US lithium iron phosphate battery maker A123 Systems has filed for bankruptcy three years after receiving a $250 million ($160 million) grant from the US government to build manufacturing capacity.
Meanwhile, it has arranged to sell its automotive batteries business to technology giant Johnson Controls – which is already involved in the batteries-for-electric vehicles business – for $125 million. Johnson will get the battery technology as well as two factories in Massachusetts, a cathode powder plant in China and the A123 stake in Shanghai Advanced Traction Battery Systems Co – a joint venture with Shanghai Automotive.
A123 was spun out from the Massachusetts Institute of Technology by a group of researchers in 2001, and in 2009 it raised $380 million through stock market floatation. But since then things have gone less well: demand for electric vehicles has dropped, deals have fallen through and faulty products have been recalled.
In October 2011, market research firm Roland Berger predicted that supply of lithium ion batteries would exceed demand by more than 100 per cent by 2015, despite rapid growth in the market for such batteries over the same period. 'Some of the battery producers have excessively grand expansion plans,' the firm said in its report. The result would be a wave of consolidation – a wave that is now it seems starting to be felt.