Wanxiang America, the U.S. arm of a major Chinese automaker, has completed its buyout and taken ownership of lithium-ion battery maker, A123 Systems. Meanwhile, the production of Fisker’s Karma has halted because of a lack of batteries, forcing the company to seek partners or even its own buyout.
Wanxiang excited about A123 Systems acquisition
“We are excited to add A123 Systems to our growing portfolio of companies as we continue to expand on our strategy of investing in the automotive and clean tech industries in the U.S.,” said Wanxiang America’s president, Pin Ni.
Earlier this week, the Chinese automaker received approval from the federal government to proceed with the buyout. The deal has been scrutinized by the feds to ensure that no vital trade secrets were revealed in the transfer of ownership. The company’s defense contracts were sold separately to U.S.-based Navitas Systems.
Bankruptcy stalls electric automakers
A123 Systems filed for bankruptcy late last year due to many problems, including those stemming from the disclosure of defects in its manufacturing methods.
The batteries made by A123 Systems can be used to power the Fisker Karma, the BMW hybrid 3- and 5-Series, and the Chevrolet Spark. However, according to Torque News, Fisker is conspicuously missing from the new A123 Systems LLC’s list of intended buyers. Fisker has stalled production for six months now due to a battery shortage resulting from A123 System’s problems and eventual bankruptcy. And quicker than you can say “auto loan bank rates,” that has left it without revenue.
Fisker seeking outside help
Torque News says Fisker has hired a turnaround company — Huron Consulting Group — to help it cut corners, and is actively seeking a partnership, or even a buyer, to help it remain solvent.
Fisker spokesman Roger Ormisher told the Los Angeles Times, “There has been interest from different people on three continents in terms of strategic alliances and partnerships. There are ongoing negotiations and discussions.”
However, according to Crain’s Chicago Business, Wanxiang may be considering investing in Fisker itself. That perhaps accounts for why the luxury U.S. automaker in not on A123 System LLC’s client list.
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A streak of bad karma
Fisker has faced its own string of troubles from the start. It missed its originally-announced launch date in 2009. That launch was delayed several times. Then it also missed some production milestones, causing the U.S. Department of Energy to freeze most of the $529 million it loaned the green-technology startup. Production of the Karma didn’t begin until July of 2011.
Later, Fisker was plagued with several incidents of vehicle fires that were originally blamed on the A123 battery pack. However, it was determined later that the fires were the result of a defective cooling fan.