oil, but because just like with motor cars and horses, they because of their `utility`. Governments will not be able to continue to subsidize oil wars. As it is, on battery life cycle base, in 2012 many EVs actually provide a lower cost of ownership/km compared to ICE Vehicles, not just in Europe but in many parts of the world. When people finance these EVs over the battery guaranteed life, the yearly annual cost is actually lower. We have run the analysis in many scenarios with our EVScreen tool. Based on the driving pattern of most Americans, even with oil as cheap as it is, it already makes economic sense to drive EVs like the LEAf and Miev for many people, because of lower O&M cost, the ability to get lower insurance cost, various incentives (free parking to EVs, access to car pool lanes). What is more, EV batteries have a second life with applications on Grid and Renewable Energy applications. New LiFePO4 and other technologies are emerging and will drastically reduce the cost of changing these batteries after 2020. So even if you do not care about the future of your kids, you have are fighting a loosing battle Cliff.

Cliff Claven
October 17, 2012

@puvi: look up "projection."

Cliff Claven
October 17, 2012

Petroleum has not had "100 years of government support." Somewhere, every civilization at every time must have a primary energy source. By definition that energy source cannot be subsidized--it subsidizes everything else. The lowest level of primary energy source is agriculture and the labor of domestic animals. This is what the Romans had and nobody bettered it till the invention of steam power enabled wood, then coal, and then oil to become much higher EROI primary energy sources that enabled the industrial revolution and civilization's unprecedented climb to what it is today in the developed and developing world. Coal and oil and gas have bootstrapped themselves up to their dominant positions on the merits of their EROIs. The US government did not invent the rotary drill, drill the tens of millions of wildcat wells, build the wooden then steel storage tanks, build the wooden then steel pipelines, invent the wooden then steel barrels, invent the rail tanker car, build the refineries, build the tanker ships, develop deepwater or directional drilling, etc. Private oil company profits have done and continue to do all this while also paying a huge chunk of taxes to the governments at all levels. The most recent federal government data for oil is 27 cents per barrel in subsidies versus more than $5 per barrel in corporate oil and and consumer excise taxes collected. That's a pretty good ROI for the government. Nuclear has not bootstrapped itself up, but was developed with a huge upfront government investment. Today's global oil and power generation companies are big enough to do nuclear by themselves by standing on the shoulders of the work already done, but they will never be allowed to by the federal government because of proliferation and safety concerns. Since the government retains control and regulation, it also retains risk and that is why the feds pay for the collective insurance policy. Nuclear has a decent EROI, but lower than oil and coal.

Atanacio Luna
October 17, 2012

Cliff_Claven, it seems your arguments are only meant to misinform and frighten. All that illogical chain of nonsense is meaningless. There are a lot of people working for Oil interests and against renewables. If this is your job it is a shameful job. If your arguments are genuine, I recommend a therapist.

Howard Johnson
October 17, 2012

paul-farley...Debates do not MEAN anything. They are just that ...a debate. Past action or inaction mean everything. That is why people submit resumes. The person hiring wants to know what you have done, good or bad. We are preparing to hire someone to govern the country. Has this person made good decisions for workers? business? or both? A123 systems was an attempt to kick start an industry. And the money lost pales in comparison to the money lost fighting overseas wars, the 800 pound elephant in the room.

Paul Farley
October 17, 2012

William & Puvial, I couldn't disagree with you more, especially when all the proof is there to controdict what you are saying. I believe the last year Bush was in power, he had signed into law, taking the limit off of the $2000 federal tax credit. So much for the thought of bush being just an oil guy. 2nd, William, nobody is saying not to fund these projects. I don't know who you are listening to, but I would suggest to stop. What some republicans are saying is, we need to do more homework before we just give tons and tons of cash to somebody without know if its going to work. Our current president predicted this is our future, batter powered cars, I don't disagree with him, (not really his prediction, it was already in the works) But when we are borrowing sooo much money and printing sooo much money, there is a time when you have to say slow down and lets stop for a moment. lets review what we are doing right now. I do know you can have several failures of what ever you are tying to create, just ask Edison about the light bulb, but right now is not the time to be losing a half a billion dollars here and there. Fiska, solyndra, and other companies. I work in the PV world, even I knew lending Solyndra all the money was not smart, that loan was nothing more then political. What I don't get is why you are not in arms about that! Our president paints this picture republicans are sending jobs over seas, did you not read what happened to Fiska? we gave them hundreds of millions of dollars to produce an electric car that will be built overseas! Our president and Democrats gave two thumbs up for this loan. Please people, take politics out of this conversation. The loan didn't work, the business set up didn't work. Maybe we should blame ourselves for not buying these cars! How about that? I would say that is the reason. Not carbon taxes, we give tons of tax credits for these cars. Maybe, just maybe, these cars, at a true cost to us, are not affordable!

