California electric vehicle maker's struggles could 'croak' Michigan's A123 Systems
(See previous story: Analysis: A123 Systems layoffs highlight challenges for Michigan's budding battery industry)
The inability of California-based electric vehicle startup Fisker Automotive to secure $330 million in federal loans it was originally promised by the U.S. government could have a detrimental impact on battery maker A123 Systems Inc., which has some 700 employees in Michigan.
Fisker is trying to renegotiate loans from the U.S. Department of Energy, according to a report by the Boston Globe and other news organizations.
But “everyone that I’ve talked to is pretty certain that the DOE loan is not coming’’ back, Theodore O’Neill, an analyst with Wunderlich Securities, told the Globe, which added that if Fisker can't get the loans, “that croaks Fisker and that croaks A123.’’
Photo courtesy of A123 Systems
A recent AnnArbor.com review of A123’s third-quarter earnings report with the U.S. Securities and Exchange Commission showed that the company gets 51 percent of its revenue from two customers, including Fisker. Government contracts and subcontracts make up another 12.3 percent of A123’s revenue.
A123 has about 40 employees at its research and government solutions division on Research Park Drive in Ann Arbor.
A123 told the Globe that it has been actively raising additional sources of financing and diversifying its revenue base.
The company landed a $249.1 million economic stimulus grant from the U.S. DOE in August 2009. That came after the battery manufacturer won $125 million in tax credits and incentives from the Michigan Economic Development Corp. in spring 2009 and a $10 million cash grant from the state in fall 2008.
Read the full Boston Globe story here.
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or email@example.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Fri, Feb 17, 2012 : 1:31 p.m.
Well said Shepard, this is what you git when the progressives like Grandmole and Obumer are doubling down with borrowed money from the Chicoms on the green fantisy. The MRDC should be abolished immediately, they continually throw away tax payer dollars with absolutely no accountability. If someone truly has a good idea the venture capitalist and the free market will decide if it is a worthy investment.
Fri, Feb 17, 2012 : 11:59 a.m.
I just can't get past the fact that a company gets $250 million of free money, plus $125 million in tax credits & incentives just 4 years ago & now they are going to 'croak'.
Thu, Feb 16, 2012 : 6:13 p.m.
I do not want the federal government giving any tax money to any business. I prefer that businesses survive or not based on private investment and popular products. Investors will invest in businesses they believe will be profitable. If the government wants to support some new technology, I would not oppose grants to universities doing research but not to companies who may fail because their product will not sell. This electric car dream is just not coming around and I think the President is way off base in his generous support. This article recently appeared: <a href="http://www.ehow.com/facts_5007343_federal-mandatory-sentencing-guidelines.html" rel='nofollow'>http://www.ehow.com/facts_5007343_federal-mandatory-sentencing-guidelines.html</a> Electric cars like the Volt are very expensive. The 2013 is $43,000 up from the 2011 Volt. So you have to be quite well off to afford one anyway, so why are we subsidizing rich folks? Why not subsidize some high MPG cars that are lower priced?
Fri, Feb 17, 2012 : 1:50 p.m.
Sounds like you prefer socialism. Have the public universities own patents and trademarks and receive income from them? Funny how that system is EXACTLY wwhat the drug manufacturers have used for years. If you do not want government picking industries, then you are definitely against tax deductions for anything including mortgage interest, which props up the real estate market, agents, home builders, and banks. You must be against child care tax credits and the deduction for having children. If you wants kids and can not afford them, it is not governments role to give free money to you. You must be against oil companies being able to write off any research and development costs because that is part of doing the business and the risk they take. If they can not survive without the tax break, then so be it. I guess you are also against the subsidized airline industry. People who get tax breaks due to marriage should also be stopped, since that is the government ppicking a winneer or married people over singles. The basis for these kinds of loans falls under the general welfare clause of the constitution. If you want to change the constitution, you know the way too do so
Fri, Feb 17, 2012 : 11:35 a.m.
You cite an article about sentencing guidelines? FYI, ehow is NOT an authoritative source. It contains "articles" written by people that earn money by writing them and ehow earns money selling ads...
Thu, Feb 16, 2012 : 5:59 p.m.
I bet Obama did this.
Thu, Feb 16, 2012 : 6:30 p.m.
Yep! The Messiah failed his followers!
John of Saline
Thu, Feb 16, 2012 : 5:39 p.m.
Since when is "croak" a transitive verb?
Fri, Feb 17, 2012 : 4:02 p.m.
Either way, that is one UGLY headline.
Fri, Feb 17, 2012 : 4 p.m.
Bless you, John of Saline - but you, too, Usual Suspect, for the fond reminiscence.
Thu, Feb 16, 2012 : 6:15 p.m.
According to Monty Python, in their Dead Bishop sketch, it is: "Oh Lord we beseech thee tell us who croaked Leicester."
