What does A123’s bankruptcy mean for Fisker?

Last spring, analyst Theo O’Neill predicted that battery maker A123 would file for bankruptcy in mid-October if it didn’t raise more cash or cut expenses. A123 supplies lithium-ion batteries for Fisker Automotive’s Karma sedan, which has struggled to get off the ground. (Eric Wesoff of Greentech Media has a chronicles the Karma-on-fire-in-Woodside here: http://bit.ly/SbkRts)

On Tuesday, A123 field for bankruptcy protection and sold its assets to Johnson Controls.

Gov. Mitt Romney used the first presidential debate to blast stimulus funding for Solyndra, Tesla, Ener1 and Fisker. Republican strategists are no doubt adding A123 to the list of talking points during tonight’s debate.

A123 was awarded a $249 million grant from the Department of Energy in August 2009 to help build its US factories in the Detroit suburbs; the company has used $132 million of the grant. The DOE put out information about its support of advanced battery manufacturing here: http://energy.gov/articles/update-advanced-battery-manufacturing

Fisker says that they have an ample supply of batteries, or enough to last them through early 2013.

“It’s comforting to see Johnson Controls brought into the picture,” said Fisker spokemsan Roger Ornisher. “Our understanding is that they will continue to produce the batteries.”

The Fisker Karma was designed and engineered with A123 in mind as the battery supplier. But given A123’s problems, Fisker has been looking at other potential suppliers for the Atlantic, its next production vehicle.

“It doesn’t matter that much to Fisker,” said O’Neill, who left Wunderlich and now has his own shop, known as Litchfield Hills Research. “They can get a battery from Johnson Controls or someone else. Johnson Controls gets a good deal, and they can buy time until the market for electric vehicles materializes.”

Ray Lane, a managing partner at Kleiner Perkins Caufield & Byers, is on the board of Fisker Automotive. He was scheduled to speak about clean tech investing Tuesday evening at the Commonwealth Club, but the event has been postponed. http://www.climate-one.org/upcoming-events/ray-lane


Tags: ,


Share this Post

  • Lars

    “Fisker states that they have a ample supply of batteries…” Too funny. Considering on how poorly the Karma is selling, they may have all they will ever need. Cadillac’s Converj will be for sale in late 2013, and will out sell all Karmas in it’s first month, which is just over 1,000 to date. I’d be surprised if Fisker Automotive survives 2013.

  • Opponents of clean energy will undoubtedly be out in force, using this story as just another example of why clean tech is a bad investment and will never work.

    Here is why they’re wrong. Simply put, the battery industry is growing by leaps and bounds.

    · The advanced battery market is expanding dramatically – from $5 billion in 2010 to nearly $50 billion in 2020, an average annual growth rate of roughly 2 percent.

    · The private sector is heavily invested in advanced batteries – Department of Energy (DOE) grants, like the $6 million the Bush administration gave to A123 in 2007, were matched dollar for dollar (or more) by private investments in A123.

    · We built a brand new battery market in America – Prior to the DOE loan program, all advanced batteries were manufactured overseas. Today, more than 30 DOE-supported plants are already in operation, employing thousands of American workers.

    · The investments have paid off and battery costs are dropping – Prior to the DOE loan program. a battery with a 100 mile range cost $33,000. Because of technology improvements and the high volume manufacturing capability we have today, the estimated battery cost is down to about $17,000 and is expected to drop to $10,000 by 2015 (Source: Department of Energy, http://1.usa.gov/RBo2OV)

    Yes, it’s a tough and fiercely competitive economy and, yes, a small number of clean energy companies have experienced difficulty, but those company bankruptcies hardly indicative of the overall clean energy sector. In fact, some fossil fuel businesses have also failed in recent months, see: ATP Oil & Gas Corp., Patriot Coal, etc. While business failures are unfortunate, this is how the free market works. Businesses occasionally fail.

    But A123 isn’t dead and its work will continue on under Johnson Controls, a strong, all-American business. Johnson Controls is the largest supplier of lead-acid batteries for cars and has commented that A123’s assets “are a good complement to [our] existing portfolio and will further advance Johnson Controls’ position as a market leader in the industry.” Mergers and consolidation are signs of a maturing industry.

    A123’s bankruptcy will no doubt be leveraged for political reasons, but that doesn’t change the facts: the advanced battery-manufacturing program at DOE has been a success. Advanced battery technology is here to stay, and it will continue to improve as its price continues to drop.

    Get more energy facts at http://www.energyfactcheck.org and follow us on Twitter at @EnergyFactCheck