Cliff Claven
October 17, 2012

@Puvi: If CO2 is taxed, then methane needs to be taxed at 25 times the rate and N2O at 298 times the rate. These are the relative IPCC warming potentials of these other greenhouse gases. Where does methane come from--land fills and farms and the deep Earth. Where does N2O come from--almost exclusively from crop fertilizer. More than 25% of the total GHG warming potential in the current atmosphere is in methane and N2O gas and that fraction is growing due to increased agriculture for food and biofuels. If you do only a CO2 tax and not a full GHG tax, then you are distorting the market and not attacking the totality of global warming problem. Stand by for a huge spike in food and ethanol prices either way. And for what? We'll probably get the 1 or 2 degrees of global warming under control just about the time a super volcano erupts or a meteorite impacts and plunges the world back into another ice age like has happened countless times before. Apophis or its cousin will eventually get us, as will an eruption of Yellowstone or the Altiplano uplift. We need policy makers that address the full spectrum of risks rationally rather than freak out in alarm over whatever Malibu decides is the current cause célèbre. The global firestorm and then sudden cooling of 5-7 degrees C averaged over the entire Earth (20-30 C over land) associated with an impact event or super volcano represents the immediate death of billions when all the crops in the temperate zones freeze overnight and there is no growing season for years. None of the global warming models (simulations) accurately hindcast the past let alone correctly predict the future. The measured warming is proceeding much too slowly. Everybody take a deep breath and count to ten. The best risk reduction strategy for civilization is to be as economically healthy and as fuel and food efficient as possible, not to tie one arm behind one's back and cripple economies to mitigate only the mildest of many possible threats.

William Fitch
October 17, 2012

Hi: Just more of the same on all of the conventional interests. All the conventionals are profitable after 100 + years of Govt support (Nuclear still is not and never will be) in more ways than Baskin Robbins had flavors of ice cream. Once profitable, they should have been cut off. RE needs that same level of support that the other children had on the playground, but the big grown up kids, now, don't want to share... they want it all, even it it takes the whole human race down in the process. There is a good side though. We will finally have population control when the Billions start dying from lack of food, drinkable water and habitat... and if we burn all those tar sands we might even drop down under a Billion or less. A prehistoric style heated earth will not support man in is current form and numbers.

.....Bill

Atanacio Luna
October 17, 2012

If one supports renewable energy, or if one believes in the power of Markets or if one believes, as I do, that governments can solve problems; the solution is very, very, simple: Tax carbon emission. --------------------------------. . Whether it is from the steel or glassmaker for wind and PV, or the car driver, or shipping company, TAX CARBON! First of all, governments can use the tax for all the great good that they do... best bang for the dollar. Second, energy users will identify and develop the best energy alternatives fast. Third, we will directly and forcefully reduce CO2 emissions in the most effective and efficient way possible. Weather you are for markets or the environment it is a win-win-win strategy if the Republicans could only release themselves from the "no-government", "no-taxes" noose that the oil and rich people have put in their noses, the solution is that easy and rational.----------------------------------------------- Pluvinergy is one total and complete solution, as so many others out there; we just have to let the market, the government, and the entrepreneurs do their respective jobs without mindless obstructionism.

Cliff Claven
October 17, 2012

@frederic: Where does the energy to make electric cars and PV panels and wind turbines come from? Fossil fuel. Even biofuels are hugely parasitic of petroleum energy. Solar panels and wind turbines and electric cars are net energy-wasting and net GHG emission increasing luxuries that soothe the consciences of those who are willfully ignorant the real score on their upfront costs in energy and GHG emissions and environmental damage. Oil and gas still produce the greatest energy return on investment (EROI) by far of any option capable of the capacity required of national primary energy sources, and thus will continue to power the bulk of the US economy for decades if not centuries to come, and will continue to subsidize the alternative energy industry until it dies its natural death when the subsidies dry up. There is another global oil glut coming as happened in 1986. The US is already a net exporter of refined petroleum again and crude oil imports are already dropping. The true environmental stewards of the next 50 years will be driving super-high MPG diesel IC cars and not wasting petroleum mining the earth for all the rare and toxic materials required to dope solar panels and make rare-earth magnets and cover millions of acres with steel and cement and agrichemicals for solar and wind and biomass farms that all deliver a far lower EROI over their lifecycle than the petroleum they consume. When someone is mining materials and manufacturing and transporting the finished hardware and emplacing solar panels exclusively with solar power, get back to me. That will be the first alternative energy option to hit crossover with petroleum. Wind and biofuels are hopelessly further behind. In the meantime, I don't feel any obligation as a taxpayer to fund someone else's fantasy.

frederic pouyot
October 17, 2012

You make a good point doggydogworld. Now, if the government supports the industry through let's say Federal capital cost incentives to EV buyers who indirectly support EV Battery makers, and if you want that to result in job creation in the US, then you need other measures so that foreign manufacturers do not end up been the prime beneficiaries. Since there are free trade agreements and so many mechanisms that restrict the ability to use duties, what would you suggest to that effect? Governments could provide tax incentives, but for many start-ups, what they needed are measures that help them deal with cash-flow issues. Even sector-wide low interest loans may not be enough unless they provide flexibility in repayment terms.