Thu, Feb 16, 2012 : 5:59 p.m.
Kick the bucket? Buy the farm? Expire? Take a long dirt nap? Sleep with the fishes? Go belly up? Give up the ghost? "Crap" the bed?
Thu, Feb 16, 2012 : 5:35 p.m.
US companies just can't compete in this markey anyways. The overseas production 'environment' (hey that's a good pun) is much better suited to this 'product'. No OHSA, no EPA, no unions, trade school education, no worker addictions and high worker loyalty and integrity, and cheap electricity and transportation, plus government trade policies that protect their money and their companies. Did I mention the way they raid US intellectual property and use it better that we do ? Face it, we are now a colony of Asia. Maybe A123 could reinvent itself as a restaurant in the area. Those are the only viable startups.
Thu, Feb 16, 2012 : 5:21 p.m.
"The inabity.... to secure $330 million in federal loans it was originally promised by the U.S. government could have a detrimental impact..." Yea, artificial markets created by central planning democrat socialists are funny that way. There is also a BIG DIFFERENCE between lending money to 100+ year old GM and a start up making products nobody but the government wants. Further, the United States does not have "$330 million" to loan Fisker or anyone else - obama is borrowing $4,000,000,000 ($4 billion) more then the IRS collects PER DAY from China and others to cover his massive vote buying program. Remember that when doing your taxes this year. ....and BTW, no amount of piling more taxes on "the rich" will ever catch up with his spending. Worst President in a century! Vote like your future depends on it.............because it does.
Fri, Feb 17, 2012 : 1:37 p.m.
"Watch the world's most popular cable news network Fox News" This tired argument? Ok why all the qualifiers? Why must popularity be limited to CABLE NEWS? Why not look at NEWS in general. For the week of Feb 6th, ABC NEWS averaged 7.968 million viewrs, NBC averaged 9.5 million and CBS averaged 6.6 million. Bill OReilly (the top rated show on Fox) on his highest rated night this week had 4.188 million viewers in TWO airings (one in Prime Time at 8 pm) So let's compare Fox Noise to other cable programs: The WWE, Pawn Stars, Jersey Shore, Teen Mom, Swamp People, Live from the Red Carpet at the Grammy's , repeats of NCIS and the Big Bang Theory all did better than ANY Fox show. As for saying Obama is a socialist, one could only hope that he actually was. He is a moderate at best. No policy he has implemented has any look of socialism anywhere. The question was asked by a former president (Ronald Reagan to be exact) " Are you better off today than you were four years ago? By EVERY metric imaginable the vast majority of the country is. The other mistaken notion is that Obama is leading BECAUSE there is a nomination process is backwards. The republicans get FREE air time to have debates and discuss their views during the process and it is reported on DAILY by all the networks. Now would be the time people would have the highest opinion of them. Once we know who Obama is going against the contrast between Santorum ( I prefer the Dan Savage use of the term, but would be deleted I am sure) or Romney will be painfully obvious to any person with a brain.
Fri, Feb 17, 2012 : 2:03 a.m.
Evidence obama is buying votes? LOL Watch the world's most popular cable news network Fox News, the only news station not licking your hero's boots and you will quickly learn why he is far worse president then all those you name – and I said worst in the last century. I do wonder what you think you know about Nixon or the end of the Vietnam War? So obama leads in polls in the middle of a Republican primary when nobody is running against him. Do you think that means his socialist, job killing, nation bankrupting, class warfare, green farce, crackpot leftist policies are popular compared to Republicans or that he is a fine president? Do you get a government check from those of us who still work? What do you know of the budget he just floated up to the Hill and why are his democrat stooges in the Senate running from it? LOL Of course both of you sidestepped the point of what I wrote. It must be tough to wake up every afternoon an obama lover while knowing he's such an amazing failure. If he were not so destructive to the future of the United States, I would feel sorry for you all. I do enjoy laughing at those who cry that they did not know he would be this bad....we told you so. "Sparty"? Good party school…. Vote like your WORKING future depends on it.......because it does.
Thu, Feb 16, 2012 : 7:34 p.m.
What a laugh ... is that why Obama leads every republican running against him? The drama: Worst President in a century, vote like your future depends on it, massive vote buying program shows the mindset from which these points come from. Fun to read, although none of them true.
Thu, Feb 16, 2012 : 6:58 p.m.
What evidence do you have that Obama is buying votes? And then you say he's the worst president in history? You must not know a lot about history. Have you ever heard of Herbert Hoover? What about Richard Nixon? Obama has his faults but the hysteria that comes from conservative leaning people about him is really over the top and frankly embarrassing.
Thu, Feb 16, 2012 : 5:14 p.m.
A123 must have a great Business plan if the only place they can try to get funding is the Federal Government!