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What Happened to A123?
http://www.technologyreview.com/energy/40450/?p1=A1[font face=Serif][font size=5]What Happened to A123?[/font]
By Kevin Bullis
[font size=4]Once the rising star of the clean-tech industry, the advanced battery maker faces an uncertain future. [/font]
[font size=3]A few days after A123 went public in the fall of 2009, the value of the company's stock nearly doubled as investors rushed to get a piece of one of the hottest clean-tech companies. The company boasted advanced lithium-ion battery technology, developed at MIT, that promised to popularize electric cars by making batteries more powerful, safer, and longer-lasting.
Things could not have looked better. Prior to the initial public offering, A123 had raised over $350 million in private funding. In the months leading up to the IPO, it announced it had been offered $100 million in refundable tax credits from the Michigan Economic Development Corporation and a $250 million federal grant as part of the Recovery Act of 2009. The IPO raised nearly $400 million, bringing total funding for the company to more than $1 billion. A123 had factories in Asia capable of producing millions of batteries per year, and within a year it would open what it called the largest lithium-ion battery factory in the United States, in Livonia, Michigan.
Three years later, A123's situation looks very different. Its stock value has fallen dramatically, depressed by ever-increasing financial losses. This week it reached a low of 82 cents a share, down from $25.77 shortly after its IPO. The company loses money on every battery it sells, and it's desperate for more capital to stay afloat. Its most recent earnings statement included a warning that the company might not survive.
What happened to one of clean tech's brightest stars? Part of A123's problems are specific to the company. A123 has signed dozens of production contracts and supply agreements, but its current problems are partly due to the fact that it has relied heavily on just one customer, Fisker, for a large part of its revenue. When Fisker failed to bring its Karma sedan to market in time, it cut back orders for batteries, and A123 was forced to lay off workers and shut down some of the production at its plant in Livonia. Then, in March, A123 announced that in its rush to scale up production for Fisker (before Fisker cut its orders), it had produced some defective battery cells, leading to a massive recall and replacement program.
…[/font][/font]
By Kevin Bullis
[font size=4]Once the rising star of the clean-tech industry, the advanced battery maker faces an uncertain future. [/font]
[font size=3]A few days after A123 went public in the fall of 2009, the value of the company's stock nearly doubled as investors rushed to get a piece of one of the hottest clean-tech companies. The company boasted advanced lithium-ion battery technology, developed at MIT, that promised to popularize electric cars by making batteries more powerful, safer, and longer-lasting.
Things could not have looked better. Prior to the initial public offering, A123 had raised over $350 million in private funding. In the months leading up to the IPO, it announced it had been offered $100 million in refundable tax credits from the Michigan Economic Development Corporation and a $250 million federal grant as part of the Recovery Act of 2009. The IPO raised nearly $400 million, bringing total funding for the company to more than $1 billion. A123 had factories in Asia capable of producing millions of batteries per year, and within a year it would open what it called the largest lithium-ion battery factory in the United States, in Livonia, Michigan.
Three years later, A123's situation looks very different. Its stock value has fallen dramatically, depressed by ever-increasing financial losses. This week it reached a low of 82 cents a share, down from $25.77 shortly after its IPO. The company loses money on every battery it sells, and it's desperate for more capital to stay afloat. Its most recent earnings statement included a warning that the company might not survive.
What happened to one of clean tech's brightest stars? Part of A123's problems are specific to the company. A123 has signed dozens of production contracts and supply agreements, but its current problems are partly due to the fact that it has relied heavily on just one customer, Fisker, for a large part of its revenue. When Fisker failed to bring its Karma sedan to market in time, it cut back orders for batteries, and A123 was forced to lay off workers and shut down some of the production at its plant in Livonia. Then, in March, A123 announced that in its rush to scale up production for Fisker (before Fisker cut its orders), it had produced some defective battery cells, leading to a massive recall and replacement program.
…[/font][/font]
