A123 Systems is but one of a number of companies that have gone bankrupt after receiving millions of Obama Administration stimulus dollars. It was among a laundry list of bankrupt companies, lead by Solyndra, that caused an uproar in Congress and lit sparks in the presidential debates. After the election, however, the controversy surrounding it seemed to subside a bit,  despite some rumblings in December that a Chinese firm might  try to make a play for it. Now it’s squarely back in the spotlight again, as the Chinese company Wanxiang received final approval on Tuesday from Congress’ Committee on Foreign Investment in the United States to purchase A123 – and this has a number of defense experts more than a little upset.

The company, as you may recall, was a leader in the clean energy field. In 2009, it’s lithium-ion batteries were sought after by automotive giants like Fisker and Chrysler who banked on them to provide juice for their emerging electric car enterprises. The company received a hefty $248 million from DOE and over $100 million in tax credits from the state of Michigan to build two plants in Romulus and Livonia. But the road after its high point in 2009 became increasingly rocky.

Chrysler’s ENVI division puttered out by 2010. Fisker, which would actually use A123 batteries in its Karma EV,  had to issue a costly recall when it was discovered the batteries would catch fire if the coolant leaked. By October 2012, A123 Systems filed for bankruptcy and its future looked glum.

Enter the Chinese.

“We’re pleased the government has completed its review and provided us with the go-ahead to finalize this transaction [of A123],” said Pin Ni, president of Wanxiang America. Wanxiang won the bidding for most of A123’s business for $256.6 million, a move it made undoubtedly to garner leading battery technology for a pittance of the true cost. Wanziang, incidentally, is also owned by one of China’s wealthiest tycoons – Lu Guanqiu, a long time member of the National People’s Congress. While the company is American based, the national security implications of this have not gone unnoticed, as reported by Paul Chesser of the National Legal and Policy Center, who wrote:

“A retired Navy vice admiral, Barry Costello, echoed those apprehensions in his own commentary for Politico. The former commander of the Navy’s Third Fleet noted how A123’s batteries – developed at the Massachusetts Institute of Technology – performed well in extreme weather conditions and how it “serves critical military applications like satellites, communications, unmanned aerial vehicles, high energy lasers, advanced armor and tactical vehicles.” 

“…The core technology will still belong to Wanxiang and is potentially available to the Chinese military,” Costello wrote. “Furthermore, that American company will still have to rely on Wanxiang’s manufacturing assets and willingness to share future intellectual property. In other words, the sensitive technology today will be exported, and our future military supply — and troops — will be dependent upon a Chinese entity.”

So it seems A123 is back in business. For American taxpayers, the whole mess has been costly with little to show for it. And, while many things remain unclear, the bottom line is that a foreign-owned company will benefit from the millions of dollars given to A123 through the President’s stimulus package. “And that,” as Senator Grassley dryly noted, “is troubling.”


  • Craig Rucker

    Craig Rucker is a co-founder of CFACT and currently serves as its president.