DoggyDog World
October 17, 2012

It makes perfect sense for the US to invest in alternatives to imported oil, but pumping tax dollars into individual companies is absolutely the wrong way to go about it. Provide incentives for the desired behavior (reduce petroleum usage) and let investors, entrepreneurs and customers pick the winners and losers. Governments are incompetent and corrupt when it comes to supporting individual companies, and the entire process inevitably becomes politicized which strangles progress.

frederic pouyot
October 17, 2012

cliff-claven, I guess that in your world, it is ok for governments to support industries that are only viable when you consider a 20 to 30 year time frame (like nuclear). And we are not talking about hundreds of millions but hundreds of billions. It makes perfect sense for the US to invest not just what has been invested in A123 Systems, Tesla and other similar technologies, but to invest over a 20 year period in these technologies enough to insure energy security in the US and so that the US does not need to import any oil. When the US imports oil, it drives foreign economies (Middle East, Canada, North Africa, South America...). Instead, the US could drive its own economy and a strong EV batteries sector, supporting jobs in the US. The Electric Vehicle revolution has started and will happen in the next 10 to 20 years with or without the US, now it is up to the US to decide if it wants to be a beneficiary or victim of it.

Tim Gulden
October 17, 2012

It looks like we can again see who killed the electric car...non-renewable energy companies are the gorilla in the room and if they don't like what they see, they just rip the heads off.

Paul Farley
October 17, 2012

James, I'm not sure why you folks are killing Romney. He would rather see a bankruptcy work then tax payers footing the bill. We've seen this in the debates.

Plus, once again, the comments are getting off track. This is about batteries, not solar,wind or any other renewable company. It was about a battery manufacturer that is failing because we the people are not buying enough electric cars to keep this afloat, (trying not to say failure).

The numbers don't lie, nearly 1 billion dollars went in to a company that can't make a profit, can't make their loan payment, and all you/ or we the people want to do is blame blame blame. Stop and smell the Coffee. There is a point in time when you have to say this was a bad idea. I truly believe that electric cars will be the future, buy maybe the scale of this loan and grant should have been smaller. Not knowing exactly where the money went in to, i am of course speculating on what I think the money went in to. Too big of a facility, expectations too high for manufacturing output? We clearly don't know, but please, don't go down the politics of this mess. Any time Bankruptcies occur, it's a mess.

James Leavenworth
October 17, 2012

The situation may not be as bad as it seems now that Johnson Controls, a profitable and well managed company, is part of the equation. Of course we can expect Romney to scream bloody murder over this. A large part of the problem with RE company bankruptcies is unfair Chinese trade policies and I hope nobody on this board is low information enough to believe Romney is the man to get tough on China.

Paul Farley
October 17, 2012

pvpurcell, I don't understand how you can bring politics in to this discussion. In two years, they received 784 Million Dollars!! They can't sell enough batteries to stay in business! It failed.

On the flip side of your comment, I don't think the republicans could stop the money going to them it if they wanted to. Two years ago, the Democrats had total control of congress and the Presidency. Nothing could stop them. According to the article, that is when they received the loans and grants. Now, what I don't know, and maybe you can share your proof, can you tell me the republicans had no representation of voting on giving them money? Just playing devils advocate!

Cliff Claven
October 17, 2012

A123 Systems just joined the ranks of Solyndra, Range Fuels, Beacon Power, Abound Solar, Bright Source, Ener1, etc. by filing for bankruptcy after receiving hundreds of millions in US taxpayer money. A123 Systems is a Michigan startup that received $249M in Obama stimulus funds and $125M in Michigan state tax incentives and grants and promised to employ 3,000 people. After developing their battery technology, they shipped $67M in defective batteries to Finnish auto maker Fisker (recipient of a $529M Obama loan guarantee and maker of $107,850 luxury electric cars of which one failed during a Consumer Reports test and two have caught fire). Now, after posting 14 straight quarterly losses, A123 has declared bankruptcy and their stock is down from $25 to 6 cents per share and their 780 employees are possibly out of work. The Chinese firm of Wanxiang is looking to buy-out the company for pennies on the dollar and acquire the capital and technology that Obama was kind enough to spend our tax money creating. Now read what Obama said in 2010 at the plant opening.

"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. 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."

Should we laugh or cry? We definitely need to vote to stop this death by a thousand cuts inflicted upon the US by two Nobel Prize winners (Obama and Chu) who obviously know less than they think they know about business, economics, and energy.

Paul Purcell
October 17, 2012

The Republicans being critical of the bankruptcy is not surprising.. Them and others seemed to have a vendetta to stop any of the bills Obama proposes to discredit him.. It seems almost like sabotage of the country! In effort to discredit Obama and his polocies congress has been blocking everything in a self destructive temper tantrum to get someone without an enviormental protection agenda in office! So afraid that Obama's polocies would bring some prosperity and the admiration that comes along with such... They would rather undermine the countries interests...