A123 Systems, a Massachusetts-based electric vehicle battery company that was championed by President Obama and received a $249 million grant from the Energy Department on Tuesday evening filed for Chapter 11 bankruptcy, as Bloomberg first reported.
A123, which had suffered numerous setbacks from defective product recalls to factory construction delays, said that the bankruptcy was the result of the collapse of a $465 million rescue deal with China-based Wanxiang Group, which did not go through due to “unanticipated and significant challenges to its completion.”
A123 will now sell its two factories in Michigan and automotive business for $125 million to Johnson Controls, which has also was awarded government funding. The factories will continue operations.
A123 had in June released what it called a “revolutionary” new battery and told TPM that it would not be the “next Solyndra,” in reference to the failed solar panel manufacturer that received a $535 million loan guarantee from the Energy Department.
Updated 4:43 pm EDT: A spokesperson for Republican presidential nominee Mitt Romney has weighed in on A123’s bankruptcy in The New York Times, criticizing President Obama’s support for clean energy investments and attempts to create “green jobs.”
“At the town hall debate four years ago, then-Senator Obama promised to ‘easily’ create five million green jobs,” said the spokeswoman, Andrea Saul. “A123’s bankruptcy is yet another failure for the President’s disastrous strategy of gambling away billions of taxpayer dollars on a strategy of government-led growth that simply does not work.”
The Energy Department has put out its own blog post on the news, noting A123 received bipartisan support, which included $6 million from the Bush Administration, and saying “today’s news means that A123’s manufacturing facilities and technology will continue to be a vital part of America’s advanced battery industry.”