A123 Systems, a developer and manufacturer of advanced lithium-iron phosphate batteries and systems, signed a non-binding memorandum of understanding (MOU) with Wanxiang Group Corporation establishing the framework for a strategic investment through which Wanxiang would invest up to $450 million in A123.
A123 announced the Wanxiang deal along with its financial results for the second quarter ended 30 June 2012 in which the company reported a net loss of $82.9 million (a 50% increase in loss compared to a net loss of $55.4 in 2Q 2011) on total 2Q 2012 revenue of $17.0 million (a decrease of 53% from $36.4 million in the second quarter of 2011).
Wanxiang is China’s largest automotive components manufacturer and one of China’s largest non-government-owned companies.
A123 systems received US$249 million in grant from the Department of Energy for building battery production facility. As of June 2012, $129M of the grant has been used to build the 550 MWh Livonia plant and the Romulus plant. Remaining untapped $120M grant’s expiry date has been extended from end of 2012 to end of 2014
In early 2012, A123 Systems announced to replace defective battery packs and modules supplied to about five customers, including Fisker Automotive. The defect caused a Fisker Karma to shut down in a Consumer Reports test. It estimated the recall would cost about US$55 million. Fisker reduced its purchase order of battery from the company to lower its inventory. Cylindrical cells made in China that are used by BMW and others are not affected